Automated Spot Sales Picking Up Speed

The automation logjam is breaking up with companies like Hudson MX, Videa, WideOrbit and ProVantageX in play. The business has reached a critical mass, according to some observers. But with so many competitors, there’s the likelihood that there will be a winnowing down of platforms with time. And frictions remain to be ironed out — most notably handling makegoods automatically.

November 1, 2018 by Janet Stilson

Look no further than IPG Mediabrands for an indication of how the automated spot sales business is gaining traction. It has gone all-in with Hudson MX, an upstart platform that now automates the front end of the buy side and may eventually automate the sell side as well.

Kathy Doyle, EVP, local investment, at the big-spending agency’s Magna Global unit, says she is funneling all spot business through Hudson for a roster of clients that includes BMW, Arby’s and Fiat Chrysler.

The agency’s full spot budget for all clients is $500 million.

Hudson is also doing business with other large agency groups, albeit not on an exclusive basis. Among them is Publicis’s Starcom unit and WPP’s GroupM.

“We’re leveraging partners like Hudson while remaining open to other opportunities with vendors like Videa and WideOrbit,” explains Tracy Chavez, SVP, director of local media at Starcom. “Spot TV has a long road ahead in advancing [automation], and we will continue to push them wherever there can be efficiencies found that grow our clients’ business.”

More evidence of progress: The two other platforms that Chavez mentions, Videa and WideOrbit, report significant growth in the number of stations and agencies using them over the last year. And a fourth platform, ProVantageX, is expected to join the fray next month.

But frictions remain — most notably handling makegoods automatically — and some expect consolidation of the platforms.

Regardless, the automated spot business has reached critical mass, according to Frank Friedman, E.W. Scripps’ VP of consumer engagement for local media and the former president of local investment at Publicis. “The progress that we’ve made on the agency side has gone a lot faster than even I thought. I think what happened is agencies are so under pressure from their management teams.”

Certainly, Hudson has been a big factor. “We ultimately decided to go with Hudson for a few different reasons. The biggest one was it didn’t require us to change the flow of our business,” says Doyle. “It’s very plug-and-play for us.”

Hudson also has a critical mass of stations using it. One source said that nearly every station in the country has received and responded to RFPs that have flowed through Hudson’s system. “The most important thing is that Hudson is a one-stop shop for our buyers,” says Doyle. “They don’t have to do part of it with one system and put that together with another system to complete the buy. Everything is in one place.”

Hudson MX is a privately funded company headed by J.T. Batson, former president of digital for Donovan Data System, which merged with Mediabank to form MediaOcean, and former chief revenue officer of Cumulus Media, the large radio group.

Batson declined to be interviewed for this story.

At this point in its development, Hudson is a “front-end” platform. It allows agencies to use an instant messaging function to request avails from stations via RFPs. Sellers receive the requests in an email and can send back their proposals and negotiate details.

Once a deal is baked, Hudson sends the deal points to the agencies’ MediaOcean or Strata advertising workflow platforms to execute the buys.

The next step for most of the platforms handling spot sales will be filling in some of the gaps in the automation process.

“We still don’t have an end-to-end solution, from pre-buy to post-buy. The pre-buy seems to have been solved by many of the different vendors,” says Jennifer Hungerbuhler, EVP, managing director of video and audio investment at Amplifi, the media arm of Dentsu. “But now we have to get into the makegoods, the stewardship and the posting process. And I will say there are platforms that are making advances in that space.”

The most glaring missing link involves makegoods, now a time-consuming and costly process for stations and agencies.

Right now, when a station submits a makegood proposal, buyers have to pore over it, making sure that it meets the right criteria for ratings and demos. It’s a tedious job.

Adding fully automated make-good functionality is likely to take place at Videa and Hudson early next year.

WideOrbit says it is making progress on that front, too. “We have automated many steps of the makegood process and are working towards complete two-way machine makegood acceptance [with the support of buyside systems],” says WideOrbit’s chief product officer Will Offeman. “The WO Programmatic Seller Console currently offers the ability to suggest makegoods to sellers that they can transmit directly to buyside systems via the ePort or DARE protocols.”

WideOrbit and Videa were earlier to market than Hudson, and differ from it in that they offer various inventory options for buyers , rather than Hudson’s method of sending out RFPs, which stations respond to with specific inventory availabilities.

WideOrbit and Videa also charge stations for use of their platforms, which Hudson has not done to date. (WideOrbit is currently waiving some fees to help prove the value of its platform.)

Both WideOrbit and Videa report significant gains over the last half year. WideOrbit’s CEO Eric Mathewson says his platform has a station base of about 1,100, up from about 400 a year ago. And the company is working with almost all the major agenices, and some second-tier agencies as well, he says.

Some 500 stations use Videa, according to its president, Shereta Williams. Videa has at least three stations on board in each of 47 markets. And it’s also doing business with multiple large agencies.

Williams says that one of the biggest points of resistance on the station side is the transactional fees that they have to pay to use the platforms. They would come on top conventional sales costs.

They “include rep fees, commission rates to account executives, transaction costs for existing electronic order formats [like ePort and Dare], data costs for measurement, etc.,” says Williams.

Some observers suggest that a winnowing-down or consolidation of the platforms may involve Hudson partnering with one of the other platforms to build out the sales side of its business.

“I don’t think the industry is going to want to maintain relationships with four different suppliers,” says ProVantageX EVP Steve Poulin. “There will be some sort of consolidation, but right now we’re focused on making our product the best production out there.”

A positive force in the development of spot automation is the Television Interface Practices (TIP) Initiative, championed by the TVB and big groups including Nexstar and Sinclair. Not only will it standardize some of the terminology, but by using the TIP system, station sellers and agency buyers can connect through standardized APIs, no matter what platform they happen to be using.

Panelists at the recent TV2020 conference suggested it could take years for the TIP universal solution to be fully functional. But the promise is there.

Mathewson, who hopped on the TIP bandwagon over the last year, likens current platform-specific API scenario to the various electric socket and plug configurations used in different countries, like France or Australia.

“You need a translator,” said Mathewson. “We’re designing the plugs and sockets so everyone can talk to one another. It’s a huge advantage to make sure we’re all talking the same language.”

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