As the National Radio Conference approaches, radioinfo continues the discussion on programmatic selling of radio inventory.

Steve Ahern reports from the Rain Summit and NAB Radio Show in Atlanta.

In conference coffee breaks and drinks functions, I asked American radio managers and sales people about programmatic buying.

Responses ranged from:

“They’re not getting inventory on my station at a discount price, we’ve got a good audience and we don’t need to sell cheaper via programmatic. Let the other stations cut their rates via programmatic selling if they want to, but we’re full.”

To:

“It’s the future of all commercial media, we need to be able to sell fast on a digital platform and deliver results to the buyers in the form of better analytics.”

So what is programmatic ad buying?

In its pure form it is automated buying and selling of ad inventory via online software.

Think of it like online hotel booking sites such as Wotif or Bookings.com.

A hotel chain uses software analysis to evaluate whether advance booked rooms and full or empty and offers them automatically to a selling portal. If rooms are full, then only a few rooms are offered at a high price. If there are high vacancies, rooms are offered to the portal at a heavy discount. Buyers can see all the rooms on offer from each chain and make buying decisions. Behind the scenes, the portal tracks both the seller’s room placements and the buyers’ purchases.

Some radio people fear that radio ad rates will be driven the same way as hotel room rates – down. However, while room rates have generally been driven down, more rooms are being sold, so profits have been stable and even rising at times. This has been happening in the hotel business for many years now, and interestingly, while there was a rush to sell rooms on these portals in the early days of the disruptive new buyer interface, more hotels are now encouraging their guests to buy direct from their own websites, not through selling portals.

So back to radio, what did the Americans at RadioShow have to say about this new phenomenon.

One of the most common things I heard was the fact that “everyone is talking about programmatic,” but not so many are actually doing it.

The second most common statement overheard in many conversations is that agencies want it, and so the radio industry will have to eventually satisfy their agency clients by providing something in the programmatic field.

One US buying agency, Dentsu Aegis, is committed to making its company 100% programmatic by 2020.

Whether they like it or not, radio networks feel they have to get on board with programmatic because there is new money to be made there.

While radio has held back from programmatic selling, music streaming service Pandora has been a big champion of the selling method as has forged tight bonds with agencies because it offers a quick and easy buying process and good post-broadcast analytics.

Dave Smith from Pandora told delegates: “Audio should be just one more format directed at marketers. Audio programmatic needs to provide the same value to an advertiser/buyer as other channels do… Publishers are looking for transparency and where their impressions are transacting. We are integrating both sides in a way that is very fruitful for the industry.”

How is audio fitting into buyers’ expectations?

Manny Rodrigues from 22square said it is useful to have more analytics, but “it’s like the wild wild west out there… its very hard without standardisation to give a comfort level for buyers that they know what the value really is.”

One buying agency representative I spoke to told me that his company plans to allocate about 15% of their media buying allocated to audio. This could be radio, or it could be music streaming services such as Pandora.

Another common theme from buyers was that they want to buy audio “through the same dashboard as we buy other media… That will be the next level in how audio will transact in future.”

These dashboards still need to be integrated into the radio workflow system, so networks which want to sell programmatically “have a way to go yet,” according to one radio manager.

There is also a question of Private Vs Public programmatic exchanges:

“What a private exchange allows a buyer and seller to do is strike an efficient way to do a transaction. Special buys should also be available as should be commodity buying deals. We need to have the ability to create value in various ways.”

Pandora does its trading in a private exchange environment at the moment. “You need flexibility in what you can offer the advertiser,” said Pandora’s Dave Smith. In other words, they will do deals and discounts, but they don’t want those deals publicly listed to every buyer.

What do advertisers want?

“We want either targeted advertising or a big buy,” said Manny Rodrigues.

 “At the moment programmatic is a buzz word, everyone wants it, but they don’t really know why they want it. The core is that it makes client advertising dollars more efficient and eliminates wasted impressions…

 “There is a lot more effort these days that goes into every dollar the advertiser spends. We want to be able to chose scale or targetability.”

Advertisers and buyers have been conditioned by buying google ads and other online inventory to expect a dashboard. “Most display buyers think they should be able to buy audio the same way as they buy facebook or google ads, but there’s not that much audio available to the buyers at the moment. They want the ability to genre format target,” said Rodrgiues.

In the US the price is $12 to $15 CPM (cost per thousand) for programmatic audio buying.

And this is what worries some radio sales people.

I was told by one sales manager: “Programmatic is a race to the bottom.”

Rodrigues says radio has a ‘scale issue’ to address: “As buyers, we have to balance scale verses efficiencies, you have to make a choice, very efficient costs to lower your cost of media or at the high end, targeting that increases your sales through pinpoint accuracy. To target small groups of specific audience segments can be done but it is expensive, you need to balance it with the efficiency of easy buying. There is a place for both sides of the equation.”

Dave Smith from Pandora also raised an interesting issue. Most of the data being gathered depends on placing cookies on a computer, but mobile devices don’t work that way. “Cookies are not available in a mobile environment, it needs a more complex Device ID… If the advertiser can’t find the user with a cookie they can’t deploy their message.”

Most listening now happens on mobile, but it seems mobile is not such a good platform for programmatic, so it may be that the programmatic ship has already sailed before the radio industry gets on board. This will be a significant thing for the Australian radio industry to consider.

 “Dumb impressions are often wasted because the advertiser does not know who they targeted with the ad. Smart impressions help the advertiser tie their targeting more efficiently, but they’re not readily available on mobile.”

A couple of other points surrounding the programmatic discussion were:

Analytics need to exist on both the sellers and the buyer’s platforms.

Whatever the purchase price or the analytics tell you, it still gets down to good audio creative. Creative that engages the listener and makes them wake up their screen and interact with the advertiser is necessary to take advantage of the new platforms.

Programmatic will be one of the big topics at tomorrow’s CRA National Radio Conference.

After the conference, don’t forget to join us at East Nightclub, where radioinfo is shouting the drinks. And, while you’re there, sit in our photobooth for a happy snap and to update your Faces for Radio page.