Automated trading “inevitable” for all media

Videology’s head of global TV strategies, Rhys McLachlan, has said that all media will become programmatic as automated trading desks witness new levels of growth.

Speaking to Newsline at MediaTel’s 2013 Automated Trading Debate, McLachlan said it will be very difficult to “fight the rising tide” of automated trading, “irrespective of your media.”

Automated trading, which sees electronic platforms used to enter trading orders with an algorithm which executes pre-programmed instructions, has seen steady growth in the UK ad industry, but still only represents around 20% of all trading according to some estimates.

The automated trading systems, currently, are also focussed on a fairly narrow slice of the media, but they are expanding and evolving.

McLachlan has said that 50% of video ad impressions in the UK market are now programmatic and it is moving quickly into audio, cinema and digital out-of-home – even, in some instances, direct to set-top boxes.

A range of trading desk specialists also confirmed the growth of automation and the “inevitability” of its impact outside of online.

“Targeting has become more sophisticated; there are more media buyers coming into the system and more formats have become available,” said Adam Pace, managing director of Annalect Markets. “That has made it more attractive to advertisers who can now find value or price differentials in better ways.”

Pace argued that the industry can expect to see trading desks continue to grow, noting that now media owners have put more inventory in them, “the potential is unlimited.”

However, he argued that in some media there was less of a financial case, particularly with radio which already has a “very efficient value chain,” and low costs. Yet digital streaming is likely to change that in the longer term.

For broadcasters, there are other issues, with Channel 4’s sales director, Jonathan Allan, worried about protecting the first-party data from the channel’s VOD platform, 4OD. He also asked why anyone in broadcast would enter into a new way of selling inventory if it reduced their yield.

“But if the trading desks can persuade us to we can improve our yield through better targeting, better use of our inventory and deliver better returns for us, then we’d be bang up for it,” he said.

Yahoo!’s VP of display solutions EMEA, Nick Hugh, added that most of Yahoo!’s video was not transacted through trading desk, but sold direct, suggesting there is still some way to go for video.

Perhaps surprisingly, there was a notable presence from the outdoor media sector in the audience, demonstrating a desire for the out-of-home sector to learn more.

Jason Cotterell, country director of CBS, said there is “no reason why we couldn’t use an automated process to reduce the cost of sale.” He also believes that the move to an automated system “would allow out of home to move towards an audience based sale.”

Senior executives from Primesight and Kinetic Worldwide also see the value in moving towards an automated future, particularly now Route is providing robust audience data for the sector.

However, Cotterell argued that there is long way to go, noting that online is still testing the waters in some sense and that it will be a “big leap” to automate a very traditional medium like out-of-home.

“We also need to make sure,” he added, “the media agencies don’t cherry pick the bits that they like about automated trading that don’t necessarily meet the needs of clients and media owners.”

Pace has said that it is actually print that was the most interesting opportunity – it already has online brands and the print transaction is the easiest to make work with automated trading desks, suggesting it is a natural progression.

Currently, the newspaper industry is looking to set up a new trading system, but as Mediaocean’s Sarah Lawson Johnston noted, it’s a “very early days” with a tender for an operator still open. Yet she still argues that “it will advance massively in the next year – and then comes programmatic.”

See also: Transparency ‘still a barrier’ to automated trading

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