GroupM: First, There was Content... - Vik Kathuria - MediaBizBloggers

Modern Portfolio Theory assumes an efficient marketplace, i.e. &#8211; all investors have access to the same information at the same time. This is the exact opposite of the "content is king" display advertising marketplace of yore (wishful thinking, unfortunately quite prevalent), which lacks efficiency for any non-custom media buying. There is a large gap between perception and reality when it comes to assessing what is premium inventory. This is mainly due to the absence of relevant (if any at all) measurable key performance indicators (KPIs).This inefficiency has created opportunity for adopting the audience-driven approach to the buying and selling of media which is being driven by media trading platforms and ad exchanges. The premise of the exchange is to give agencies access to large pools of liquidity (ad exchanges) with a public auctioning system and full transparency to ensure efficient pricing and a complete tracking solution. These exchanges can either be accessed directly by the agencies via plugging into the exchanges API or thru media trading platforms.Currently, less than five percent of all display buying is managed via audience-based technology targeting platforms. These buys can range from non-premium ad exchange inventory, all the way up to tier one premium content. The premise of audience buying is in contrast to the concept of buying content, for example, specific sites. With that said, the fact that the majority of audience-targeted spend today goes towards the large non-premium ad exchanges is something that will change dramatically in the coming years.The evolution from DR to brand audience buying will happen in a similar fashion to what we saw with the evolution of digital advertising in general. We suspect that when brand advertisers realize the importance of targeting their messages directly to a certain audience AND optimizing that message based on actions, in real- time, the shift of dollars will accelerate exponentially. The optimal way for agencies to take advantage of this is via private digital media trading desks. Using proprietary algorithms and targeting technologies, the systems assemble audiences from a vast pool of unsold impressions that meet the KPIs of clients and can be optimized in real time. The trading operations turn agencies from media planners into audience aggregators.The approach is to extract maximum possible value from each impression by assigning relative value irrespective of source (i.e. "premium" inventory vs. networks vs. verticals). This is only possible when the focus is on buying audiences and not sites. The goal of demand side platforms is for the advertiser to dictate multiple pricing points for a whole range of remnant inventory. This is only possible when publishers give access to audience data which allows the advertiser to focus on automated as well as spot buying.Ad exchange platforms and their attendant real-time bidding (RTB) capabilities will be an important factor in delivering an efficient and liquid "marketplace" for buying and selling data-driven audiences, offering enhanced scale, behavioral targeting, audience segmentation and improved transparency. This, combined with (increasingly available) anonymous audience data that is stripped of PII (personally identifiable information), will allow for pinpoint measurement of incremental performance of individual campaigns and assign relative value to all level of inventory as opposed to current perception of "premium" vs. "non-premium" inventory. This is a marked contrast from current nebulous KPIs of "reach" + "awareness" which should only exist in a static linear media environmentCurrent daily inventory availability in the ad exchange world ranges from 10-15 billion impressions. Expect this to grow with increasing adoption of audience-based media buying technology platforms. In addition, the adoption of supply side yield management technologies on the publisher side creates congruence through higher monetization of perishable inventory. This inventory, previously only monetized through ad networks offering low CPMs and margins for publishers, is now flourishing in the ad exchange marketplace where technology has married buyers and sellers for market value pricing.Key take away of trading in real-time environments has been realized in the power of audience buying technology, regardless of the platform or marketplace. Content is simply a proxy for audience.Vik Kathuria is Managing Partner, Mediacom Interaction, responsible for overseeing all digital investments and trading. Vik can be reached at vik.kathuria@mediacom.comRead all Vik's MediaBizBloggers commentaries at Musings from GroupM - MediaBizBloggers.Check us out on Facebook at MediaBizBloggers.comFollow our Twitter updates @MediaBizBlogger

GroupM: First, There was Content... - Vik Kathuria - MediaBizBloggers

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Vik Kathuria

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