The future (and present) of programmatic TV
Columnist Grace Kaye takes a look at the current state of programmatic TV advertising and predicts what we can expect to see within the next few years.
Regardless of exactly when, it seems inevitable that all TV will eventually be bought programmatically. Traditional TV advertising has started to slow down as digital has boomed, leading to an arms race between broadcasters and “super-platforms” (Google, Facebook, Amazon) to develop programmatic TV.
It’s no longer really about when, but who — there are so many players, and so many different forms of programmatic TV out there at the moment, it’s easy to get confused about what exactly programmatic TV is.
Here’s my take on the current situation, and my predictions for the future.
How is programmatic TV at the moment?
Open AP (Turner, Viacom, Fox)
This one’s not programmatic at all, but it’s a sign of change in the US TV industry. In an effort to improve targeting, Turner, Viacom and Fox joined forces this year to form Open AP, a centralized digital user interface that enables data-sharing, improves data transparency and enhances targeting.
Media inventory still needs to be purchased manually, and the performance of a campaign cannot be monitored. However, this does offer a more data-driven approach and may be a stepping stone towards programmatic TV.
Sky launched AdSmart about three years ago, allowing advertisers to purchase spots in real time via their app, Sky Go, and to overlay first-party data with Sky’s own audience segments and a number of audiences from third-party data providers.
As the broadcaster announced earlier this year, the ultimate plan is to make all of their TV inventory available programmatically. Even live TV will ostensibly be accessible via real-time bidding, with highly granular targeting and the opportunity to measure performance via their own DMP.
Google, Amazon and Facebook
Google announced in April that it’s adding TV inventory to DoubleClick Bid Manager. DoubleClick is a well-developed platform for enabling targeting and monitoring, so there’s no doubting its capability there. The question, however, is whether they’ll successfully get the co-operation of broadcasters. Time will tell, but until they do, this isn’t really an option.
Amazon’s pay-TV service, Amazon Channels, which recently expanded into the UK and Germany, is a slightly different approach. Instead of offering advertisers a programmatic route into traditional broadcaster platforms, its approach is to bring live TV to its own platform. Once again, it certainly has the data to provide targeting and monitoring, but the compliance of all broadcasters is uncertain. British broadcaster ITV has, however, recently agreed to run its ITV Hub catch-up service via Amazon’s platform.
Facebook’s plan is to sell broadcasters its ad tech and data to enable programmatic TV buying, but so far only on OTT (over-the-top) devices or through VOD (video on demand) apps. Still, there’s no reason this approach might not also be applied to linear TV, if and when broadcasters stop resisting.
In the UK, VOD ad spend grew by 12.6 percent last year, with platforms such as 4OD and Sky Go leading the way, according to an Advertising Association/Warc report. This was still only 4 percent of the overall TV ad spend (the rest going to spot advertising), but it’s indicative of the growing popularity of this medium among advertisers looking for a more cost-effective alternative to live TV.
Unlike with upfront buying, VOD programmatic allows advertisers to target specific audiences and to pay by impression (rather than estimating according to viewing figures). A well-run programmatic campaign ought to offer any business a better bang for their TV ad buck.
The future of programmatic TV
Although programmatic still makes up a modest share of overall TV ad spending, it’s expected to more than double to $2.16 billion this year.
Channel 4, Channel 5, and most recently ITV are developing ad tech to enable addressable TV advertising, i.e., ads which are targeted to households and can be bought in real time rather than upfront.
As the Advertising Association/Warc report revealed, internet ad spend is expected to rise 8.5 percent during 2017, while TV is forecast to fall 0.5 percent. The unilateral move towards addressable TV reflects traditional broadcasters’ awareness of the threat of digital and the need to do something to compete with the efficiency of automation.
In the short term, the target businesses will be SMEs (small and medium-sized enterprises), but this ought to pave the way for even the biggest spenders investing in programmatic TV. If display advertising could earn the trust of someone as large as Unilever, then there’s no reason a mature form of programmatic TV won’t be able to do the same.
We should hope to see all TV inventory, eventually, available on the open exchange. At the moment, there is an obvious commercial incentive to keep it mostly within the Private Marketplace (PMP), but this is partly due to programmatic and display being misguidedly conflated.
Display inventory is an ocean, whereas TV is, in relative terms, a pond. Broadcasters will therefore be able to avoid the “race to the bottom” effect that display is sometimes accused of.
Within the next three years, we can expect to see TV obtain the supremely data-driven status of digital. Marketers from businesses of all sizes, if they haven’t already, should be adjusting their strategy accordingly.