Does the world need another upfront?
On the heels of its successful "Newfront" for online video, AOL is launching yet another "upfront" for ad-tech this fall, betting that just like TV, advertisers will commit budgets to machine-traded advertising ahead of time -- if they can get a better deal by doing so.
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 for us."
