VivaKi’s Hecht: Many Intermediaries Won’t Last
The digital media world is going through a period of enormous change, only to wind up in a very similar place: buyers and sellers interacting with each other directly. There will be increased automation, according to VivaKi Nerve Center chief Curt Hecht, but technology will be used to create the direct connections that have long served as the bedrock of media. Hecht, who is based in Paris to lead the Publicis Groupe’s R&D center, sees recent moves spelling the end for a brief period where middle-men-like ad networks had a larger role than the value they created warranted. He answered several questions for Digiday via email. Follow Hecht on Twitter @curthecht.
Programmatic buying is definitely taking off. What’s the one thing that needs to be fixed to make it grow even faster?
Believe it or not, one big challenge is simply getting people to accept it. The pipelines are in place, and technology features are getting more refined to enable customized bidding and buying. But programmatic buying is a dramatic shift that challenges long established business practices. New skills and talent are required to support this shift, and many job descriptions will need to change. But those who understand how programmatic buying will impact the future marketing ecosystem will be ahead of those who resist the change. Growth and acceptance will be fueled by more education. And more inventory. And agencies will increasingly do what our Audience On Demand team does – they work closely with the tech companies to inform product roadmaps and influence features and functionality. This essentially customizes the product for the teams, agencies and clients who use it. We live in a world of infinite but increasingly intelligent impressions and the fact that programmatic buying brings more IQ into a largely EQ-driven marketplace will continue to accelerate its growth. But to be clear, we need both, and the balance between EQ and IQ will vary by client, media partner, geography and flex and flow in real time.
I’ve heard that spending on ad networks dropped significantly in the fourth quarter. Can you quantify how much Publicis agencies have redirected from network buys?
I can’t quote numbers, but I can confirm that our media planners and clients are getting smarter about the digital marketing ecosystem, and therefore, demanding more transparency, attribution and accountability of media spend. Companies like ad networks that are in the business of operating big “black box” systems will, as a result, continue to lose share. The reality is that direct relationships — whether through people or now increasingly through machines — are the past and future of this business. Intermediaries come and go but this is a scale-driven marketplace and it’s consolidating but also increasing in complexity on integration across screen or interfaces, data joining, attribution, etc. There may be point solutions, but it’s not the work of a small company with limited resources.
Yahoo recently tightened up its exchange-participation requirements. Do you see a “war on the middlemen” happening in online advertising?
Yes, I do. Yahoo’s strategy is about cutting out the middle man and taking resellers who do not add any real value out of the media buying equation. Cutting out intermediaries is one of the foundational benefits of AOD. Our business is built on direct relationships, people and machines, and we have direct connections into Yahoo. There are three huge benefits from this relationship and this decision. Efficiency is the most obvious upside. By dealing directly with publishers like Yahoo, we cut out the middleman costs. AOD will continue to get access to Yahoo’s inventory and to the data we leverage to do impactful targeting and optimization of client campaigns. Yahoo strategy will actually restrict others from having the access that we have through AOD. By eliminating the reselling of its inventory, Yahoo’s performance will stand out more clearly and insights and optimizations will be more effective. AOD will know the true impact of Yahoo on media plans and optimize spend appropriately.
Trading desks, from what I’m told, are vastly more profitable than the traditional media buying agencies. As this grows, will client procurement officers start to squeeze agencies on margins like they’ve done across the board in every other service area? If not, why?
As long as the operations are transparent, I believe blended technology/services solutions will be a profitable model for any organization. Our clients have made it clear they are willing to invest in premium talent and best-in-class technology solutions …. as long as we deliver outcomes that meet or beat their objectives. Surely client procurement will evolve to the changing media landscape, and how they value business results will evolve as well. But don’t forget, we speak the language of procurement: waste-free advertising served to people who are receptive.
How would you say AOD differs from something like Cadreon or Xaxis? What’s the differentiation when you’re all using bits and pieces from the same tech vendors?
What’s most unique about AOD compared to the other holding companies’ entities is the fact that AOD operates under the Nerve Center’s “thin-layer” strategy. This means that we leverage an open-source and open-partnership approach, putting our data, media and technology partners through a rigorous evaluation process called VivaKi Verified. For example, we put all of our DSP partners through a rigorous six-phase, 243-point evaluation process to validate the existence of mission-critical criteria and functionality. And we will continue to evaluate performance and capabilities of our partners to ensure that the technology we leverage is best in market. With a constant eye on the landscape, we were first to discover and partner closely with Invite, pre-Google acquisition, and others followed our lead. Our thin-layer approach allows us to be more nimble and flexible in the fast-paced, ever-changing marketplace without forcing a single technology solution onto our VivaKi clients. Compare that to WPP, which is trying to compete with the likes of Google and Microsoft by building proprietary technology that they claim is a competitive advantage. We have strong evidence that we are, by far, the largest direct buyer from exchanges. We are fortunate that we have one capability and alignment across VivaKi and that we have a four-year head start educating the client teams and delivering results. My sense is that we are pretty good relative to the competition and our VivaKi board appreciates that this is a big part of our future and we need to be best in class in this area like we have been in others.
When you look at the logos on the Luma slide, do you think “what a mess” or “what an opportunity”? Is too much made of the complexity problem?
We are neither impressed nor intimidated by those charts. We simply navigate the chaos. The key is to audit and quickly identify the companies that are truly going to keep our clients connected to people in this digital world of ours.
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