It’s December and time to make bold predictions for the upcoming year. I have a mundane, but important, prediction for 2013: it will be the year the digital advertising industry finally adopts a standard electronic insertion order. Furthermore, the electronic IO will usher in a wave of innovation in “programmatic premium.”
Digital advertising was born 18 years ago when AT&T ran the first banner ad Hotwired.com. Today, digital advertising is a $45 billion industry. Despite being digital at its core, it’s still very much an analog business in its back room operations.
Earlier this month at the iMedia Agency Summit, I attended a session called “The Internet Ad Pioneers” moderated by Cory Treffiletti, a pioneer himself and author of an excellent book on the subject. As part of the recollections, panelist David Yovanno said, “Back in the early days, we did a ten minute sales call on the phone and ten minutes later we got a six figure IO over the fax machine.”
A lot has changed since then. There’s certainly a lot more competition and closing deals isn’t so easy anymore. Insertion orders aren’t all in the six figures. But one thing has not changed: insertion orders still come in on paper.
Even today, some still use the trusty old fax machine to send insertion orders. Others have replaced the fax machine by printing, signing, scanning, and emailing IO’s. Some have gone even further by replacing scanning with electronic signatures. But the end result is the same: a “paper” insertion order. Sure, it might be an electronic file, but it’s still effectively a piece of paper because it has to be re-keyed into the ad server and other systems to execute the order.
A truly electronic insertion order is one that arrives in a standardized, machine-readable format. Because it arrives in this format, it can be used in an automated work flow. For example, after reviewing the order, you click the “accept” button which books the deal, sends an acknowledgement to the buyer, reserves the inventory, and installs it on your ad server. Look ma, no hands!
Foretelling the electronic insertion order may seem trivial. After all, it’s an obvious idea with clear benefits and relatively low technical challenge. However, the development of e-business standards has proceeded slowly since it was initiated years ago. While certain vendors can send and receive orders electronically within their own walled gardens, it has yet to come to fruition from a cross-platform industry perspective.
I think the electronic IO will finally arrive in 2013 for three reasons:
First, you have a motivated group of buyers. In 2012, programmatic buying was widely adopted – particularly with real-time buying of remnant inventory through exchanges on the spot market. This method of buying has grown from nothing to about 20% of spending in the last two years. Many see cherry-picking impressions at the lowest price as the main benefit of programmatic buying. There’s surely value there, but a big benefit of programmatic buying is driving the transaction cost of buying digital advertising to zero. Compare that to the $40,000 it costs to create and execute a digital media plan when buying directly using typical methods.
While I’m skeptical about today’s breed of programmatic buying technologies working for guaranteed buys, they’ve certainly proven that automation can reduce buying timeframes to milliseconds and eliminate transaction costs. That puts a lot of pressure agencies involved with direct buying to streamline their process or risk losing the business entirely.
Second, you have a motivated group of sellers. Publishers’ prices are eroding as their inventory gets commoditized by audience buying via exchanges. In a recent high profile case, The New York Times is blaming exchange-traded media for its declines in online display ad revenue. Leading publishers are now scrambling for ways to efficiently drive direct sales as a way to reverse the trend and to claw back higher revenues and margins.
Third, you have a motivated group of service providers. Steve Sullivan and Ramona Gonzales are doing a wonderful job leading the IAB’s renewed effort to deliver its eBusiness Interactive Standards. You also have a new breed of motivated advertising technology providers who are committed to finally realizing the electronic insertion order including MediaOcean, Facilitate, Centro, NextMark (my company), Operative, iSocket, and ShinyAds.
It’s because of these highly motivated buyers, sellers, and service providers that I confidently predict 2013 will be the year that electronic insertion orders finally become a reality. This basic building block will enable the automation the industry desperately needs to move beyond the fax machine.
Joe is a contributor to The Makegood and is the Founder and President of NextMark, a company that provides tools for media planning and buying industry.