Sales Management Special Report

Automated Spot Buying Looming On Horizon

Automated, or programmatic, systems allow agencies to purchase advertising directly online, either eliminating sales people or limiting their role. In some instances, the systems involve an auction with buyers bidding for time. Such systems are commonplace in digital media, but they had far less success in the broadcast spot market. Now, however, some station groups are seeing the possibilities. This is Part II of a four-part series. Part I on what TV stations are doing to integrate digital ad selling into their sales processes appeared Tuesday; Part III, on Thursday, will focus on improving digital sales operations; and Part IV, on Friday, will offer a case study of a successful digital sales effort and the lessons it offers for broadcasters and newspapers alike.

It may no longer be a matter of if automated buying and selling services will move into the spot TV realm, but how soon, and to what extent.

Even as broadcasters express major reservations about automated buying, at least two companies, IPG and Visible World, say they expect to light up automated platforms and begin making spot buys with them by the end of this year.

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Automated buying of spot is likely to be fairly common “within the next five years, and probably within the next two or three years,” says Jack Myers, chairman of the research firm MyersBizNet.

And it will be a positive development for broadcasters, he adds. “This will ultimately help create increased value for premium [spot] inventory, not less,” Myers says. He believes that automation won’t “prevent demand from being extracted from the product.”

Automated, or programmatic, systems allow agencies to purchase advertising directly online, either eliminating sales people or limiting their role. In some instances, the systems involve an auction with buyers bidding for time.

Such systems are commonplace in digital media, but they had far less success in the spot market. Google TV Ads may have been the highest profile TV effort — and the biggest bust. It shut its digital doors at the end of 2012.

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A few platforms like persist at selling so-called remnant TV time, but they have had minimal impact on the business.

The renewed interest in automatic buying is coming mostly from the buy side, media agencies weary of the back-and-forth with broadcast sales people and their reps that adds time and expense to the process.

IPG is leading the charge. The agency holding company wants to make half of its buys via programmatic platforms across all media by the end of the next year, says Janice Finkel-Greene, EVP of IPG’s Magna Buying Analytics.

To that end, IPG formed Magna Consortium and has been recruiting like-minded media companies. IPG already has one broadcaster on board, Tribune, and is talking with others. IPG hopes to make its first spot buys through the consortium by the end of this year.

The consortium also includes Cablevision Systems, A&E Networks and Clear Channel.

Another major agency holding company, WPP, is also pushing automated buying. Along with Viacom, Time Warner Investments and Comcast Ventures, WPP is a backer of Visible World, whose Audience Express automated buying venture intends to move beyond cable TV and online and into spot by the end of the year.

"We don’t support real-time bidding or auctions for TV inventory, because TV is a plan-based medium,” says Walt Horstman, general manager of Audience Express. The goal is to raise rates on spot avails that are undervalued and bring in additional buyers.

WPP's new Modi Media unit will focus on interactive and addressable TV advertising, but will also involve automated TV buying. That’s according to Brian Gleason, managing director of WPP’s Xaxis North America, which handles programmatic buys in other media. Modi’s president, Michael Bologna, was not available for comment.

WideOrbit, the dominant supplier of traffic and billing software to broadcasting, has been working on an automated system practically since its founding in 1999, says President Eric Mathewson. But because of the complexities, he says, he doesn’t know exactly when it’s going to launch.

Among the major broadcasters, Tribune stands alone as a proponent of automated buying.

“I think some level of programmatic or digital transaction is inevitable. It’s our view that we would rather strategically participate in that process than wait for it to participate at us,” says Larry Wert, president of Tribune Broadcasting, which has joined the Magna Consortium.

Some of the concern of other broadcasters is unwarranted, he says. Human engagement in the sales process will be needed “for the foreseeable future."

“I understand the concerns about potential commoditization, but I don’t think that’s a reason to not have programmatic transactions be part of your model. The owner of the inventory can decide what, if any, inventory they want to put in the market in that process. And they can decide their own pricing,” Wert says.

Wert says he believes Tribune can increase revenue through programmatic selling because “price is a reflection of supply and demand. If you increase demand because you’ve tapped into bigger pools of prospective customers, that can influence price in a positive way.”

Other station sales executives are biding their time, fearing that automated buying will devalue spot inventory.

“We’re certainly in favor of exploring anything that makes local broadcast easier, more affordable, and less labor-intensive to negotiate and buy," says Wayne Freedman, VP of sales at Raycom Media.

"And there’s certainly an opportunity to offer non-premium inventory. But we do have a real concern about any further commoditization of our business."

Valari Staab, president of the NBC Owned Television Stations, expresses a similar view: “The closer you can make [inventory] a commodity the better it works for automated systems. And obviously the last thing we want is our viewing to be commoditized.”

