I was talking (emailing actually) about yesterday's post with a friend of mine who happens to be a finance wiz. My post on Friction reminded her of the changes that have occurred in stock trading over the last decade. When she started trading stocks they were still quoted in fractions. Then, they went to nickels at some point and by the time she left trading they were in pennies. One of the reasons the technology of rapid, quantitative, algorithmic trading has been growing by leaps and bounds is the loss of these spreads.
Now, so much of the trading is based on computer models and is done electronically. However, as a result, the profit margins have been reduced so greatly that LARGE volume must be done to make it worthwhile for a broker. When my friend was trading on the floor the avg payout on a single share of stock traded was $0.06 or $0.07. Now, this volume is done through programs electronically and the payouts are fractions of a cent.
This technology change has pushed out human brokers who still rely on the old fashioned way of trading out of the biz. Interestingly, she saw Jeff Zucker's comment "Analog dollars to digital pennies" through this lens. Technology provides huge advantages in costs & increasing production, but there are going to be some who are left out in the cold if they don't adapt in time. The benefactors change as tech changes.
I see this all the time when speaking with publishers. They conceptually want to adapt but they are afraid and the the people and organizations need to embrace the changes. A role inside the digital media organization that understands rapid change is Ad Operations this group has seen a massive shift from coding html on a page to serve an ad to now dynamically managing inventory across a frankenstein system of ad servers, order and yield management systems, data providers, rich media vendors, analytics, third-party ad networks and the list goes on. Digital media is looking more like the stock market every day and the trafficker is a lot like the broker of old, we now live in a data economy so the inventory analysts will run the business and those that are still hard coding ads to a page are long gone.
