Article in Campaign, 3 November 2016. Charlie Makin, board advisor and investor, Bitposter
A little over a year ago Jerry Buhlmann said that Dentsu could be "approaching 100% programmatic by 2020". It created a minor storm, obviously he's a highly regarded industry leader and secondly, programmatic is a value laden term. Programmatic has been weaponised in the increasing hostile power battle between agencies and clients over fees, costs and rebates and is, without doubt, the most contentious area in the ANA report about lack of clarity between clients and agencies.
Although growing rapidly, most programmatic buying is still mainly confined to digital channels where there is an almost unlimited supply of low cost inventory and editorial content that is often free or cheap to create. It's a very effective way of distributing a mass of inventory that could never be managed manually.
The issue for the future is how this model can be applied to high value media where there is finite supply. Considering that an hour of Downtown Abbey costs over £1 million to make and the 40-metre-long motion@waterloo digital screen reputedly cost £4 million to install, one understands why 'established' media owners still need to retain control over yields. High value content and consumer experiences create mass engagement, which requires significant investment to deliver, and the industry should value this as much as the opportunities offered by precision targeting.
Programmatic, as a noun, perhaps deliberately, obfuscates a simple concept. Programmatic automates bringing buyers and sellers together and creates an automated marketplace driven by a set of rules (I've deliberately used automated twice). I'm involved in developing Bitposter an automated platform for out of home. We've deliberately avoided programmatic as a moniker, as our objective is to democratise the billboard market, making it more efficient, transparent, accessible and easier to transact. Automation, as term, isn't valued laden and simply describes an objective.
Automation is a massive opportunity for the whole industry. Consumers are influenced by very complex cocktails of media, and automation allows us to deliver better solutions. All media are automating trading in some form; out of home via Bitposter, Sky's AdVance, the Guardian for national and 1XL and Trinity Mirror for regional press content are a few examples. Automation will help advertisers to access multiple channels more precisely and serve their consumers better.
I recently did a project for a FTSE250 city broker, with revenues of nearly £1 billion. They've experienced all the same issues as the media industry, albeit ten years earlier. 40% of their trades are voice, 60% are electronic. Simply, low value, high volume trades are done automatically, leaving the brokers time to focus on complex deals that drive value, where some form of human expertise and intervention is vital. I suspect roughly the same will happen in media, I don't think the industry will be close to 100% programmatic in four years' time, but I do think it will be increasingly automated across every channel, freeing us to focus on where we can genuinely add value for clients and consumers.
Charlie Makin is an investor and board advisor to Bitposter, plus other projects.