AOL held its first "Programmatic Upfront" tonight, bringing together a packed house of agencies and brands to hear multiple executives and guest speakers pound home a double message that data and automation are poised to revolutionize advertising, just as they have done on Wall Street. From a purely news standpoint, AOL announced 3 specific things:
1. Clients will be able to buy reserved premium AOL inventory programmatically through the company's AdLearn Open Platform (AOP) beginning January 1, 2014.
2. Major agencies including Accuen, Amnet, Havas Media, Horizon Media and Magna Global have all made programmatic commitments for 2014 (sizes not disclosed), with DigitasLBi, Razorfish and VivaKi considering.
3. New features in AOP including real-time bidding through private marketplaces, cross-screen inventory buying with frequency and optimization, and availability of all ad units for programmatic buying.
The data/automation message was weaved throughout all of AOL's executives' and guests' presentations. Executives cited a range of 40-60% of ad spending lost due to the inefficiencies of manual work. Though AOL believes programmatic processes will eventually automate a large part of the ad buy/sell process, it still sees a place for direct sales and more customized campaigns. This co-existence or "barbell strategy" as AOL calls it, will become the norm.
While programmatic has been a big theme in the digital advertising industry, it has become core to AOL following its recent acquisition of Adap.tv. AOL is trying to bridge the world of TV and online video advertising by making more efficient programmatic tools available for video ad buying, which it believes will help reduce friction and unlock bigger budgets online. As well, it seeking to infuse more data in the buy/sell process, for improved targeting and ROI.
From a practical perspective, for video, AOL has an inherent advantage in driving programmatic forward: much of its video viewership actually comes from its 3rd-party syndication network of major publishers (AOL was ranked #2 in unique viewers by comScore in August). To the extent that AOL can demonstrate for these publishers that it can help monetize video better and more efficiently using programmatic, it will accrue valuable proof points that will move the larger industry forward. In other words, AOL isn't just promoting a technology approach; rather it has the ability to incrementally put it into place in cooperation with its publishing partners.
It's still early days for programmatic and traditional concerns questions around scarcity, channel conflict, pricing control, inventory value, etc. won't go away over night. But AOL is clearly positioning itself on the leading edge; as programmatic gains, AOL will as well.