Meet programmatic, the digital cousin of targeted TV advertising

Ravi Peravali

Consumer viewing habits have changed a lot in recent years, as the television programs can nowadays be watched on a variety of devices and platforms: tablets or Smartphone’s, laptops, and connected TVs. On the other hand, the television screen itself is increasingly used for viewing over-the-top (OTT) content, from providers such as Netflix and Hulu, through the Internet.

This shift in the consumer-viewership ecosystem presents marketers with a highly fragmented audience. The marketers do not care about the device or platform from where they get impressions, as long as their target audience is reached.

While, targeted advertising based on program ratings, day parts, and genres has always played a significant role in the television and broadcasting industry, a highly sophisticated and successful ad-serving model already exists for television’s digital cousin—for rendering of advertisements on web and mobile. Digital ad serving offers the benefits of precise audience targeting, along with measurement of reach and attribution, with high levels of process automation.

The allocation of ad spends across television and the plethora of digital media will benefit if television advertising matches the standards set by digital advertising. This is where programmatic TV advertising has the potential to help marketers make a smart choice for their advertising placement and ad-spend allocation.

What is programmatic TV advertising?

Programmatic TV advertising is a set of data-driven solutions that enabled buying and delivery against television programs across mobile devices, web, set-top boxes, and connected TVs. Traditional TV advertising (buy and sell) is driven by program and network ratings, both for placement and pricing decisions. With programmatic, audience intelligence and household characteristics will become the key factors driving these decisions.

A robust programmatic TV advertising solution should enable:

Process automation -For inventory management and views, and purchase transactions

Ad targeting optimization - Using trusted audience intelligence and viewership data

Measurement - Impressions and reach, and attribution linkage

One area where programmatic TV advertising will differ from digital advertising is real-time transactions. Digital ad serving has successfully adopted real-time bidding and transactions via ad exchanges for a sizeable portion of its ad inventory. Even though platforms are being developed and technology companies have automated programmatic offering, real-time buying is far from reality in TV advertising, at least as of today. The good news is, it is not even necessary.

Unlike digital, the television ad inventory is limited, and doesn’t grow at the rate it does for digital. The difference is stark for remnant inventory, which is abundant in digital and benefits from real-time auctioning. Television networks on the other hand, especially the primary networks, have traditionally enjoyed the certainty of sales, and would be reasonably averse to real-time transactions upsetting that.

Programmatic TV advertising today

There is definitely a shift towards niche-audience intelligence data (beyond geography and demographic profile) to enable targeted ad buying and pricing. However, processes, related to ad routing and delivery, continue to remain largely manual.

This is also the reason that the term programmatic itself means different things to different people when applied to television advertising. In spite of some overlap, programmatic differs from addressable advertising and data-driven targeted advertising. Addressable advertising is the ability to deliver different creative’s to different households for the same program airing, depending on household characteristics. Targeted advertising is just one feature of the programmatic solution besides automated inventory management, ad buying, and delivery across devices and platforms.

As outlined by television advertising industry leaders, a major concern that networks have with programmatic TV advertising is de-valuing of their ad inventory, especially the premium inventory. Additionally, third-party data integrations are not as mature as it is for digital, and trusted data accessibility will be the key to implementing an automated ad-buying and delivery solution. The technology infrastructure required for programmatic requires heavy investments and are still piecemeal or in early stages of experimentation and testing.

Programmatic TV advertising: potential

Programmatic TV advertising has its biggest supporters among media buyers seeking an integrated platform for TV and digital purchases. It will help them understand the audience mix better and improve their ad spend efficiency across the media.

Cable networks with lower-than-average ratings can better monetize their unsold and undervalued inventories. Media buyers using traditional methodologies avoid low-rated programs completely, and that ad inventory can open up with programmatic targeted advertising.

Lastly, the returns on the premium inventory itself can be optimized by networks with a shift to programmatic. Audience attributes and impression-driven pricing will help broadcasters meet the demand they may not have known to exist earlier.

Programmatic TV advertising: future

Data-driven targeted advertising and reach measurement have gained great momentum in the last few years. They can be seen as a precursor to implementing full programmatic for television advertising. Targeted advertising is getting more specific and interest-based. The OTT and streaming space share more similarities with digital, and will adapt to programmatic easier than linear television.

Digital advertising today uses a mix of real-time bidding via ad exchanges and third-party ad serving via ad networks. Traditional ad buying for television spots will continue to work with programmatic in the next few years, with both relying on audience data to make decisions.

Interest in programmatic has sustained despite a slow beginning and it will continue to be evaluated and experimented with by broadcasters and media owners. About eight in ten advertisers told IAB that a multi-platform solution including TV and digital video, under one buy, is important. The brands and marketers who advertise on digital platforms demand the same accountability, control, and targeting precision for television too. And the broadcasters will need to find ways to meet that dema

The article is authored by VP, Media & Entertainment Practice at Tavant Technologies