The future is programmatic and will be good – Media & Advertising

João Paulo Luz, digital business director and publishing company at Impresa

On October 27, 1994, HotWired.com, now just Wired.com, published the first banner in web history. It was a simple banner that said “Have you ever clicked your mouse right HERE? YOU WILL” as part of an AT&T campaign.

It will have been the first digital campaign, registered an impressive 12 percent CTR, a value 60x higher than the 0.20 percent average that the famous m-recs achieve today. The success of the campaign promoting AT&T’s new technology offerings was so high that it sparked huge demand from other advertisers, for HotWired.com but not only. And that is how, between 1995 and 1996, the first ad servers appeared to automatically respond to the management of available page views in view of the impressions that advertisers were looking for for their banners. Reminding us that there are undeniable advantages in being a first mover, it was in 1995 that DoubleClick was created in New York, which was acquired in July of that year by private equity firms.

Even before the turn of the century and in the heat of the dot-com bubble, the first Ad Networks also began to emerge, aggregating and scaling the offer of various sites, facilitating transactions with their advertising buyers. Although the stock market crash of 2000 temporarily cooled the market, its rapid growth remained unstoppable and, around 2004, with other bandwidths available, the first rich-media formats appeared (video ads, layers and intersititials ) which, taking advantage of flash technology, brought another impact to the communication of brands on the web.

And it was between 2007 and 2010 that the first Ad Exchange projects were developed, giving rise to what we now call programmatic purchase. In these Ad Exchanges we already had a huge list of buyers competing for the same impression, with the decision of which one won the election being made in real time based on the price each one was willing to pay. It didn’t have the complexity of today but the principles were already the same.

It is also around this time that one of the most important deals for the digital advertising industry takes place. On April 13, 2007, Google proposes to acquire DoubleClick for $3.1 billion in cash. It was a huge value, but it was also the acquisition of the market leader in Ad Serving, which led to the expression of reservations by the competition authorities in the US and the European Union. Microsoft added its voice to those reservations by saying it feared that this acquisition would give Google too much control over online advertising.

Despite reservations and discussion, on December 20, 2007, the Federal Trade Commission approves the acquisition of DoubleClick, initiating Google’s large dominance position in the online advertising market and later in the programmatic transaction, in which the The acquisition of DSP Invite Media, in June 2010, was another piece in the solidification of this leadership.

By 2021 it will not be an exaggeration to say that there is no doubt that all online advertising purchases will be programmatic. If we describe the process in a simple way, the advantages that programmatic buying introduces to both buyers and sellers are evident. Let’s imagine that we have hundreds of campaigns that want to buy mrecs on the Expresso website today. It will be easy to admit that not everyone is available to pay the same price, and that not everyone intends to impact the same user profile (grouped into segments typified by the most popular DMP). On the side of those who sell, Expresso in the example, it matters that the campaign chosen at each moment is the one that pays the most, a task that was impossible to perform manually, assuming that advertisers want to be able to change the price at any time.

Without going into great technical details, the programmatic allows efficiency for those who buy and for those who sell and should also bring transparency to the market. Everything is recorded and can be reported to both sides of the transaction. Buyers could know how many times they bid and lost and sellers know how many bids competed, so they can manage minimum prices on their side (floor prices) and know who is looking for them.

But it was exactly at the point of transparency that the industry lost its balance. In this auction, as in any other, having access to more information brings a huge advantage to any of the players, whether seller, buyer or intermediary. If we imagine that there is a player who is all three things at the same time and who, being an intermediary, knows the competing bids and can adapt theirs, the idea immediately arises that we are facing the best possible deal.

All too simply, this is what is at stake in the 220 million euro fine that the French competition authority imposed on Google at the beginning of this month of June. Google did not acknowledge guilt but preferred a settlement to litigation, committing to a series of measures that the French regulator will have demanded. Note that Google is not the only one trying to completely dominate the chain but is, by far, the dominant force in this market.

It is not the first time that an aggressive and skillfully executed strategy has led a company to a dominant position in a sector, but it is the first time that programmatic buying has seen a fine specifically aimed at the advantage of using information that is only accessible to who is the protagonist of the entire process.
We already knew that the future would be programmatic, we learned that it could still be good for everyone.

*By João Paulo Luz, digital business and publishing director at Impresa


Source: Meios & Publicidade by www.meiosepublicidade.pt.

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