Published April 2015
Our Evolution of TV series explores how TV is shifting to internet delivery. Programmatic TV is one dynamic driving the shift and potentially transforming the way TV is bought and sold. Here we dispel the hype and discuss the positive impact for brands, programmers, and distributors.
Television advertising is big business. How big? TV ad spending in the U.S. is projected to reach almost $84 billion per year by 2018. Traditionally, many of these billions are spent during upfronts—that time of year when traditional TV networks and, increasingly, digital media companies gather to present their fall lineups and pitch marketers for ad dollars. Whatever TV inventory hasn't been sold, or is held back, is then sold in what is called the scatter market.
While this traditional TV buying and selling model has worked for decades, it's not without its inefficiencies. Chief among them is the fact that many of the interactions that occur are manual: requests for proposals, insertion orders, and ad trafficking, not to mention the endless emails, spreadsheets, and even faxes. So it's no surprise that, as in other areas of advertising, there's a lot of chatter in the TV industry about whether a digital approach might be more efficient.
Programmatic TV buying is just such a solution, and one that could apply digital advertising's efficiency models to TV advertising. We define programmatic TV as a technology-automated and data-driven method of buying and delivering ads against TV content. This includes digital TV ads served across the web, mobile devices, and connected TVs, as well as linear TV ads served across set-top boxes.
As with any new technology, though, there are skeptics, and the "why change what's not broken?" mentality has its adherents. We're here to say that, while the TV buying and selling process isn't exactly broken, it could be better, simpler, and faster with programmatic TV.
The programmatic TV skeptics, understandably, are focused on its present capabilities, which are lacking. Today, the programmatic TV solutions presented to programmers (the owners of one or more television channels), distributors (service providers that deliver television channels), and brand advertisers are more sizzle than substance. With the majority of these solutions, audience targeting and digital automation of the linear TV workflow hasn't caught up to the level of sophistication that's prevalent in programmatic buying across digital video.
However, programmatic TV has the potential to be a win for audiences, advertisers, and the television industry itself. Imagine when programmatic TV buying is a reality—when buying and selling is instantaneous and data-driven. Programmers and distributors will be able to monetize TV ad inventories properly regardless of screen size, including niche programming and content on connected devices (a pain point for most of them today). Brand advertisers will be able to get even more specific with their targeting, and viewers won't be inundated with repetitive, irrelevant ads.
In our in-depth Evolution of TV series, we've been discussing the complexities and opportunities associated with the 7 Dynamics Transforming TV. Here we delve into one of those dynamics, programmatic. We dispel the hype and concentrate on the promise (and yes, the challenges) for programmers, broadcasters, and advertisers.
Read the article below to learn more about how programmatic has the potential to change TV as we know it.
Posted by Rany Ng, Director of Product Management, Video