I spent the early part of this week at UBS’ 42nd Annual Global Media & Telecommunications conference in New York City: the must-attend for all investors in media firms since virtually every major media company CEO attends, and much news is made.
On Monday, I was part of a panel on the Evolving Advertising Landscape with UBS’ Eric Sheridan, one of the top analysts in the ad and media world.
He sent us some questions in advance of the session to prep. I thought that sharing some of those questions — and my answers — would be a great way to give you a sense of the issues we talked about.
Here they are:
Eric Sheridan: Attitudes towards automation (advertisers) – How do advertisers view the pros and cons of automation? Have there been any notable changes in this view over the past 12 months? How do you think this will change over the upcoming year?
Dave Morgan: I think that advertisers have been chasing automation for not all of the right reasons. They are trying to use it to drive costs down — and they are also doing it because their agencies are pushing them into programmatic, many times because the agency has intermingled its economics with the economics of the programmatic vendors.
Advertisers should look to automation as a way to shift their focus from just buying media outputs to buying business outcomes. It is a path toward making media just a component of revenue management and ROI.
ES: Attitudes towards automation (media owners) How do media owners view the pros and cons of automation? Have there been any notable changes in this view over the past 12 months? How do you think this will change over the upcoming year?
DM: Their motivations in looking to automation parallel advertisers’ motivations. Media owners are now starting to move on automation – but many face an ‘innovators dilemma’, in that if they embrace and promote audience and automated ads too quickly, they might accelerate a shift from content-based TV ad buying, the bread and butter of their ad business today.
ES: Adoption hurdles – For the industry, broadly, what are the big hurdles to seeing increased adoption of automated solutions? On which side (i.e., advertisers vs. media owners) does greater friction reside?
DM: The biggest hurdle to adoption of new technologies in TV is the protection of legacy business, margins and relationships. [It’s hard,] moving from a cost-centre-managed world to one where buyers and sellers transact on outcomes, and ROI is counter to those born into a world where ‘efficiency’ rules. Many lack skills to transact and succeed in that work. Most lack experience operating in worlds where you place total trust in data, science and software. Navigating that shift is hard.
ES: TV to digital shift – As consumers spend more time on digital media and less time watching TV, are you seeing advertisers modify their approach towards video advertising across those channels?
DM: Yes, advertisers are modifying their approach towards video, though I believe that many have over-shifted into digital video, spending on it well before there was appropriate inventory and ROI.
ES: Programmatic TV – How would you assess the state of programmatic TV? As you consider the end-to-end process of buying and selling TV ads programmatically, where is there room for the most improvement? How does this compare to digital display?
DM: Programmatic TV is a press release that is 98% hot air. TV ads are not going to be bought and sold like display ad inventory anytime soon, if ever. Yes, the industry will automate and will certainly become audience-based and algorithmic, but not like what many of the press releases I read say.
ES: Opportunities and challenges – As you look ahead over the next 12-24 months, what are the biggest opportunities? And what are the biggest challenges?
DM: I believe that the themes in 2016 and 2017 will be big shifts to buying TV media on guaranteed ROI, and marketers taking direct control of much of the process. We will start seeing TV insights, planning and outcomes becoming part of marketers’ enterprise data systems. It won’t happen overnight, but it will begin to happen over the next two years.
So (readers), what do you think?
Dave Morgan is the CEO of Simulmedia in New York. Previously, he founded and ran both TACODA and Real Media. Follow him on Twitter @DaveMorganNYC. This story was first published on MediaPost.com
