A version of this post originally appeared in ClickZ.

Fairfax Cone, the founder of Foote, Cone, and Belding once famously remarked that the problem with the agency business was that “the inventory goes down the elevator at night.” He was talking about the people themselves. For digital media agencies, who rely on 23 year-old media planners to work long hours grinding on Excel spreadsheets and managing vendors, that might be a problem.

For all of the hype and investment behind real-time bidding, the fact is that “programmatically bought” media (RTB) will only account for roughly $2B of the anticipated $15B in digital display spending this year, or a little over 13% depending on who you believe. Even if that number were to double, the lion’s share of digital display still happens the old fashioned way: Publishers hand-sell premium guaranteed inventory to agencies.

Kawaja map companies, founded to apply data and technology to the problem of audience buying, have gotten the most ink, most venture funding, and most share of voice over the past 5 years. The amount of innovation and real technology that has been brought to bear on audience targeting and optimization has been huge, and highly valuable. Today, platforms like The Rubicon Project process over a trillion ad bids and over 100B ad transactions every month. Companies like AppNexus have paid down technology pipes that bring the power of extensible platform technology to large and small digital advertising businesses alike. And inventory? There are over 5 trillion impressions a month ready to be purchased, most of which sit in exchanges powered by just such technology.

All of that bring said, the market continues to put the majority of its money into premium guaranteed. They are, in effect, saying, “I know I can buy the ‘sports lovers’ segment through my DSP, and I will—but what I really want is to reach sports lovers where they love to go: ESPN.com.”

So, while RTB and related ad technologies will grow, they will not grow fast enough to support all of the many companies in the ecosystem that need a slice of 2013’s $2B RTB pie to survive. NextMark founder and CEO, Joseph Pych, whose company focuses on guaranteed reserved software, has been calling this the great “Sutton Pivot,” referring to the famous remark of criminal Willie Sutton , who robbed banks “because that’s where the money is.”

In order to better inderstand why this is happening, I have identified several problems with RTB that are driving companies focused on RTB to need to pivot:

• There’s a Natural Cap on RTB Growth: I think today’s RTB technology is the best place to buy remnant inventory. As long as there are low-value impressions to buy, and as long as publishers continue to festoon their pages with IAB-standard banners, there will need to be a technology solution to navigate through the sea of available inventory, and apply data (and algorithms) to choose the right combination of inventory and creative to reach defined performance goals. While the impressions may grow, the real cap on RTB growth will be the most important KPI of them all: Share of time spent. Marketers spend money where people spend their time, whether it’s on television, Twitter, radio, or Facebook. When people spend less time on the inventory represented within exchanges, then the growth trend will reverse itself. (Already we are seeing a significant shift in budget allocation from “traditional” exchanges to FBX).

• The Pool is Still Dirty: It goes without saying, but the biggest problem in terms of RTB growth is brand safety. The type of inventory available in exchanges that sells, on average, for less than a dollar is probably worth just that. When you buy an $850 suit from Joseph A. Bank—and receive two free suits, two shirts, and two ties—you feel good. But it doesn’t take much figuring to understand that you just bought 3 $200 suits, two $75 shirts, and two $50 ties. Can you get $15 CPM premium homepage inventory for $3 CPM? No…and you never will be able to, but that type of inventory is just what the world’s largest marketers want. They would also like URL-level transparency into where their ads appeared, a limit on the number of ads on a page (share of voice), and some assurance that their ads are being seen (viewability).  Inventory will continually grow, but good, premium inventory will grow more slowly.

• It’s Not about Private Exchanges: Look, there’s nothing wrong with giving certain advertisers a “first look” at your premium inventory if you are a publisher.  Auto sites have been pursuing this concept forever. Big auto sites guarantee Ford, for example, all of the banner inventory associated with searches for Ford-branded vehicles over the course of a year. This ensures the marketer gets to his prospect when deep in the consideration set. Big auto sites may create programmatic functionality around enabling this type of transaction, but private exchange functionality isn’t going to be the savior of RTB, just necessary functionality. Big marketers want control of share of voice, placement, and flexibility in rates and programs that extend beyond the functionality currently available in DSPs. As long as they are spending the money, they will get—and demand—service.