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Comments (13) -

Ron Stitt Nickname posted over 3 years ago
Several people quoted in this article are not very well informed. You may not like the idea of programmatic, but the worst thing broadcasters can do is try to sit on the sidelines until the market forces them to jump which point, the groundrules will already have been set by others.
TownCrier Nickname posted over 3 years ago
Broadcasters are worried about their inventory becoming a commodity? Uh, that's already happened. Time to get with the program. This is not real time bidding that will necessarily drive prices to the bottom. The challenge at hand is to embrace this inevitable advance in technology to any given station's advantage. And yes, middlemen who don't add value to the equation are an endangered species...
SalesGal Nickname posted over 3 years ago
Great for network TV. More difficult for local TV stations with a majority in local revenue. Local clients who need to do revisions for sales or creative may not be able to move inventory week to week easier via a computer since week to week inventory changes. Human interaction, customer service and people who think are the best folks to reach your viewers to buy your product. If your buyers and reps are just playing numbers games, maybe you need new buyers and reps who can maximize results not cheapen inventory value. IMHO.
tjxx Nickname posted over 3 years ago
OK all you Einsteins.. This will never happen.. You are talking about human interaction in selling and marketing a product. In some form its been going on for thousands of years. People advocating this obviously sit at their computers all day and complain about not making budgets..Good luck with this one.. These are the same people who are espousing the virtues of electric cars etc....Never made anything and never sold anything and never had to run a company or read a balance sheet when revenue either makes or breaks you.
HopeUMakeit Nickname posted over 3 years ago
1. Of all the traffic systems I have worked on in my 25 years as a TV rep. Wide Orbit is the worse for local AE’s. It is slow, cumbersome, not well thought out. It should not take 15 mouse clicks to email a confirmation to a client. This is also why I would never send feedback suggestions to a company whose primary goal is to replace me with a CPU. We actually had a arrogant software rep tell us in a sales meeting that it was their goal to replace us with software in 5 years. This idiot actually said this to us as we were about to launch the beta test of his software. I am quite proud to say that 5 months later, we still had jobs and he did not. What software will never be able to do is exactly what I do best and that is leverage human relationships to over achieve on budget relative to audience share. I generate profit. I do it very cheaply at less than 3% commission. I grow businesses using the most powerful advertising media every invented by man and I have a boat load of references to back up that claim. The National side has been automated since I got in this business. It still is not efficient and millions are wasted when agencies base their new business pitches on spot rates rather than cash register receipts. What TV station and agency groups really need to be thinking about is armies of laid off TV AE’s forming local agencies and taking control of media budgets on the buying side. I can zap any station in any market and still grow the clients business. Even worse would be going back to where I started, local cable.
Ron Stitt Nickname posted over 3 years ago
Not sure how/if/when programmatic will come to local, but if national is a significant % of your revenue, sorry, you cannot run away from this - money talks, buyers (agencies) have the money, and they want this. And if it's managed correctly, the commodity issue can be circumvented. Some here seem to view programmatic transactions & related issues as some new thing just discovered. In reality, it is a maturing business both in terms of platforms and best practices for sellers. Those who are smart about it access a broader client base, reduce unsold inventory, reduce sales channel friction, and eliminate menial tasks. Good direct sellers don't go away - they're just freed up to, you know - sell. Again, this is not a theory - it is happening on the digital side and you do NOT want to play ostrich here.
WeHaveAProblem Nickname posted over 3 years ago
Really,"eliminate menial tasks"? You must have a full time Assistant, as we have three for 16 AE's and National business. But you're correct. When that day of complete automation comes station groups can punt all of their AE's and hire people who used to work at the DMV for $30k a year.
SalesGal Nickname posted over 3 years ago
'money talks, buyers (agencies) have the money, and they want this.' ....Money may talk but I don't want a bunch of agencies and buyers looking to buy my inventory cheaper to have too much control of my valued product that reaches valued viewers. Stations need the final say on who airs and who pays the frieght. Too each is own though. I can get on board with a system like Southwest Airlines where you have the must air rate, the normal rate and the "wanna get away'/discount rate . If managed correctly, it can be done.
HopeUMakeit Nickname posted over 3 years ago
“It’s a maturing business both in terms of platforms and best practices for sellers” … really? My station has been here since the fifties. It “matured” a long time ago. Change happens and we are change agents. Another task software cannot grasp. There will always be guys who cannot keep a job in the station trying to “innovate” their way into a process they do not understand.
WeHaveAProblem Nickname posted over 3 years ago
The industry has been forcing AE’s to do less and less selling and more and more maintenance. Look in the mirror and say …“50% of my time is dedicated to the selling funnel process”...then say “liar”.
Ron Stitt Nickname posted over 3 years ago
Of course everyone is entitled to their own opinion, but it's pretty obvious that the naysayers on this board have no experience and know virtually nothing about programmatic systems in practice. That, my friends, is the key ingredient for disruption...and for those who try to sit it out, oblivion.
tjxx Nickname posted over 3 years ago
Hey Rocker.. You are clueless!! How many years did you work for the Federal gov't or were you a career teacher in the Public school system???The only disruption is between your ears..........
Ron Stitt Nickname posted over 3 years ago
tjxx LOL
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Overnights, adults 18-49 for September 27, 2016
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