Top Buyers, Sellers See Benefits In a Programmatic Approach

There’s a lot of talk about programmatic buying in the media world. But there is also activity, with ads being targeted with big data and buys being executed on an automated basis.

A discussion of the virtues of programmatic doesn’t necessarily break down into agency vs. ad sales executive, though. Some companies on both sides of the negotiating table have embraced programmatic and are working to do business in a new way because they think it ultimately will be better for their clients and for their bottom lines.

Magna Global is part of IPG’s Mediabrands unit, which in 2013 set an ambitious target of doing half its business on a more automated basis by 2016. It has announced a series of partnerships with media companies designed to test and enable programmatic techniques.

Comcast’s NBCUniversal unit, one of the biggest media companies, has been busily creating new products, including an exchange for buying digital inventory and a targeting platform designed to identify high performing inventory for clients.

Although they have very different vantage points, Chris Williams, president of Magna, and Krishan Bhatia, executive vice presidnet digital strategy and operations for NBCU’s ad sales division, see data and automation as an important and growing part of what their companies do.

Broadcasting & Cable business editor Jon Lafayette talked with Williams and Bhatia talking about where programmatic is now, and where it’s headed in the future. Edited transcripts of the conversations follow.

Chris Williams

MCN: How big a deal is programmatic buying really?

Chris Williams: First of all, it gets a hell of a lot of attention in the trade press. I think it gets more airtime in the trade press than it does relative to the amount of time you spend with clients talking about programmatic and also the amount of money that you spend programmatically. Although it’s certainly increasing pretty rapidly.

And I guess we have to define what we mean by programmatic. If it’s the use of more granular levels of data to target more precisely and then using technology to execute our media buys, whether that’s through workflow automation or whether it’s through the various platforms that exist across the ecosystem to actually transact upon, it’s certainly dominating the landscape increasingly.

So it’s very important to us. If it’s the ability to reduce waste, to target more precisely — and it is using technology to reduce labor and improve workflow — then it’s a good thing that is not going to stop any time soon. If I was a client I would want to increase my billings in terms of the buys bought through the use of data and technology, absolutely.

MCN: Is there high-quality TV-like video available for programmatic transactions?

CW : Yes. If you take the TV landscape in local and satellite you can buy using data technology. There are some opportunities, but it’s going to increase over time. But there’s a scarcity of premium video and that’s still a massing pool of inventory that needs to be unlocked in terms of using data technology in the way that we want to get the kind of performance and targeting that we want to deliver on behalf of clients.

MCN: Pricing has been an issue. The owners of premium video are concerned that programmatic will drive down pricing like it did with digital display. What’s your experience with programmatic and pricing?

KB: I think people say that the price in display was driven down by programmatic, but it depended on the inventory. I think the value of some inventory increased. It depends on the quality of your inventory.

Do I think it’s a bad thing that poor inventory, low-quality inventory, low-demand inventory has a readjustment on its price point? I think that’s a good thing, isn’t it? What happened in display anyway where prices did get driven down is, it was over low-demand and remnant inventory. It wasn’t about the programmatic side. It wasn’t that valuable in the first place.

There’s a finite amount of high-quality premium video inventory. I don’t think that by applying the type of customized data we want to in today’s buys is necessarily going to drive the price down. It’s likely to do the opposite.

You’re right in saying there are companies that control that content and particularly the premium content that have a perception of programmatic, and it might also be influenced by what happened in display. They are reluctant to open up the potential for more inventory being executed this way. But I think if I was a media owner, it will be more favorable for them in the long term to start testing the value of their inventory by allowing agencies on behalf of advertisers to use data to allow them to target more precisely.

Certainly if I was running a sales team I would want to be leading the industry so I can understand the value of my inventory. That will put those who innovate and embrace it in a better position than those that don’t. That would be my prediction.

Krishan Bhatia

MCN: How is programmatic treating NBCU?

Krishan Bhatia: We have made a lot of investments in programmatic, but more importantly, data-enabled offerings, across our portfolio. We believe the marriage of the premium content at the scale that we’re able to deliver it, both on television and on digital with rich data, is the combination that marketers are looking for in terms of increasing the effectiveness of how to spend their media dollars. Last year we rolled our digital programmatic offering, NBCUx.

MCN: Have more clients been using NBCUx?

KB: Yes. I think the interesting thing is it’s pretty diverse in terms of the industry category representation. We’re working with clients from automotive to [consumer package goods] to financial services to retail. So it’s a pretty diverse set of clients that are finding this to be a valuable tool. And within each category we have multiple clients that are transacting with us. And we’re starting to really push the envelope beyond display into video and mobile inventory.

At the same time everyone recognizes, including the clients and us, that this is not a “set it and forget it” kind of offering where one platform connects to another and then everyone goes home. It is actually very involved, both technically and relationship-wise. It requires discussion with clients to understand what are they trying to achieve, who are they trying to reach and how can we use data on our digital inventory, in this case to help them reach those audiences.

MCN: What kind of results are you getting?

KB: With clients where programmatic and data-enabled offerings are front and center in their buying, we’re doing anywhere between 20% and 30% of business on our digital properties with them in that manner, which is a real meaningful chunk.

MCN: You said the exchange was moving into video. What types of inventory are available?

KB: At this point really any of our digital video inventory, whether it’s short-form clip-based content or whether it’s long-form or what we call full-episode content. So think about any of our broadcast programs, anything from The Blacklist to The Voice, any of our cable shows, are available in a data-enabled fashion and we’re working with multiple clients to determine what the best setups are. So we have a supply-side platform that we’re working with and all of the buyers have demand-side platforms in order to execute data-enabled campaigns. But from our perspective, there’s nothing in our digital portfolio that is not available for data-enabled or programmatic transactions. Video is still in development and so we’re actually working on a number of different setups with clients to determine what ultimately is the best way to do that. But the content itself is available. We’re not restricting any content from being available on a programmatic basis.

MCN: NBCU announced its Audience Targeting Platform. How does that fit with the exchange and other programmatic offerings?

KB: I think the way it fits together is more from a strategic perspective, basically the marriage of content and data. Our digital programmatic offering ultimately has the same objective — how do we use data to inform campaigns more effectively on digital inventory. In television, technology doesn’t enable advertising on an addressable basis. What you can do is you can create front-end planning tools that allow you to determine which inventory, which shows, which dayparts may perform more effectively for you based on audience groups that go beyond just traditional Nielsen age-gender demographic brackets. That is what the Audience Targeting Platform is intended to do. So it is not programmatic execution. It does use data in the front end to determine where the matches are and where, therefore, I should be running my campaigns.

Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.