What Is Programmatic TV Advertising?


SpotXchange

While the TV industry is now reaching a point where it is embracing the programmatic as the future of the industry, there’s still much work to be done when it comes to laying down the track for automated buying. The issues and opportunities have been neatly encapsulated by a new report published by SpotXchange.

Many of the arguments in programmatic TV’s favour will sound familiar to anyone to the transformation seen in other channels, so things like operational efficiencies, better yield management, data-driven transactions and real-time optimisation come to the fore. However, household – rather than just individual – addressability is likely to be more significant for TV buyers than it would for advertisers on other channels.

SpotXchange say the end point will be ‘a future that will allow sellers and buyers to transact impressions seamlessly across broadcast, cable and digital “over-the-top” (OTT) sources — on the open Internet via devices such as Roku, Playstation, Xbox or a desktop computer — all on the same plane, calibrating and correlating impact in real-time for all forms of delivery’.

As with most of the ad tech revolutions, change will be primarily driven by the demand-side, as highlighted by the IAB’s research from last year’s NewFronts:

Importance of Multi-Platform Solutions that include TV and Digital Video Under One Media Buy

 

However, the sell-side will play its part too of course, and SpotXchange say that smaller TV industry operators may be particularly well-placed to reap the early benefits of programmatic. These operators — cable networks with limited viewership, or TV stations in smaller markets, for example — tend to package their inventory in four different ways:

1. Premium/tentpole inventory (series premieres and finales, live sports, specials, etc.).

2. High demand dayparts, such as prime, outside of tentpole events.

3. Packaged inventory that can’t be sold as standalone, but that buyers must purchase along with certain high-demand programming.

4. Inventory that is sold to direct response (DR) advertisers, which tends to be in dayparts that brands do not value from a mass audience perspective.

While operators are expected to continue to charge premium CPMs for the top tiers of inventory, the opportunity to boost yield on lower tiers – i.e. those sold to DR advertisers, which can be sold in the US for as little as $1 CPM. As the study notes, remnant inventory is also typically bought with no audience guarantees in exchange for the low rates, in spite of the fact that Nielsen data shows that 65 percent of US TV viewing is on programmes with a rating of under 0.5,4. SpotXchange say that enhancing this ‘remnant’ inventory — which is often avoided by advertisers — with data represents a huge opportunity.

Technological and Cultural Barriers Could Slow Progress

The report concludes with a refreshingly honest assessment of programmatic TV, noting that ‘current solutions are fragmented and piecemeal, and long-established processes and business practices may slow the transition’. Content owners are also likely to be concerned about how programmatic could commoditise their inventory and have a detrimental effect on pricing, which was the impact seen across the digital space when it was used for display advertising, However, it’s worth noting that things like fraud, poor viewability and click-bait sites have exploited programmatic’s weak spots when it comes to display, so TV and video will in all likelihood fare better once viewability and fraud issues are addressed.


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