NAB 2018

Automated Selling Coming, But Who Pays?

Broadcasters and agencies agree on the need to automate ad buying and selling, but problems persist, including incompatible automation platforms. The biggest roadblock, however, seems to be figuring out how to pay for it. “It is an unfortunate truth that neither side wants to pay for this,” said Videa’s Shereta Williams. “It is also an unfortunate truth that this is an expensive business.

LAS VEGAS — Midway through a panel session on automated selling of spot TV at the NAB Show this week, Shereta Williams, president of Videa, one of the suppliers of competing automation platforms, rose from the audience with a call for action.

 “You have got the [media] agency saying I will work with you when you have the inventory … and have got the broadcaster saying bring me an order,” she said. “The pool is warm. It’s ready. I am just saying get in.”

If only it were that easy.

As panelists and other audience members at the TVB-organized session attested, progress has been made, but tough technical and money challenges still stand in the way of fully automating spot transactions.

The pay-off for broadcasters is potentially big.

They believe — and buyers agree — that the current system of incompatible software, emails and even faxes is so costly and labor intensive that buyers are almost compelled to shift ad dollars out of broadcast and into cable and digital where deals are far more easily done.

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Panelist Frank Friedman, the president of the Publicis media agency who just completed an extensive automated trial, said he is convinced of its efficacy.

“We have proved out down on the front- and the back-end that it actually works. So, we have seen the ability to cut down the time and the friction so that we can go to clients and say: ‘Look, we can be as nimble as digital.’

“We had a lot of clients come to us towards the end of last year. We had a good Black Friday and dollars started to flow in. We were not even considered in the local space because it takes a month to execute the buys.

“Imagine if we could have brought these platforms to bear and say: Look we want to participate here.”

Friedman said a proper automation system could boost spot spending as much as 15%. “This is something we have to do.”

(During the convention, it was announced that Friedman would soon be joining E.W. Scripps as VP of consumer engagement.)

One of the panel’s other buyers, Heather Gundry of GTB, agreed. “The time that our people are spending doing the make goods and all of that has to go away. To Frank’s point, we could increase our spending 10% or 15% once we get rid of all of that.”

Sell-side panelist Gregg Siegel, VP of national sales for the Sinclair Broadcast Group, wasn’t quite as optimistic. Following the panel, he told this reporter that automation would probably not produce the double-digit growth Friedman and Gundry were suggesting, but that it could stop further erosion of the stations’ share of national advertising.

A big problem has been the emergence of incompatible automation platforms like Cox Media’s Videa, WideOrbit’s programmatic system and ITN’s ProAdvantageX. Because they are incompatible, stations and agencies would need different software for each one, adding a self-defeating layer of complexity.

But a consortium of leading station groups — Nexstar, Sinclair, Tribune, Tegna and Hearst — believes it has a technical solution: a set of open standards that would allow buyers and sellers to easily interact with any platform that adopt the standards, while imposing certain business rules on transactions.

Nexstar CTO Brett Jenkins, another of the sell-side panelists, said that the Television Interface Practices (TIP) initiative is well under way, and, “laser focused”; it will produce the necessary standards by the end of the year.

“The local TV industry in particular thrives on the diversity of players and that ability to innovate and do different things. We just don’t see a world where there is a single platform,” he said.

“So, we have got to get away from this walled garden idea. We really need to kind of think about a vision where multiple platforms can all exchange data and information.”

The set of standards will be a panacea, he said. “It really makes the vendor technology providers’ life easier, it … accelerates innovation, it opens the door to investments for people coming in trying to solve the harder problems of attribution and marrying stuff up to audience data and measurement with currencies that may or may not be accurate.”

Panelist Ed Busby, SVP of strategy at Tegna, said the standardized platforms will allow broadcasters “to compete in the things that really matter in the market, which is delivering value to both our audiences as well as our advertisers and really connecting the two.”

The other major sticking point is money. The vendors expect to get paid for developing, maintaining and improving their platforms. The buyers and sellers on the panel acknowledged that the vendors need to get paid, but nobody was reaching for the checkbook.

“It is an unfortunate truth that neither side wants to pay for this,” said Videa’s Williams. “It is also an unfortunate truth that this is an expensive business. It’s not free…. We are not being greedy. I don’t think anyone is being greedy.”

Also speaking from the audience, Bruce Roberts, president of WideOrbit, said that his company will cooperate with the TIP consortium and with other platform providers that need to integrate with its ubiquitous traffic system.

“That’s not the issue. The issue is how … does that all get paid for. It’s not cheap to develop and then it’s also not cheap to maintain and that’s part of the discussion that really hasn’t taken place yet either.

“I have approached you guys saying let’s together figure out some kind of fee or revenue model that’s fair and equitable to all.”

Roberts suggested the payments could come out of the savings from the reduced head count that buyers and sellers will experience once automation is in place.

“If we can provide efficiencies to the buy side, are you able to reduce your staff in the local department from 600 people to 300 people?” he asked. “Can the sell side then reduce their staff? Do they need 400 people on the streets selling that inventory? Can they reduce that down to 200?

