TV's upfront market and online's programmatic advertising
marketplaces are contradictory ways of selling advertising. In one,
advertisers bid for valuable, scarce ad space for the coming year
on TV. In the other, advertisers buy audiences across the web --
with little regard to the content -- as cheaply as possible and
generally at the last minute.
Yet, AOL CEO Tim Armstrong says more and more advertisers are
expressing the desire to plan so-called "programmatic" ad budgets
as a way of securing lower prices, getting better service and
making sure they have access to the technologies and platforms when
they need it.
So to kick off this fall's Advertising Week in New York, AOL
will host an event on September 23 in hopes that other ad-tech
players will join, creating yet another week of upfronts. Like the
TV upfronts, the aim is to secure commitments from advertisers and
agencies to use AOL's ad technologies for their automated digital
ad buys ahead of when they actually place those buys.
"It's essentially a machine upfront," Mr. Armstrong told a group
of reporters Tuesday night. "We believe you will have an upfront
commitment cycle that will rival TV."
AOL's related hope is that when upfront dollars are committed,
publishers will make more of their top-shelf, or "premium,"
inventory available for purchase via computers instead of phone
calls and paperwork.
A formidable showman, Mr. Armstrong excels in the upfront milieu
and would like AOL to be thought of in the same breath in ad tech
as his alma mater, Google, which built a market-leading ad-tech
system on DoubleClick, which it acquired in 2007. AOL
has staked that claim by developing and acquiring a number of ad
technologies that span the buying and selling of automated
advertising and work across online, mobile, social and video.
Earlier this year the portal rolled up those technologies into
AOL Networks, and last week it
hired Razorfish global CEO Bob Lord -- well versed
in ad tech from his days at one of the original ad tech
conglomerates aQuantive -- to oversee the division and better
compete against companies like Google and Adobe that have assembled their own ad tech
juggernauts over the years.
Messrs Armstrong and Lord also believe that their upfront can
shine a light on the problems in the ad tech ecosystem as it exists
today. Namely, that too many startups and point solutions have
their snouts in the trough. He issued research -- similar to
findings released by others -- that shows that for each dollar
spent in online advertising, only $0.25 to $0.45 actually makes it
back to publishers where the ad is placed after a host of middlemen
get their piece of the action.
"There are hundreds of small companies chipping pieces out of
advertising," Mr. Armstrong said. "Consolidation is coming to the
programmatic space. We think features in the ad business will get
sucked into companies."
Asked whether AOL will be a consolidator in the industry, Mr.
Armstrong said, "We have invested a substantial amount in our tech
stack. I think you will see us pick off solutions that make sense