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Media agency price war led to programmatic trading arbitrage, says former BBC sales boss

Dobson

Dobson

Former MTV, BBC and Zenith Optimedia executive Chris Dobson has said that television will be the last screen medium to embrace programmatic trading, because there is no immediate incentive for the TV industry to change.

“Any projection for the growth of the television advertising market is still healthy. Look at the upfronts in the US. Billions of dollars of trading is done against a metre system that is fatally flawed. But the industry seems to be happy if clients are throwing money at it,” he said at Spikes Asia.

He also said he had “sympathy” for media agencies trying to squeeze money out of their clients through programmatic trading because of a price war that emerged at the beginning of the millennium.

“TV will be the last medium to come kicking and screaming into the programmatic space,” he said. However, Dobson said that the TV industry will be “disrupted” by the access to the consumer that programmatic trading provides.

“Technology will force TV to change. TV doesn’t hasn’t got the incentive right now. But it will. TV will absolutely have to change,” he said.

Dobson now works at programmatic trading firm The Exchange Lab as executive chairman. Previously, he was global head of sales for BBC Worldwide and Microsoft and European sales chief for MTV. He also ran marketing for media agency Zenith Optimedia.

On whether the issue of arbitrage – media agencies not disclosing the margins they make on online trade deals to their clients – could hamper the growth of programmatic trading, Dobson said that he had sympathy for media agencies because programmatic emerged at the time of a price war in the sector.

“I have sympathy with agencies,” he said. “Their current position is a result of price wars – just when the business got complicated in the 2000s when margins began to get squeezed. It was a bad time to get in a price war.”

The challenge for agencies is procurement, Dobson said. “Big clients have procurement departments with mounting questions about transparency. Agencies will have to make up their minds whether they answer those questions or not.”

These questions are about where the money is going, Dobson said. “It’s not about gross margin, it’s about net margin. Clients rule the roost. The transparency question is not going to go away.”

Dobson referred to a task force launched by the World Federation of Advertisers that, in partnership with the likes of Procter & Gamble and Coca-Cola, is looking at how to standardise programmatic trading.

On whether clients will increasingly look to take the programmatic buying function inhouse, Dobson said that the market will decide how things pan out.

“Some will want a managed service. There will be a whole range of solutions depending on what a client wants [from automated trading],” he said.

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