Gundry was skeptical. Paying for the auction by cutting staff “is not going to work, she said.

Tegna’s Busby didn’t want negotiations to take place in public. “Let’s be clear,” he said. “I mean, what we are here to do is facilitate the communication, right?  We are not here to set the pricing for the industry explicitly.”

After the panel, Sinclair’s Siegel told this reporter that the vendors are asking for between 1% and 3% of the dollars that pass through their platforms. For many broadcasters, that would come on top of the commission they pay their rep firms, he said. That fee is typically 3%-6%.

Friedman said that some vendors may have to lower their expectations. “It may not be a winner takes all. It might be a lesser payoff for the good of everyone so that it actually succeeds. That’s the process that we are going to have to go through. There is only so much money to pay the toll.”

In addition to more ad dollars, automation may benefit stations and buyers in other ways, the panelists said.

Siegel said it will help broadcasters hire better people for “higher-level selling.” Some don’t want to work in local TV because it means being mired in the “nuts and bolts” of transacting the business.

Friedman said that buyers also want to avoid the transactional hassles so that they can do other things like bring Big Data into their advertising buys.

Tegna’s Busby said automation opens up opportunities that are now closed. “We are missing … the chance to incorporate innovation, the chance to take data in, the chance to finally be able to have the conversations with clients that we have wanted to have for years about how one piece of the funnel impacts another piece.”

Busby said the broadcasters’ TIP initiative is setting the pace for widespread automation. “It’s moving faster than even several of us have hoped. Obviously, all of us want it here tomorrow, but I think this is a pace of acceleration that this industry has rarely seen before.”

Read all of TVNewsCheck‘s NAB 2018 news here.


Comments (7)

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Brian Bussey says:

April 13, 2018 at 9:38 am

“Can the sell side then reduce their staff? Do they need 400 people on the streets selling that inventory? ”
of course they do I ! No software can match the value I bring to my station. I specialize in garnering unfair shares of business for my station. I made that my job description 20 years ago to protect my job. Of course the agencies want fewer local reps on the street. Its no different than shade trees killing the grass under its shade umbrella so it wont have to share the water. The agencies know their leverage would be multiplied if there is less demand on inventory. I have trained my local advertisers to love preempting underpriced national buys. Share of voice wins the retail war every weekend. This article is about selling delusion. It is also about laying of thousands of college grads and shifting their income into the pockets of the incapable. I also take offense to the comment about hiring higher level sales people. How about training the sales people you have. ? You actually would have to have some experience to do that.
This is just the latest example of people with no people skills trying to engineer sales commission out of seller pockets and into their own. That B.S. about being nimble with copy changes when away with tapes. We can flip copy in minutes. The agencies have no interest in speed of service. They always have the stations to blame.

    Amneris Vargas says:

    April 15, 2018 at 2:32 pm

    The goal is to gain more national business (or stem decline) by making local easier to place and reconcile, starting with taking friction out of the pre-empt and make-good process.

Snead Hearn says:

April 13, 2018 at 9:48 am

After reading some of the “soundbites” from the corporate suits it may be time to have the people who actually do the work to take over. TIP setting a pace of acceleration that this industry has rarely seen before also tells a story.

Rachel Fowler says:

April 13, 2018 at 10:55 am

“Roberts suggested the payments could come out of the savings from the reduced head count that buyers and sellers will experience once automation is in place.” Former Rep indeed. And ditto what HopeUMakeit said…

Don Richards says:

April 13, 2018 at 12:22 pm

A lot of this conversation is only relevant for large market stations that are mostly transactional sellers. As you get down to the middle and smaller markets where local direct business becomes the major player, none of this applies. In those markets management (LSM, NSM, GSM, GM) handle the big regional dollars. The rep (or the NSM) handles the national business which is usually sold at the lowest rate of all the inventory sold. The local sales team accounts for the majority of the dollars. Those local sales are made based on relationships and knowledge. Smart stations train their sellers to be consultants so that selling spots, digital, or any other product is part of a solution. Those local businesses do not have the time, skills or inclination to move to an automated system. Those clients need their TV salesperson to come in with ideas, suggestions, recommendations, etc., and to act as an in-house marketing department. Programmatic selling is fine for the commodity sales (reps, DR, unwired, etc.) but it will never replace the local AEs if you want to continue to generate local direct business (which, ultimately, is the only revenue stream you control).

    Brian Bussey says:

    April 13, 2018 at 3:58 pm

    I am writing from a big market. We grow local advertisers to the point where national agencies come in a pitch them. Our tier 2 auto groups are 15+ million dollar accounts. The only pitch national agencies make is lower rates which is offset by insanely expensive creative.

Cheryl Thorne says:

April 13, 2018 at 8:34 pm

The commodity brokers have taken over and the value sellers…the small market Joe’s and Sally’s, wont be able to keep up..Hence local TV (media) is a declining business…why?/The Advertisers don’t’ give a F about value because most of their products are commodity businesses..Look at the Dow 30 stocks..Not too hard to figure out..


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