Advertising History

Digital Media Enters the Bionic Age

jpych-nextmark260Generation X’ers: Remember the Bionic Man on the Six Million Dollar Man? And who could forget Lindsey Wagner the Bionic Woman? Media pros will soon be like our childhood heroes as digital media enters its Third Age: the “Bionic Age.”

In October 1994, AT&T served up the first banner ad on Hotwired. This ad was the watershed moment that started online advertising and ushered in the first age of digital media, the “Guilded Age.”

No, not the “Gilded Age” because that would imply a veneer of wealth. In 1994, “digital” was a small experimental budget, if there was any budget at all. Veteran media planners would not touch digital: Why do 10 times the work for 1/100th of the budget? Nobody was making any money, but a few visionaries saw the promise of digital and jumped in feet first.

These early pioneers were excited by this new media, and embraced it as a way to gain status and power. In those early days, everyone was simply trying to figure it out. Media plans were hand-crafted from scratch on Excel spreadsheets. Advertising inventory was purchased in large batches at negotiated rates expressed in contracts called insertion orders, just like in print. These early digital media artisans soon joined together and established the guilds that became known as digital media agencies. Like medieval guilds, they closely guarded their trade secrets and only passed them down to their apprentices.

Like the Gilded Age, the “Guilded” Age was a period of significant growth. However, the laborious process to create and execute a digital media plan was slow and expensive. Digital media was moving too fast to tolerate this. As digital advertising budgets grew and became significant, both advertisers and publishers grew frustrated. Inventors saw this problem as an opportunity and created the first networks and, eventually, ad exchanges.

In mid-2007, Google bought DoubleClick, Yahoo bought Right Media, and Microsoft bought AdECN. These acquisitions validated early ad exchange technology and marked the start of the Machine Age of digital media planning.

Unlike the slow and expensive transactions that powered the Guilded Age, the Machine Age introduced astonishing efficiency through real-time bidding. Instead of humans taking weeks to plan and execute a campaign through an insertion order, machines purchased impressions at auctions that took place in the milliseconds before a browser loaded your Web page.

Machine buying threatened to break and replace the guilds. However, despite their efficiency, the best publishers were reluctant to sell their premium inventory through ad exchanges. The exchanges quickly became filled with the long-tail of the internet: low-quality, commoditized inventory. Leary of placing brand advertising amidst such inventory, the exchanges became the playground for direct response marketers, and rarely saw significant adoption from larger brands.  As such, machine buying was limited to a small portion of digital advertising budgets. Inventors saw this problem as an opportunity and created the first Programmatic Direct workflow technologies.

At Advertising Week in September 2013, AOL, Microsoft, and Yahoo announced an alliance to collaboratively create an industry-standard API and to make their premium inventory available through programmatic direct buying methods. This announcement validated the efforts of the early pioneers in Programmatic Direct and marked the start of the Bionic Age of digital media planning.

Instead of the man versus machine discussions of the Machine Age, we speak of man and machine in the Bionic Age. We use computers to automate the repetitive, mundane tasks to free us humans to do what we do best: be creative and strategic. Additionally, the Bionic age promises more than just web-based efficiency gains that replace Excel-based media planning. Computers are helping to put a layer of business intelligence in the media planning process that helps with determining media mix, creative decisoning, and budget allocation—processes that used to happen on “gut” instinct. More importantly, because publishers have control over their inventory and how it is priced, all of this automated buying can happen on high-quality, premium inventory for the first time. Unleashing high-quality inventory for programmatic direct buying is a watershed moment that nearly all publishers will seek to replicate—as AOL’s Tim Armstrong said in their announcement, “You’re going to have a hard time fighting the math on this.”

Like the Bionic Man and the Bionic Woman, Programmatic Direct technologies of the Bionic Age of digital media are enabling humans to achieve super-human results. As digital media spending breaks the $30 billion threshold and continues its stunning growth, it’s more important than ever to combine the efficiency of machines with the creativity of humans. In other words, to be bionic.

Joe Pych 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. 
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