Programmatic: The machines only replace those that want to be replaced

By Brendan Coyne | 9 October 2013
Kirk McDonald: Australia's publishers are at the inflection point.

Programmatic trading will only replace the people that want to be replaced. Madmen and mathmen are both required and the companies that have come to Australia trying to play both sides of the game will get found out. That's the view of PubMatic president Kirk McDonald.

McDonald has a bit of experience in digital publishing. Before PubMatic he was president of digital at Time Inc, and before that he was chief advertising officer of the Fortune Money Group. He also had long stints at CNET and DrivePM/Atlas. He started selling ads on CD-ROM in 1995.

For the next nine months he's booked out the red-eye from New York to be in Australia and, more broadly, Asia Pacific. The difference he sees between programmatic in the states and Australia is that "in terms of execution, the market is still about 18 months behind … but in terms of market understanding it's as good as anywhere in the world".

The market knows what it wants to do, he told AdNews. "Pulling the trigger is the next step."

The good thing about that lag is that Australia will avoid the mistakes of other markets. Chief among those is the perception that programmatic will be all or nothing, man or machine. He describes it as the pendulum of extremes: "Either programmatic is not working or fire the sales force."

That is not the world in which we we live, he said. "There has never been a time in history where it is all art or science, black or white. We live in a world of balance."

That balance requires “both madmen and mathmen” and both the creatives and the scientists have used data to inform their instincts, McDonald said. “There has never been a time when the madmen were not doing market research and working out whether what they are doing is working.” The only difference now, he says is that the signals are coming thicker and faster from many more sources. “It's just a faster cycle.”

Automated trading is “problematic if it is only programmatic”, he says, and the smartest publishers are using it as a tool to deliver an effective execution strategy. People are still in charge, said McDonald, technology is the enabler.

McDonald believes that "the only people that will be replaced by technology are those that want to be replaced". Programmatic is new here and there is a talent shortage. Those that can reinvent themselves will find opportunity.

“There is no magic formula. You have to invest in the local market. In the long run that is good but it's tough in the short term. The good news is that the industry is growing so fast that if you devote yourself [to programmatic] you can rapidly get up to speed. So I'm not too worried about the long-term aspect.”

In the short term, PubMatic is "flying in platform knowledge from around the world to train smart media and tech people and get the wrapped on our strategy". That strategy is "all about solving the publishers' problems" and not trying to play both sides of the game, said McDonald. He reckons that those providers that do serve two masters, claiming neutrality between the buy-side and the sell-side, will be found out and the market will shrink to a sustainable size.

Right now, it's overweight.

“There are 500 companies claiming to create unique value between publishers and advertisers. You know the numbers are wrong. It is not two and it is not 500, it's somewhere in between. Something has to happen.”

What McDonald thinks might happen is that those that have “traded on the ignorance of buyers and sellers” will all get shaken out.

“If you can't or won't answer who your customers are and the value that you bring you will get found out. You can't write the code to answer two questions.”

While there has been much talk of data in Australia not being up to scratch, McDonald believes that publishers have all the data they need, but the investment to extract it has been too scant.

“If you are a magazine publisher you are sitting on eight to 12 subscriber data points: name; address, gender; demographic; interests. The question is, so what? What have you done with it? What have you done to create more engaged experiences and a personalised ad experience? Publishers understand what they have to do. They just haven't executed it yet.”

That's what the firm is here to do, said McDonald: “Take data and use it to raise the price of impressions in the market.” That should be an easy sell, but “some people who got here earlier made [publishers unsure]”.

Now though, the publishers are less wary. McDonald thinks it is their best chance of winning the rapidly changing game.

“I think publishing can win. I spent years in publishing but joined a tech company to help ensure publishers keep winning and right now I think we're at the inflection point.”

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