The shifting tides of video advertising

By: Phil Duffield  Published: May 2, 2012

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Life is changing: we don’t use travel agents to book flights anymore; we can do all of our banking digitally; there’s no need for record stores with music just a mouse click away; and our friends stay in touch through social networks. Virtually every facet of life has experienced a transformation from old, manual processes to a newer, more automated way. So, if we value the conveniences offered by self-service and automation, why are we still trading advertising like we did in the 1960s?

Well, the truth is, it is changing. The old way of buying the advertising space for television, which was grandfathered into the digital media business, is dying out. What was once a logical way to buy video real estate has become time consuming and costly in today’s digital world. While there are many similarities between TV and digital, the fluidity of online purchasing capabilities has made the traditional process inefficient to a fault, having a direct impact to bottom lines. The television model for digital media buying simply takes too much time and labour to be valuable to video advertisers. In short, the time has come to usher in a new and improved way to buy and sell video advertising.

As we’ve seen in the recent comScore rankings, there has been an influx in the volume of video ads traded using self-service and automated buying tools. This proves that the industry is moving towards a more programmatic way of buying and selling media. But what exactly is ‘programmatic buying?’ Michael Greene, senior analyst at Forrester, defines it best as a process that, “is largely about creating workflow efficiencies through increased automation – both within and outside of auction environments.”

Automation and programmatic buying is making its mark on Australia with InviteMedia and Mediamath both launching here and in the video space. Agencies are beginning to understand the benefits of the programmatic solutions that brings and revenue will only start to increase in this area. Forrester predicts RTB spending will reach $667 million in the US by 2013, that represents a 251% increase, Australia has a long way to go but the signs are already there.

So, at least, programmatic buying and selling will triumph over the inefficiencies of the last century, such as the tedious and time-taxing request for proposal (RFP) approach. The biggest driver for a more automated way of carrying out media transactions is the greater returns for agencies and publishers. Nothing instigates change like dollars and cents.

Programmatic buying has already seen tremendous adoption around the world and is likely to not only transform how video is bought and sold, but scatter television as well. Just as removed the need for a storefront by offering a better shopping experience online, programmatic buying removes the constraints of a physical ad buy. The only question that remains is, how long until we see the demise of the RFP? Let’s hope it’s not too slow and agonising. No one enjoys an overplayed death scene.