The Digital Big Bang

Blog posted by James Brown
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James Brown, UK MD, Rubicon Project reflects on the impact digital has made and continues to make, and looks at the promise of automation.

From travel to the car boot sale, a number of industries have been turned on their heads by digital in the last decade. eBay started out by selling PEZ dispensers and now sells a car in the UK every two minutes, while Sabre Systems has grown from selling unsold airline seats to powering all flight ticketing, not to mention hotel bookings. 

Though no industry has a direct parallel, it’s interesting to see the effect automation has had on finance, and on the London Stock Exchange in particular: when its Stock Exchange Automated Quotation System was introduced in 1986, even the most bullish observer couldn’t have predicted the impact it had. Only a year after this ‘screen-based quotation system’ was introduced, the LSE did as much business in a month as it previously did in a year.  Since then, its turnover has grown from £1bn to £16.6bn per day.

Parallels in the World of Advertising

Up until the last few years, the tools used to buy and sell advertising in digital had moved on very little from the days of print. Fax, email and Excel (and more often than not, emailed Excel) were the most commonly used, in an overwrought, inefficient process which involved more than 40 different stages and a dozen pairs of hands. It was time-consuming, error prone and out of date. The overheads incurred also hampered the growth of the digital ad market, especially as compared to the relatively lower fixed costs in the world of linear TV. 

Fast forward just a short space of time, and automation, or so-called programmatic technology, has come to the fore. Replacing the traditional paper insertion order and fax, these smart digital platforms that handle the mundane, repetitive tasks around the ad trading process have proved a hit. The UK Internet Advertising Bureau (IAB) even suggesting that almost half of all digital advertising in the UK was transacted in this manner already in 2014. It says that number may reach up to 80% by 2018.

While some in the industry feared at first that automation meant the rise of the robots moving in to take their jobs, there is increasing acceptance across the board that, instead of replacing them, automated advertising is instead simply allowing people to focus more time and energy on higher value tasks, campaigns, customer retention and above all, more creativity.

A Continuing Evolution

As in the financial markets, advertising automation has enabled more buyer activity due to easier access. Sellers might now run tens of thousands of advertisers per month instead of several hundred, and as ever, higher liquidity means higher yields. 

That said, despite impressive growth worldwide, up to this point automated advertising has been restricted to buying and selling impressions on a real-time basis, especially since moving rapidly from its origins in lower value to higher value deals and direct orders.

A key factor in the Digital Big Bang’s continued evolution is its move in focus from real-time unsold inventory, towards factoring in availability or guaranteed future delivery over a set period of time: before now, this so called ‘direct’ advertising was limited to the paper and fax transaction methods of old. But that is now changing, as so-called ‘automated guaranteed’ comes to the fore in 2015.

And why is this latest development so important? In short, the potential of automated guaranteed far outweighs all that has come before it, with research firm IDC forecasting it is set to grow from $10bn worldwide next year, to $41bn in 2019[1].

It is our belief that automated guaranteed will form the next great wave of change in the advertising industry, as all campaigns can effectively be transacted programmatically.

This will enable buyers to access the inventory and audiences they want more easily. And for advertisers in particular, it will mean greater media efficacy, knowing more money is going to the media itself rather than operational overheads.

For sellers, automated guaranteed promises its own significant shift: a move from the manual work and frustrations around trafficking and delivery, to a higher value focus on campaign optimisation – which for so many up to this point has been little more than a pipe dream. 

The Digital Big Bang

As noted earlier, the role of technology in revolutionising entire industries is repeating itself again and again. From eBay and Sabre Systems to the more recent examples of Uber and Airbnb, time and again we see digital platforms bringing scale, connectivity and new liquidity.

And this dual network effect of growing each market as well as improving the user’s experience of it is exactly the same process we’ve also seen in the London Stock Exchange since its transaction process was automated. 

With the emergence of real-time bidding, the advertising industry has seen its own Digital Big Bang develop. And its latest iteration is potentially the most exciting yet, promising greater efficiency from top to bottom of the ad stack and across all screens.

Automated promises to be a game changer for the entire industry.

[1] IDC Digital Advertising Market Model, June 2015

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