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Smartening up advertising: A conversation about programmatic with Mike Agovino of Triton Digital

What is the state of the programmatic audio advertising market? Automated buying, real-time bidding, sharp audience targeting — these key values get lumped into the “programmatic” meme in a swirl of enthusiasm, reluctance, adoption, and avoidance. There are differing levels of awaremike agovinoness about what programmatic advertising is, and where the audio programmatic market stands in the larger landscape of digital advertising.

For a deeper dive, and a view through the eyes of the leading programmatic provider to streaming audio publishers, we spoke with Mike Agovino, Chief Operating Officer of Triton Digital. Triton’s a2x platform is an automated ad exchange for programmatic buying of online and mobile digital audio ads. Triton recently announced a partnership with data company Exelate, which will create an audio-specific Digital Management Platform (DMP).

Audio Impressions Have an IQ, and Too Many Are Dumb

Throughout our conversation, Mike Agovino returned over and over to the lynchpin of the programmatic market: the intelligence of impressions. “This is about raising the IQ of audio ad impressions,” he said.

Intelligent impressions are ad exposures to targeted individuals. Having intelligence about the listener is necessary to delivering a smart impression to an advertiser. The programmatic market is largely about delivering a supply of smart impressions to meet buyer demand for targeted audiences. This basic supply-and-demand equation makes sense, but Agovino says the market is stalled in a peculiar quandary.

“We actually have a unique circumstance in the digital audio market. We have both a scarcity of supply and a glut of supply, at the same time.”

Paradoxical at first hearing, but not when you refine the supply through the filter of audience intelligence.

“When I say the marketplace a scarcity and a glut at the same time, I mean a scarcity of smart impressions that advertisers covet and will pay high CPMs for, and a glut of unintelligent impressions that are being marketed in channels that will accept them — which are very basic channels like the network radio marketplace where you don’t have a bunch of targeting imperatives.”

Pureplays and Broadcasters

The division between suppliers of smart inventory and audio publishers which supply unintelligent inventory (not smartly targeted to an audience segment) brings up another division in the marketplace, between pureplay Internet audio companies and radio broadcasters, in Agovino’s view. That division is oddly weighted, inasmuch as pureplays have more audience (as measured by Triton), while broadcasters have more inventory.

“When you look at the 200-billion impressions [an estimate of the 2014 market], the pureplays have about 75% of the concurrent audience as we track it in Webcast Metrics. But from an impression standpoint the market is actually weighted more like 60-40 in favor of the broadcast streams, because they have more advertising per listening hour than the pureplays do. When you blend the whole market together, about 120-billion of the 200-billion impressions sit on the broadcast side. 80-billion of them are on the pureplay side, even though the pureplays have about 75% of the Webcast Metrics-tracked market.”

That weighted snapshot of audience and inventory leads to an unbalanced market of smart impressions. “Smart impressions are, with great disproportion, held on the pureplay side,” Agovino said. The reasons seem obvious: Internet audio companies are more naturally data=gathering operations than broadcast radio has been historically. One important piece of that is the registration process that acts as a gateway to full enjoyment of the services by users. Even aside from the sophisticated Big Data enterprises conducted by the largest pureplays, where interactions with the service can yield sharp user profiles and audience segments, the simple ZAG (Zip Age Gender) registration smartens up any impressions targeted to those users.

“For broadcast publishers, it should be a simple decision,” Mike Agovino evangelized. “Most will lament the economic challenges of the model where you pay the heavy price of royalties for an audience, but are unable (as of yet) to monetize that audience at significant price points to build profit. If that’s the case, the first thing I’d say is, Put up a registration gate! Force a very light registration that at least gives you ZAG. That will turn away some portion, but every time we test, it’s a small portion. And the benefit to the value of the inventory is so dramatic, that it ought to be a no-brainer. It’s a key piece.”

The Reward of Smart Impressions: CPMs

The effort of gaining audience intelligence, with data collection and data management, requires an evolutionary process. The reward is in higher prices paid by advertisers eager to target their marketing more smartly.

“Smart audio inventory is in great demand — advertisers will pay double-digit-plus CPMs for smart inventory. Smart impressions are, with great disproportion, held on the pureplay side.”

Although Mike Agovino certainly threw down the gauntlet to broadcasters during our conversation, his larger point was about moving the overall market. The supply-and-demand equation isn’t working correctly, to the detriment of buyers (advertisers) and sellers (audio publishers of all kinds). He compares audio’s 200-billion annual impressions with trillions of monthly impressions in the web display channel (which operates much more programmatically than audio does), and wants to see the audio industry evolve.

“The challenge on the smart-inventory side is this: the market needs more of it. Our focus is sharply on ways of delivering higher IQ to each impression. That includes a variety of things — encouraging traditional publishers to enable registration on their players, encouraging the app developers in this space, the aggregation plays, to implement our SDK so that we can retrieve data back from them that allows the exposure to the content on their platform/app to be targetable. It’s employing all the methods of getting the inventory as smart as it can be.”

Agovino noted that in web display, most publishers don’t have direct sales teams. That fact has helped developed programmatic as a solution for selling banners — which Agovino characterizes as a remnant industry for the most part. Banners are a difficult premium sell no matter how they’re marketed, because they are clicked accidentally, and often fail the IAB’s visibility standard.

By contrast, the traditional radio business is top-loaded with direct sales. “You’ve got highly compensated sales executives selling $500 over-the-air spots and it’s not efficient to spend their time selling digital audio in a spot metaphor at $5 a spot. It doesn’t scale,” he said.

But the opportunity is great, because audio advertising is inherently premium. “This is not a remnant play. Everyone we meet with, from the DSPs to various trading desks, they all recognize that the audio ad unit is premium, above the fold, native — however you want to look at it. It is inside of content, it is interruptive, it is a premium unit.”

2015

Audio is already a mostly mobile medium — all recent research confirms that reality, suddenly though it might have crept up on the industry. For audio advertising, mobile is a major opportunity.

“Audio’s opportunity in mobile couldn’t possibly be clearer. The audio market stands to benefit dramatically by the audio ad unit becoming a very significant unit in the mobile ad ecosystem. It will. But the ad unit has to answer to the expectations of the advertiser. It has to be a smart ad unit.”

Overall, 2015 might be a crucial year, especially for broadcasters.

“2015 for the broadcast side of the market will put a lot of publishers on notice that they’ve got to smarten up their inventory, that the 3rd-party technology players can help to a certain degree. The efforts that we’re making will be a significant help in monetizing inventory on the programmatic side in the long haul.”

 

Brad Hill

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