Programmatic TV in 2018: The next big thing in AdTech?

Television advertising is big business. How big? Global TV advertising in 2017 is projected to reach almost $182 billion. Traditionally, a significant chunk of this amount is spent during upfronts – that time of the year when TV networks gather to present their upcoming fall series and pitch marketers for ad dollars. Whatever inventory isn’t sold, or is held back, is then offloaded in what’s called the scatter market.

While this traditional ad buying and selling model has worked great for decades, chinks in the armor are beginning to show. At a time when most media is predominantly digital, ad inventory for TV is still being bought and sold manually – requests for proposals, insertion orders, and ad trafficking are all executed over emails, spreadsheets, and even faxes. So, it’s no surprise that there’s been a lot of chatter in the television industry about whether a digital approach might be more efficient.

What is Programmatic TV?

Programmatic TV can be defined as an automated and data-driven approach to buying and delivering ads against video content on television, including ads served across the web, mobile devices, and connected TVs, as well as linear TV ads served across set-top boxes.

In short, programmatic TV represents any TV ad buy that uses data and automation to more precisely target specific consumer segments, with the end goal of driving higher ROI on media spend. This definition is in contrast to programmatic advertisingOpens a new window on mobile devices and personal computers, where every ad is targeted to an individual user. For television, only a relatively small amount of inventory is what we call “addressable”, meaning that an advertiser can target individual households. Today, we have about 42 million addressable households in the US. Advertisers can purchase inventory from cable and satellite companies to send individual messages to these households.

However, on the bright side, the specificity of programmatic TV has the potential to be a big win for audiences, advertisers and the television

                                                          (Difference  between Linear Tv and Non- Linear Tv)

industry. Joe Camaco, CMO at Sabio Mobile believes, “Traditional TV measurement mechanisms are inefficient and becoming more and more irrelevant.  However, it requires a huge change in mindset to move away from the decade’s old system.

Instead of siloed TV spend, Programmatic TV could now be part of the overall digital spend and help target the right end users more efficiently, allowing advertisers to combine the advantages of mobile with the reach of TV. The whole purchase funnel is also being driven by new smart devices.  For example, if a user has Amazon Fire TV and/or Echo then it’s a high probability that they’re also Amazon shoppers.  Programmatic TV also opens up several new layers of targeting including set-top device level, app level, and show level targeting.”

“TV networks and cable operators have since long voiced that a lot of TV inventory is undervalued, and what better audience targeting will help revitalize its value” he adds.

Although, some inventory vendors worry that programmatic might commoditize and further devalue their inventory. Larger networks with a robust business aren’t too keen on changing the way they sell. Smaller television networks with a lot of inventory to sell will embrace programmatic a lot faster than a network like Time Warner Cable.

Why is Programmatic TV a billion-dollar opportunity?

There’s a host of reasons why programmatic TV could well be the next big thing for the television industry. What could be better than a single piece of technology that automates planning, buying, and measurement across channels, screens, and formats? This is precisely the promise of programmatic TV:

 (The above Infographic points out key players in the Programmatic TV landscape)

• Automated buying: Traditional TV ad buying practice is still manual and by the time campaign reports are generated, it’s already too late to do any optimization. “Advertisers need to stop building silos around different types of TV activation and focus their efforts on a unified omnichannel approach to TV buying. Technology is available today to allow advertisers to build a singular media plan with consistent targeting and reporting and activate across all of the screens and media types available to today’s consumer” says Chris LaHaise, TV Solutions Manager at dataxu.  Programmatic TV lets buyers plan, execute, and measure in conjunction with display, providing greater visibility into all aspects of an ad campaign. Automated buying helps speed up processes while eliminating manual ones.
• Data-driven targeting: Data is at the core of programmatic, and this holds true for both TV and digital. With programmatic TV advertisers can go beyond the age, gender, reach, and frequency components of audience targeting based on gross rating points (GRPs). Leveraging first, second and third-party data sets can also help advertisers optimize for more personalized, relevant content to users, even as they switch between screens. Speaking about the massive opportunity that programmatic TV is, Jon Nevitt, VP of Marketing at Taykey says, “To date, a lot of vendors have focused on streamlining workflow but, for programmatic TV, there’s much bigger upside in improving data-driven targeting. Perhaps 1:1 addressability for every impression is the holy grail for buyers, but there are a breadth of short-term opportunities to bring more data to bear on TV buys. Audience interests are more dynamic and fragmented than ever, so bringing real-time interest data to the TV landscape presents a unique opportunity to drive increased engagement. There are also numerous opportunities to enhance audience-based targeting beyond basic demographic segments and better optimize creative executions against these segments.” 
• Cross-screen measurement: For marketers, the ability to measure the effectiveness of campaigns across multiple channels including TV could well become a reality in the not-so-distant future. Marketers could develop a unified KPI for TV and digital ad optimization similar to GRPs, or impressions, conversions, etc.
• Unified campaign management: Over 77% of TV viewers todayOpens a new window , (Click to read about The new multi-screen world study by Google) watch TV with a tablet, phone or a laptop close by, it’s no wonder that viewer attention is divided. A unified buying platform provides brands and advertisers with a single, seamless platform from which they can plan, buy, measure and manage all their advertising campaigns holistically, irrespective of whether audiences are viewing ads on set-top boxes or smartphones.
• Real-time optimization: Programmatic TV will allow marketers to leverage real-time or near real-time feedback to improve and optimize campaign performance. Chris advises, “As a follow-up to the concept of unified TV buying, advertisers need to stop settling for limited contextual based buying plans and begin to take more advantage of audience-based buying techniques where they can leverage their own first-party data.”

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Why programmatic has yet to fully take off
While programmatic TV offers a world of opportunity brands and advertisers, it’s still quite new. Many cable, and broadcast networks are hesitant to make their premium inventory available to programmatic buyers due to a belief that data-driven advertising might commoditize inventory and decrease prices for premium TV ads. “Understanding the ways in which various addressable properties can work together as complement as opposed to mutually exclusive substitutes. Addressable TV can come in the form of linear, VOD, and even connected TV, but does not need to cannibalize traditional TV budgets, rather they work together to enhance the benefits of each” opines Chris.

Another major factor impeding largescale adoption of programmatic TV is scalability. In the US, only 13 percent of all households have addressable capabilities. Chris says, “Scale has traditionally been a challenge as only a subset of cable and satellite operators have addressable capabilities and only a subset of the households within those operators have enabled set-top-boxes.”

Unlike online ads that can measured through metrics such as CTRs and video completion rates (VCRs), establishing engagement metrics for programmatic TV is a lot harder. Jon says, “There are many factors preventing more of the Industry’s $70 billion in TV spending from moving online more quickly. Standardization and integration are probably some of the key themes. There isn’t even a consistent definition of programmatic TV itself, let alone consistent methods for applying data across media owners or measuring cross-platform reach and performance.” 

To unlock the complete potential of programmatic TV and achieving largescale adoption means overcoming several ideological and technical challenges. Advertisers, programmers, and broadcasters need to appreciate what programmatic TV can do instead of what they think it does. Joe believes, “The biggest challenges with mass adoption are the change in mindset of the industry as well as growth of programmatic TV technology. Real time bidding as well as measurement for programmatic TV are still in its infancy but is surely on its way there.”

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Programmatic TV might not be quite ready for “prime time” yet, but as advertisers, programmers, and adtech Opens a new window providers work through these challenges, programmatic TV will begin to live up to its potential.