What does all of this mean? RTB-enables ad technology is not going away, but some of the companies that require real time bidding to grow at breakneck speed to survive are going to pivot towards the money, developing technologies that enable more efficient buying of premium guaranteed inventory—where the other 85% of media budgets happen.  I predict that 2013 will be the year of “programmatic direct” which will be the label that people apply to any technology that enables agencies and marketers to access reserved inventory more efficiently. If we can apply some of the amazing technology we have built to making buying (and selling) great inventory easier, more efficient, and better performing, it will be an amazing year.

A version of this post originally appeared in ClickZ .

As the bloated Display LUMAscape shifts, more and more companies focused on real time bidding are turning their venture-funded ships in the direction of programmatic direct and trying to pivot towards an area where nearly 80% of display media budgets are spent. This has been called the “Sutton Pivot,” referring to the notion of robbing banks, because “that’s where the money is.”

The fact that that 80%—over $6 billion—is largely transacted using e-mail, Microsoft Excel, and fax machines is staggering in a world in which Facebook is becoming passé. a lor of people have been calling the move to create efficiency in guaranteed display buying “programmatic premium,” but it’s not 100% about inventory quality.  The larger question is whether or not publishers are going to enable truly premium inventory to be purchased in a way that lessens their control. At a recent industry conference, publishers including Gannett and Turner completely rejected RTB and “programmatic” notions. In a world of ever growing inventory, the premium stuff is ever shrinking as a percentage—and that means scarcity, which is the publisher’s best friend. Selling less of a higher margin product is business 101.

As I wrote recently, at the same conference, Forbes’ Meredith Levien laid out the three principle chunks of inventory a super-premium publisher controls, and I want to examine the programmatic direct notion against each of these:

• Super Premium: Big publishers love big “tent pole” branding campaigns, and are busy building mini-agencies within their sales groups, which bring together custom sponsorship packages that go beyond IAB standard banners. A big tent pole effort might involve a homepage takeover, custom rich media units, a dedicated video player, and branded social elements within a site. While some of the display elements within such a campaign can be purchased through a buying platform, this type of complex sale will never scale with technology, and is the very antithesis of “programmatic.” For many publishers, this type of sale may comprise up to 50% of their revenue. Today’s existing buying and selling platforms will be hard pressed to bring “programmatic” efficiencies here.
• Transactional: Many super-premium (and most premium) publishers spend a lot of their time in the RFP mill, churning out 10 proposals and winning 2   or 3 of them. This “transactional RFP” business is begging for reform, and great companies like AdSlot, iSocket, Operative, and ShinyAds are starting to offer ways to make selling premium inventory such as this as programmatic as possible. Companies such as Centro, Facilitate, MediaOcean, and NextMark (disclosure: my company) are starting to offer ways to make discovering and buying premium inventory such as this as programmatic as possible. Much of the RFP process is driven by advertisers looking for information that doesn’t need to be offered by a human being: How much inventory do you have, when do you have it, and how much does it cost? This information is being increasingly found within platforms—which also enable, via tight pub-side ad server integrations, the ability to “buy it now.” 100% of this business will eventually happen programmatically. Whether or not today’s big RTB players can pivot their demand- and supply-side technologies to handle this distinct type of transaction (not very “real time” and not very “bidded”) remains to be seen.
• Programmatic RTB: There will always be a place for programmatic buying in display—and there has to be, with the sheer amount of inventory available. Let’s face it: the reason the LUMAscape is so crowded is that it takes a LOT of technology to find the “premium” needle in a haystack that consists of over 5 trillion impressions per month. If the super-premium inventory publishers have to sell is spoken for, and the “transactional” premium inventory publishers sell is increasingly going to other (non-RTB) platforms, then it follows that there is very little “premium” inventory available to be bought in the programmatic channel.

The middle layer—deals that are currently being done via the RFP process, is where programmatic direct  is going to take place. In this type of buy, a demand-side platform will create efficiencies that eliminate the cutting and pasting of Excel and faxing and e-mailing of document-based orders, and a supply-side platform will help publishers expose their premium inventory to buyers with pricing and availability details. That sort of system sounds more like a “systematic guaranteed” platform for premium inventory.