Analysis: Programmatic Media Is Missing Something Big

AdFin logoEvery day we read about the rapid rise of programmatic media, now a $20 billion market with daily volumes 100x the size of the NASDAQ.  At the same time, headlines proclaim the tarnished nature of programmatic: fraud, suspect viewability, brand safety, and the “black box” model.

So, is an industry dominated by programmatic media a fait accompli?  Perhaps.  But, before we declare programmatic the de facto future, let’s be clear. It’s missing a key ingredient on which all efficient markets rely: independent sources of unbiased intelligence and information.

Andrew Altersohn, AD/FIN CEO

As Nobel Prize-winning Stanford economist Alvin Roth noted in his book “Who Gets What — and Why”: “Markets depend on reliable information” — information that’s trusted, timely, and equally available to all participants. It’s what drives confidence.  Without confidence, there is no trust. Without trust, there is no market.

Take it from someone who’s seen this before: Tom Glocer, former CEO of Thomson Reuters, who told me, “Over Reuters history, we helped many markets make the transition from small, thinly traded, opaque venues to large, efficient and transparent exchanges. It feels to me that programmatic advertising, after a very promising start that has borrowed trading technology from the financial markets, is ready to make this important transition.”

As larger parts of media budgets flow to programmatic, new questions are being raised that only independent sources can reasonably assess.  We see it in fraud and viewability, where multiple independent solutions have come to market.

But what about more basic questions buyers are asking: “Where did each dollar go?” “Did I pay a competitive rate?” “Did I get a competitive return?” To address these and other questions, programmatic media needs independent tools that analyze, track and benchmark each step of the value chain.

Media Is No Different

This is not new news.  Today most people don’t transact without having a go-to resource for independent information: from stocks (Dow Jones, Reuters), to cars (KBB, CarFax), to real estate (Zillow, Trulia).  Why should media be different?

This is not to say impressions are commodities. In fact, impressions are like snowflakes: no two are exactly the same. But, then again, no two pieces of real estate are exactly the same, yet you wouldn’t buy a new house without reviewing independent price and market information.

Market-Based Benchmarks

To achieve maximum value, information must also be put in context, e.g., benchmarks and standards. Otherwise it’s impossible to gauge whether outcomes are good or bad.  For example, learning you received a 10% return on your money sounds great — until you learn that the market was up 20% during the same period. Only when goals are measured against consistent, industry-accepted benchmarks can we determine the real winners and losers.

Asymmetry In Application, Not Access

Will programmatic continue its exponential rise and become the robust marketplace many envision?  It can, but only if independent, honest brokers of information are made an integral part of the mix.  If history (and economics) have taught us anything, it’s that markets thrive on the asymmetric application of information (I’m smarter/faster than you) and not on the asymmetric access to information (I know things you don’t know). That kind of asymmetry kills markets.

Let’s not let this happen. Let’s foster programmatic’s future by building independent sources of unbiased intelligence and information.

Andrew Altersohn is CEO of AD/FIN, which brings financial style intelligence to programmatic media markets. This piece was originally published in MediaPost.