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All Animals Are Equal

February 26, 2015

“All animals are equal, but some animals are more equal than others.”
George Orwell, Animal Farm

Is every pair of ears worth the same amount to every advertiser? The answer is no. Certain audiences are worth substantially more to a given advertiser, depending on the age, sex, race/ethnicity, or geographical makeup of the audience and how well that audience matches the consumers looking for a particular product or service.

The term “programmatic buying” is everywhere in the advertising industry these days, but not everyone understands what it means. The broadest, simplest definition of programmatic ad buying is the use of technology to automatically execute digital advertising transactions.

At first this process was aimed strictly at digital inventory. That makes sense, as the digital fingerprint each of us has on our computer, tablet, or phone can be quickly scanned and the appropriate advertisement can be dynamically served to each of us. This type of programmatic buying is also referred to as Real Time Buying (RTB).

In the digital space, where there are too many potential touch points to count, the use of computers to negotiate the transaction and choose which ads to serve to which people makes sense. It’s not realistic to think that the traditional media planning-buying-selling process could work effectively in this environment.

I hear some of you asking “why is this important to the radio industry?” Recently, advertisers have begun to look at the efficiencies gained by executing digital campaigns programmatically, and some have expressed an interest in applying that technology to traditional media inventory. Because we don’t have a digital fingerprint of every listener that can be accessed on the fly as the avails come down, how will the computers decide which inventory is more valuable to which advertiser? Cost is not the only factor to making an effective radio buy.

To circle back to Mr. Orwell and Animal Farm, how will the computers know which inventory is more equal to which advertiser?

This will be a big challenge for the radio industry. We can’t just allow a system to evolve where we wait for an advertiser to post its needs, then let computers automatically pick the stations/units with the lowest CPPs. That is a race to the bottom that we can’t afford. We need to work with the technology companies to create systems that factor in the differences in our audiences by age, gender, race/ethnicity, geography, and other qualitative factors such as “plan to purchase” research data.

In the meantime, it is incumbent on the people representing the radio industry to create effective ways to highlight the value of our individual audiences and not let those audiences be treated like commodities by machine-based algorithms.

Every product and service has different potential customers. And every station’s audience has a different value to those different advertisers. We need to be out there selling those differences before the machines marginalize them beyond the point of no return. If the computer makes the buy, and the ad campaign is ineffective, radio still gets the blame…not the computer.

We’d like to hear your opinions about the impact of programmatic buying on the radio business. Please contribute to the conversation in the comment section below.

-Marc Greenspan, Partner

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