The Great Decoupling - Part III
Digital Advertising dodges one bullet, but gets winged by another
“How did it do?”
“Meh.”
Eric Porres was writing up the post-mortem for our OTC client on ad auctions. More specifically, Eric had spearheaded the effort to participate in a completely new model for purchasing digital advertising – the ad auction. To be perfectly honest, it scared the shit out of me.
Eric was one of those technology-driven people who was driven by curiosity and who came at the media business in an oblique sort of way. He didn’t come to Underscore by way of having been through media training at a holding company agency like I had, though he had managed large development projects for blue chip clients at Agency.com. He had worked in the digital space for a lot of big brands, just not with media.
And here he was, leading the charge with DoubleClick’s Advertising Exchange – getting Underscore into the beta, explaining to clients why it was important, and taking their needs to market. Again, it scared the shit out of me.
[Insert stick shift metaphor here]
Up until that moment, almost every digital display ad dollar being spent was through a media buying team executing contracts (insertion orders) with publisher sales teams. We spent much of our time meeting with sales reps and representing our clients’ interests in that marketplace.
This was different. DoubleClick’s Ad Exchange was in beta, so yes – it was a transaction that had a lot of human hand-holding, but in the end, the writing was on the wall. We would be buying more through interfaces and not through the personalities who talked to us about advertising the pain relievers, sunscreens, prescription drugs and other products we represented. And Eric was leading the charge.
That Eric was leading it wasn’t scaring me. He was one of the most capable people I knew. Neither, really, was the move from relationship selling to transactional selling. What scared me was the model.
“Let the market decide”
Google wanted DoubleClick. At the time this was happening, an acquisition was looming. DoubleClick, ever the innovator in the back-end technologies in the digital ad space, was executing something I had feared would come to pass – a speculative ad auction. That is, advertisers and their agencies could come to their marketplace to place bids on advertising they had listed there – well in advance of it running.
To me, this looked a lot like trying to commodify ad space. Jim Meskauskas, one of our other partners, and I had engaged in long discussions about this model. The dynamics of it started to look an awful lot like a stock market or a commodities market. Think about it – what happens when a chunk of digital ad inventory was sold off at auction and then was given the chance to change hands electronically? What if that happened several times before the advertising actually ran? Would this thing begin to look like the finance industry? What would happen when such a beast started trading in futures and derivatives? It gave me a headache just thinking about it.
Sorry, dear client. A sovereign investment fund has your ads.
What would have happened if WebMD suddenly decided that all of its diabetes-related inventory over the next quarter would go to auction? And then some speculative investor glommed it all up? Would we have to bid for our clients against the financial might of a banking institution? Grandma’s retirement fund?
It occurred to me that there were forces trying to turn digital advertising into a commodity.
In the end, Eric did everything right. He secured inventory that aligned with the goals of one of our clients. It ran. It didn’t do poorly, but it didn’t blow us away, either. And we had our first foray into buying digital display advertising under this new model.
Enter RTB
Then something came along that put my biggest concerns to rest – real-time bidding.
Rather than have blocks of advertising changing hands between investors ahead of it running, the real-time bidding model instead brought the inventory to auction on an impression-by-impression basis, and it sold in the milliseconds before it actually ran. This eliminated the speculative aspects of the market because there was no time for the impression to be traded among speculative buyers.
When it took hold and became the dominant model, it saved us from becoming a commodities market. Personally, I was breathing a sigh of relief.
Bringing in a tiger to chase out a dog
But that relief was a distraction from the commodification of something else that was remarkably important – the audience itself.
Moving to real-time bidding meant that the decisioning around whether to buy an individual impression or not would have to be automated. Humans were simply incapable of it. Increasingly, the basics of an ad impression – size, publisher, location – weren’t enough to inform that decision. We needed to know more about who it was impacting. Conveniently, ad networks had been building profiles on users for years – profiles that were married to third-party cookies.
We had narrowly avoided becoming a commodities market, and in our exasperation at having dodged that bullet, we failed to recognize that we were commodifying audiences.
When you say commodifying audiences, do you specifically mean that another sin of advertising is treating all users the same?
I really enjoyed this chapter. It at once evoked nostalgia and re-awoke the concerns and (can I admit) fears I had at the edge of that “brave new world”? I came at the business from a different perspective. At the time deeply immersed in human insights, sometimes very qualitatively justified without much data to back them up (though they usually rang true) to get to really creative media and original content based solutions. I talked about what I did, and what the future might be, as a departure from exposure based advertising to engagement marketing; from trying to find attention to creating it (I over-used “creating experiences with gravitational pull for our audience” far too many times…but clients bought it). So in the early days, legitimately arguing about showing someone a B2B data storage ad while they were checking scores on ESPN.com was such an interruptive experience divorced from mindset and receptivity was kind of fun (in hindsight) and something that eventually became less concerning as the data informing decisioning and placement got better. Native ads helped me personally feel better about it. But I still feel like in those early days when I was at PHD we swung the pendulum too far. I joined an agency that was all about mindset and creating experiences globally and the US arm became the antithesis of that. It put me in a tough spot; do I cater to my dotted line boss, global head of strategy and push back or push more of what was in PHD’s heritage into what we do or do I abandon that and join the US ethos which was really about being mini-OMD and all about media buying effectiveness? It was a crazy (fun) time. I love the power of programmatic (although recent reporting is that about 90% is useless…not sure I believe that), and maybe I’m a dinosaur clinging to the past but I still thing brands should be mining audience insights and creating experiences “with gravitational pull.” :-)