Wednesday, July 16, 2008
The Infrastructure For Automating Media Planning
By Cory Treffiletti The rapid growth of SEM management services, the ad networks and ad exchanges, and the development of various toolsets in the marketplace, point to the automation of much of the online media planning, buying and management process in the next two years. But in order for this to happen, we need to address some infrastructure concerns.
I've stated many times before, in many, many meetings, that at least 70% of our business can be automated. Forty percent of all online ad dollars are allocated towards search, which has proven to be able to be massively scaled and semi-automated using the tools in the marketplace. Of the remaining 60%, at least half (based on my estimates) is spent on ad networks and against ROS or RON general inventory, with larger sites at a low cost CPM.
These buys are optimized against CPC, CPA and other metrics, most of which can be entered into a system and automated. That translates to about 30% of all online budgets on top of the 40% allocated to search -- which means 70% of the online budgets should be able to scale and be managed via automated, or at least semi-automated, systems. That doesn't mean there will be no creativity in our sector; it means that the remaining 30% of the budgets (not an insignificant amount of dollars) is allocated towards a craft. It is allocated toward sponsorships, integration, promotions and more creative uses of the budget. This is where media planners can apply creativity -- and this is where they should be focusing their time and attention.
Automation is inevitable, if you examine the forecasts for spending against the category, versus the issue of human resource capital that is obviously facing our business. Simply put, there are not enough people to handle the current jobs - a problem that most likely will not be fixed in the next two years. No; the answer lies in automation, but for that automation to occur, we need to see some standardization in the basic part of the business.
First of all, we need to see the industry create standard lead times for planning and implementing campaigns. We can't have every other client ask for a campaign to be planned and implemented in 48 hours. This process creates errors and inefficiencies because people overlook the details.
Second, we need to see these tools tied into inventory management systems on the side of the publishers. Ours is a dynamic marketplace and the back and forth between sales reps and planners creates inefficiencies because the market moves faster than they can. Supply and demand are changing rapidly; trying to keep up with these changes causes rifts in relationships that would be avoided if the process were automated.
Thirdly, and this is possibly the hardest infrastructure issue to address, we need a formal training process for these tools in the marketplace. When you work in television, you learn Donovan Data Systems at the same time you learn how to use Excel. It's just a basic tool. Agencies need to invest in the future of training and using these tools, by either partnering with the folks creating them, or flat-out buying those companies and tailoring them to their needs. Some agencies have gone very far down this road by creating their own analytics systems, but these need to be earlier stage and applied to planning. If not, this situation will just get worse over the next two years.
And, yes, I keep saying two years because I think that is the crucial time period. I assume that the current recession in the U.S. will last another 12-18 months and we will see an upturn going into year two, which gives us that time to get our ducks in a row, so to speak.
So if you are working on these tools, let's get moving already. If you are in need of these tools, let's get a movin'! Time is a wastin'!
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Cory is president and managing partner for Catalyst SF.
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