A Race to the Top

By January 6, 2014 January 7th, 2014 clypd, clypd Blog

TV inventory owners are right to be reticent to embrace programmatic advertising. They witnessed first-hand the downward price pressures that on-line publishers experienced with programmatic buying. Even Marissa Mayer has noted this problem at Yahoo when she observed that Yahoo’s display advertising business was negatively impacted by shifts around programmatic buying. As an industry, those of us in ad tech have incorrectly associated “programmatic” with particular buying models, technologies and timelines, and as a result we’ve unfortunately negatively molded the perception of the strategy. Programmatic is simply the ability to leverage data to make smarter decisions when buying and selling advertising while bringing some level of automation to the process. Most will agree the ability to layer data creates value on an impression-by-impression basis. In theory, the inventory owner gets the maximum value based on the quality of their audience and the marketer gets maximum benefit by reaching the right target. Unfortunately impressions are doubling on-line almost every year so supply is becoming limitless. Thankfully TV does not have this problem. In fact, the opposite scenario exists – demand outstrips supply. As we learned in Econ 101, price is a reflection of supply and demand. So there is validity to the “race to the bottom” that many publishers fear in on-line advertising. TV inventory owners however have a massive opportunity to cash in on the limited supply of their premium inventory. By leveraging data + automation (programmatic) TV asset owners can now jump in and thrive on what we call a “race to the top.”

Over the past year the clypd team spent considerable time meeting with inventory owners from cable, satellite, telco, broadcast and TV networks. We’ve had healthy discussions about the unique situation they have with excess demand and limited supply. They see additional revenue generating opportunities if they make their inventory available to marketers for data -driven, audience- based buys rather than the traditional age, gender, GRP – based TV buys. The pressure of fragmentation, competition from the web and the strong interest from the buy -side has convinced them to move. They know they need a programmatic story, they want to play in this space and they want help. They just don’t want help from everyone that is offering it to them today – the buy side. These instincts are sound as the TV asset owners are likely to lose control if the very help they seek comes from partners that grew up servicing the buy-side. Any way you slice it, if you come from the buy-side, it is impossible to remain neutral to the sell side. Buy-side companies that get paid to find the lowest price for the target audience do not have the best interest of the supply-side in mind. At clypd, we built our platform from the ground-up exclusively for TV. The platform is designed to help TV inventory owners enable programmatic access and put controls in place that protects the value of the inventory and drives the value up, not down.

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By leveraging programmatic, TV inventory owners will capture incremental revenue from new digital buyers that have never had access to TV’s premium inventory. New revenue will also come from traditional TV buyers that will secure additional budgets if they can move beyond age/ gender/GRP to audience-based, programmatic buying. Technology hurdles exist to make all of this happen such as integration with legacy trafficking systems, billing systems and ad servers and the development of new processes for creative approvals, attribution, reporting and ad verification. These are challenges the clypd engineering team embraces however and much of this functionality is already built into the clypd platform. Just as important, we are helping our supply partners “find the new scarcity” in their inventory using data. As an example, overnight inventory is often sold by TV inventory owners to direct response advertisers at CPM’s below $3. Through clypd’s audience modeling and data science, we may determine this particular inventory heavily skews toward auto intenders- one of the most sought after targets for audience-based buyers. Suddenly our supply partners can monetize their inventory at 4-5x the normal rate and reap the profit from the upswing in CPM’s. Some companies today buy inventory in a manual fashion at low rates, attempt to dress it up with data and then sell it at a higher rate than purchased. This is a classic arbitrage play that ticks off the inventory owners. At clypd we provide new tools and automation coupled with data science and yield management algorithms that allow TV inventory owners to find the new scarcity in their inventory and make sure it is sold at maximum CPM rates. The net result is they effectively arbitrage their own data and eliminate the middle man. This is a long-term sustainable solution that delivers maximum revenue for years to come.

Now that sounds like a race worth running.

As clypd’s EVP of Business Development, Doug makes sure that clypd is always racing to the top.

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