In the world of
programmatic advertising, there have been many evolutions. If Programmatic 1.0 was best represented by companies using the Right Media Exchange for trading — where two companies could come together, sign a written contract and execute media transitions among only those two parties, with some of the elements being automated — then Programmatic 2.0 is representative of today’s exchanges and marketplaces: trading desks to DSPs (demand-side platforms) to exchanges to SSPs (supply-side platforms) and the inevitable ad tech tax.
Real-time bidding (RTB) has allowed parties to do business across partners and on an impression-by-impression basis, both via open-audience-driven campaigns or in private marketplace environments, eventually throughout the entire supply chain of a publisher, the header through the waterfall.
So what will Programmatic 3.0 look like? If the pipes and the connections are in place, what then remains is the opportunity to consider sophisticated business rules and relationships which can only come from a next level of thinking.
In financial markets, groups of commodities or stocks are in many cases bundled together (think exchange-traded funds or mutual funds or futures contracts where buy and sell prices are guaranteed for long periods of time, sometimes years). Once those contacts are established, they are free to trade repeatedly for the duration by any entity that would have capital to invest.
So, why does advertising need futures?
In today’s digital ad sales environment, a publisher’s direct sales team negotiates inventory sales with advertisers, which result in a “guaranteed order.” However, those guaranteed orders typically contain “out clauses” that allow the advertiser to cancel the contract for a variety of reasons. These out clauses can wreak havoc on a publisher’s revenue stream, making it difficult to forecast what their actual earnings will be.
So perhaps a guaranteed order isn’t really, well, guaranteed?
In a true forward and futures market, advertisers or their agents could buy inventory for future use and lock it in with a truly guaranteed contract, allowing them to forecast long-term spending on digital advertising and buy a package of inventory holistically versus disparately.
Can you imagine the ramifications of this? The machinations are incredible if you think about it. Just imagine a publisher selling inventory, buying it back and selling it again.
What about other media outside of digital?
Potentially print, TV and radio could be afforded the same capabilities. Once this solution is mainstream, there’s no reason why their inventory can’t be traded in a similar fashion. In the beginning of any new paradigm, market education and research serve as a building block to align interests and bring the market entrants to the table.
In previous columns, I’ve written about educating digital leaders on cutting-edge issues around digital brand safety, including viewability, ad blocking and data protection, as well as mobile and native ad monetization. I believe programmatic 3.0 is an equally important topic, because publishers must continuously find innovative ways to generate revenue to sustain their business. This type of trading would open up a world of possibilities for the publishing community.
I asked Richard Bush, CTO of NYIAX (and a partner of The 614 Group), about this and he said, “I have been involved in media trading and its automation for 18 years now and have seen it all. These concepts are new and really exciting. They invoke a new way of thinking about the future of programmatic trading. This endeavor will be educational, and I look forward to hearing what the market thinks about these ideas and what they still need to learn.”
As we work to educate the market on the next iteration of programmatic, I invite the publishing community to join us in helping to shape this content. Email me your thoughts, and I’ll share what we learn in a future Marketing Land column. I would love to hear what others think programmatic 3.0 will look like at the intersection of Wall Street and Madison Avenue.
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