A Simple Dougorithm…

by Doug Weaver on May 17, 2011 at 6:17PM

My Monday morning keynote at the IAB Networks & Exchanges event was supposed to bring clarity to the opaque and byzantine automated marketplace that seems to be forever dawning around us.   I think this fell to me because Middle East peace and third world poverty were already taken.

Given the technical acumen of the group, I thought it best to come clean with them:  after 17 years in this business, I’m still pretty fuzzy about what exactly an algorithm is.  They look great on chalkboards, and people toss the word around our business pretty casually, but I’m guessing I’m not the only one who might be having a little trouble digesting all this science.

So as a service to the algorithmically challenged, I offered the group my own take on the landscape via “the Dougorithm.”   It may not clear the picture up entirely, but it just might make things a little more cogent and real for us mere mortals.

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I think the reason this little five minute explanation resonated with so many is that it breaks all this technical jockeying down to what it truly is:  a conversation about power and leverage.  When publishers had too much inventory and agencies had not enough planning capacity, the power and leverage of the networks ascended.  The triple combination of exchanges, DSPs and agency trading desks was supposed to shift the mantle of power back to the agencies and their holding companies.   But now the tepid support of this model by clients and the unwillingness of publishers to put quality inventory into play has shifted the balance of power and leverage once again.  Now it seems that advertisers and media owners may yet have the next say in what happens….if not the final one.

My hope is that this video serves as both irritant and catalyst.  You may not like or agree with my point of view;  or you might.  But just maybe the five minutes you spend with this video will prompt a better conversation about what’s inevitable and what’s not.  And whatever your views on what you see here, I’d be honored to have them appear in the comments below.

Reader Comments (8)

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  1. scot May 18, 2011 at 9:25 am

    First the Oreo Doctrine, now the Dougorithm – brilliant. However, as you’re saying – “fear not, i think there is a way out” youtube cuts you off – don’t leave us hanging! what is the way out Reverend?

  2. Eleanor Angone May 18, 2011 at 9:28 am

    Hi Doug,

    In light of our last convo, very interesting….thanks for always making things come down to the obvious.
    el

  3. Mark McLaughlin May 18, 2011 at 11:49 am

    Doug, this is a f**king classic. Well done.

    The video ends with “I think there’s a way out.” I sure hope the next issue of the Drift picks up the story line right here.

    I’ll be checking email everyday waiting.

  4. Doug Schumacher May 18, 2011 at 12:09 pm

    The video’s a great visualization. Like the Kahn Academy for advertising.

    You should TM Dougorithm before I do :D

  5. Jeremy Randol May 18, 2011 at 1:44 pm

    Doug,

    Great keynote. One important theme that you addressed briefly was the view of many in this RTB space that content is a commodity. Premium content is what drives brand safety, performance and price stability. It is also what drives large advertiser commitments in television and online video. If we can marry premium, well lit environments with the scale and efficiency of bid based buying, we’ve found the answer. I think private exchanges – where large publishers can partner directly with trading desks – are a good solution to monetize and extract value from “tier two” inventory. Tier 3 sourced inventory can keep playing the DR game but, as you said, there will be a significant thinning of the heard. Maybe publishers need to take a larger role in this conversation.

  6. Chandler May 19, 2011 at 10:16 am

    Doug, I regret I missed the conference, but glad you captured a strong highlight.

    Couldn’t agree more with your analysis. A great simple piece that is opposite to the cacophony heard on the streets today.

  7. Ross C May 19, 2011 at 1:04 pm

    Interesting points, as always, Doug. It seems an underlying factor in all this is trust – premium content providers can’t afford to trust trading desks not to simply cookie via an open or private exchange and re-target for a fraction of the cost. The ultimate goal being shaving off pennies to prove to the digital auditors that their rates are the lowest and therefore this equates to a better job for the advertiser. . . . the inconvenient truth.

    Looking forward to internet TV adding to the ‘cluster***k’ – would be an interesting experiment to see if the half-time spot at the Super Bowl went for more $$ via live RTB … (or potentially we’ll just bid for cheap spots in the pre-event real and re-target the viewers within an irrelevant program because after all it’s about the user alone not the content + state of mind + timing + association etc ….. *sigh*

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