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With isocket, programmatic is taking a bite out of the big side of the pie

For about the past 18 months I’ve been talking about the coming of programmatic technologies (machine to machine buying and selling) to the premiums side of the display ecosystem. It was one of my “2012 AdTech Predictions” published last year in AdExchanger and I expanded on that prediction in a piece earlier this year, also in AdExchanger.

The basic idea is simple. Programmatic technology has made a huge difference in online advertising – bringing down transaction costs, allowing for better audience and content targeting, enabling publishers to better manage their inventory while at the same time allowing advertisers to make better buying decisions (not to mention spot ad buys). It’s been a great addition to the ad stack and for Foundry a solid area for investment (our two companies that play directly into this trend are AdMeld, which was purchased by Google late last year, and Triggit, the leading onramp to the Facebook exchange and growing extremely rapidly). Both AdMeld and Triggit – as well as almost all of the other companies that play in programmatic – are focused on non direct sold or remnant inventory. This was a logical place for programmatic technologies to be first applied. Publishers were more focused on the direct sold side of their business since that was where the large dollars were. And the marginal cost for a single impression (and therefore the cost of getting something wrong) was relatively low. At the same time, there was a huge volume of remnant impressions that were available to this ecosystem and because of the way these impressions had traditionally been grouped together for buys by the ad networks, there were significant targeting efficiencies to be gained by adding a software layer to this buying process (allowing more impression and user level information to pass through the system as well as opening up those impressions to multiple bidders through real time bidding).

Fast forward to today and because of these efficiencies and better targeting capabilities programmatic in general and RTB in particular has taken off even faster than most industry observers (myself included, although we’ve been the happy recipient of this trend) ever expected. But how can these same marketplace rules apply to the other side of the inventory equation – those high value impressions that are sold directly by a publisher’s sales force? This buying process is still handled manually, by fax and email primarily, adding complexity and cost to the process that is almost hard to imagine (which is one of the reasons that other forms of brand advertising remain in much greater favor than online). Dealing with premium inventory is a different beast and requires different technology and different rules of transacting than remnant. But the benefits in terms of marketplace fluidity, reach, scope and efficiency have an even greater potential on this side of the market.

I first met John Ramey from isocket about a year ago. We started talking about 16 months ago – after I had started thinking about the coming of programmatic guaranteed but before I was making much noise talking about it. isocket was well on their way building products and the isocket marketplace to go after this market. Over the months we’ve spent time together trading ideas about how this side of the business was likely to evolve, updating me on the progress of isocket, letting me know which ex-AdMelders he was bringing on board, etc. I’ve come away from each of our conversations more and more impressed with the platform isocket is building and more and more convinced that we wanted to have a chip on the table in programmatic guaranteed. John has surrounded himself with an impressive group of advisors, including James Beriker of Efficient Frontier and Dapper who will be joining me on the isocket board.

I’m extremely excited to be working with John and the isocket team and look forward to building a great business together. You can read the full isocket release here (which also talks about the launch of the BuyAds Pro product, the addition of James Beriker formerly of Efficient Frontier and Dapper to the isocket board as well as the addition of Mark Liao from Yahoo as CFO). Exciting times!

October 31st, 2012     Categories: Foundry Companies     Tags: , ,
  • StevenHB

    I’m surprised, Seth, that you haven’t mentioned Cogo Labs (http://www.cogolabs.com/) – they incubate RTB advertising companies.

    On the machine-to-machine front, one of Brad’s fraternity brothers is working at Quantopian (http://www.quantopian.com/)

    • http://www.sethlevine.com sethlevine

      Thanks Steven. I don’t know the guys at Cogo Labs. And I hear you on the quant angle to RTB – lots of smart people working on various
      “trading” algorithms.