More company in the “Future”

A noteworthy installment from Cory Treffiletti on his MediaPost board yesterday.

I wrote on the topic of media futures several several times and in detail in my past life at Brand.net (the pioneer in this area), so nothing new for me in Cory’s piece.  But it is nice to see more and more folks coming around to recognize the need for and value of a futures market for digital advertising.

I specify “digital” advertising here even though (as Cory mentions) the upfront provides a futures market of sorts for “non-digital” television advertising today.  It bears repeating that format convergence means all advertising will be digital in the not-too-distant future.  The innovation in transactional models for media will continue to be driven in the market we see as digital today, then as more and more IP-connected devices ship we will see the old TV upfront model subsumed by the new futures model that was developed for digital.

Not going to happen tomorrow, but will certainly happen.

I would also highlight Cory’s point that it is large clients – many of whom have sophisticated trading operations in other raw material inputs – that will likely drive this change.  With some exceptions (Digitas and Hill Holliday notable among them) most media agencies lack the required skills and perspective.

Given this reality, I wouldn’t be surprised if the desire for a futures-driven approach to align media buying with other raw material procurement initiatives is a catalyst for more than one large advertiser to bring their media buying in-house over the next couple years.

IBM, SAP and others seeking to enter the media market by working directly with marketers should give this some thought.

See what all the fuss is about!

Another quick post today to encourage those of you that haven’t read today’s Q&A on AdExchanger to check out the demo for MFP On DemandTM.     Also see more coverage of Thursday’s press release on Fast Company.

A “future” cure for online ad pricing volatility

A very interesting post on AdExchanger today covering the first installment in what DataXu expects to be a monthly series of reports on market trends.

DataXu disclosed historical volatility of prices across the landscape of biddable online ad inventory they saw through their DSP platform – billions of impressions across multiple exchanges – between 4/10/10 and 5/10/10.  The figure?   102%.  That’s huge pricing volatility on an absolute basis and (as they point out) much higher volatility than we see in Goldman Sachs share prices, oil prices and even presidential approval ratings.

Broadening the aperture doesn’t change the picture.  For example, 102% is much higher volatility than we typically see in historical data for a wide variety of exchange-traded commodities – themselves a notoriously volatile asset class.  I think the way DataXu has calculated volatility for online ads may even understate the difference.  From the notes on the source post here, it looks like DataXu is calculating this 102% number by measuring the variance of average daily prices within that month period.  Volatility in financial markets is usually expressed in annualized figures (like this).  I’m not sure exactly where DataXu got the other figures they list, but since annualization is very common for these types of figures I wouldn’t be surprised if those are annual figures.  If I am right, then the apples:apples annualized figure for online ads would likely be much higher.

Either way, there’s simply no question that the spot market for online ads is tremendously volatile.

So it has always struck me as odd that the same large manufacturing companies that have active, sophisticated, futures-based hedging programs for raw materials like oats and soybean oil with 30-40% annual price volatility would tolerate volatility many times higher in purchases of online media – an increasingly critical raw material input.  As I have written previously in a pair of articles in Ad Age and Ad Exchanger, I think this will change and indeed must change for online media to become a greater share of overall media spend for key categories like CPG.

But in order for that to happen, we need to give them better tools.  We need a Futures market.

What Online Advertising Should Learn From TV’s Upfront Market

Just a short post today to steer folks to this year’s Ad Age Network & Exchange Issue.  In it I have a byline that outlines, in a more popularly accessible way, the main ideas of my previous technical piece on on the importance of the futures market for Brand marketers.

We think that the Futures market is a critical and under-served space in online advertising.  So we’re proud to offer the industry’s first and only web-wide Media Futures Platform, which has powered guaranteed delivery of high-quality campaigns with phenomenal offline sales results since 2008.

As always, we welcome your thoughts and comments!

It’s Time For The Futures Exchange

A quick post to direct readers to today’s guest article for AdExchanger.  It will be pushed to the broader AdExchanger audience tomorrow in John’s roundup, but I wanted our readers to have a “sneak peek” to get the dialog started.

As always, I am very interested in your thoughts and comments.