Joe Pych is CEO of NextMark, an ad tech provider. Follow him on Twitter @jpych.

There’s been a lot of industry excitement about programmatic premium. It’s already been proven that it’s possible to drive transaction costs and timeframes to zero. But adapting real-time bidding algorithms to direct buying with the thought that transaction costs will disappear is a fallacy. The dirty secret of programmatic premium is that there’s really no infrastructure to support it today.

Digital advertising has a directory problem. Unlike virtually every other media channel, there’s no comprehensive directory of advertising inventory. How can a computer be expected to find inventory without access to a searchable electronic directory that includes all the information it needs to make decisions? And how can a computer start the ordering process without a way to identify the inventory it is buying? This is a showstopper.

The Interactive Advertising Bureau is working to solve the directory problem with the IAB Digital Advertising Directory. (Disclosure: we built and maintain this for it..) So far, more than 800 publishers have contributed. But it’s far from complete; only 7,500 digital media programs are indexed and many of the listings need work.

Digital advertising also has a protocol problem. The industry has not yet adopted a standard electronic order format. Orders today are essentially paper transmitted in a variety of formats via email and fax and re-keyed on the other end. How can a computer be expected to send insertion orders to 20 publishers in a media plan without a standard electronic protocol in place? This is another showstopper.

The IAB is trying to solve the protocol problem with its eBusiness Interactive Standards. It recently published version 1.0 of the electronic insertion order, which is the lynchpin to programmatic buying. But these standards have not yet been implemented by anyone.

And digital advertising has a systems problem. Today’s RTB systems are not well-suited for direct buying. Furthermore, most legacy agency and publisher workflow systems are closed systems that cannot communicate electronically with other systems. How can an agency’s computer system be expected to deliver electronic documents if publishers’ systems aren’t listening? And how can a publisher send a proposal or electronic invoice if the agency’s system is not listening. This is yet another showstopper.

Ad tech vendors are now in a race to develop the systems required to support programmatic premium. Incumbents are attempting a Sutton Pivot, while challengers are starting from scratch on purpose-built platforms. It’s on the close horizon, but nobody has yet made meaningful “first contact” by successfully transmitting electronic IOs from one system to another.

Programmatic premium is a huge opportunity for advertisers, agencies, publishers and their ad tech vendors. However, until the basic infrastructure is put in place, beware: The promise of programmatic premium will remain an empty promise.

Image via Shutterstock

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