Programmatic TV is the future: Here’s how to capitalize on the opportunity
As programmatic TV continues its inexorable march forward, columnist Grace Kaye explains how you can get in on the game and optimize your programmatic TV advertising.
The tide is turning: traditional TV advertising is slowing down, programmatic TV is rapidly expanding, and tech platforms and broadcasters are in frantic competition to claim this new, highly desirable market.
All TV will eventually be bought programmatically
Five percent of all TV ad spend in the US will be programmatic by 2019, according to research by eMarketer. Though modest-sounding, that’s an extremely rapid expansion from $640 million in 2016 to the $3.8 billion it is expected to become.
Research by PWC predicts that programmatic TV will represent approximately a third of global TV ad revenue by 2021, whereas a study by Videology states the consensus among industry experts to be closer to more than half by that date.
Regardless of exactly when, it seems inevitable that all TV inventory will eventually be purchased programmatically. And, considering the example of programmatic display’s incredibly rapid growth, we should expect this to happen sooner rather than later.
What is ‘programmatic TV?’
Like most things programmatic, there is already a fair amount of complexity within this area, beginning with what “programmatic TV” actually refers to. In essence, any TV inventory that can be bought via a programmatic platform falls under this definition.
Within this quite broad category, however, there are several types. First of all, in terms of the content itself there is:
- Video on Demand (VOD): TV that isn’t live, basically, such as Netflix. This may refer to content you watch on a smart TV using an app, or on a laptop, tablet or phone.
- Digital linear TV: Sling TV was the first to create a live TV service streamed via the internet in 2015, but others have followed suit since.
- Video: YouTube is the obvious pioneer in this category. As Facebook rolls out Watch, the distinction between video and TV content is starting to blur, but for the time being, it seems worth being made.
And in the near future, there may be a fourth type of inventory:
- Terrestrial linear: As soon as traditional broadcasters develop the technological means (and many are currently trying), there may come a time when the most expensive and prestigious media inventory is available on the open exchange, or at least via a programmatic platform.
There also seem to be at least two synonyms for programmatic TV: “addressable” and “targetable,” the latter of which may incorporate terrestrial TV inventory purchased up front, but with far more granular targeting than the traditional method.
Lastly, there are the two different ways of purchasing programmatic TV inventory:
- Open exchange: The big communal pool that just about anyone can access, using real-time bidding to auction inventory to the highest bidder.
- Private marketplace: aka “programmatic direct/guaranteed/premium,” which is up front, but based on impressions rather than the traditional guarantees of time and place.
How to optimize programmatic TV advertising
There are a number of unique features of programmatic TV advertising, which can make a considerable difference to the performance of a campaign. My employer (Brainlabs) ran campaigns on VOD, Facebook and YouTube for clients over the past year and has developed a number of insights based on the data that was generated.
As a consumer, you may have already come across this. Basically, instead of being presented with one ad, you can offer viewers multiple options. With one client, we experimented with using three ads and compared the performance with that of each individual ad.
The results were remarkable. We found that using ad select increased conversion rates by as much as 1,200 percent for one ad and 680 percent on another. On average, people were 10 times more likely to convert with ad select rather than a single video.
This feature works by displaying a creative when a video ad is paused. Once again, the improvement to performance it caused was impressive: a 0.1 percent CTR (click-through rate) on normal VOD, increasing more than 12-fold to 1.25 percent when using ad pause.
This is a feature of UK-based Channel 4’s VOD service, though a number of other broadcasters are offering similar tools. It’s basically like embedding a mini-site within the video, displaying information up front rather than requiring the user to necessarily visit the site. As a substitute for the main site, Ad Bloom may — and in this case, it did — reduce CTR but caused a significant increase in conversion rate.
The structure of the ad — usually a list of different topics related to the brand — also leads to insights about an audience’s preferences. Depending on the items on the list, a brand can quickly learn which aspects of its business people find most interesting.
We were also able to test a hypothesis about the bottom-left being the best place for a CTA (call to action), which was confirmed by a considerable majority of clicks coming from this location, rather than the bottom-right.
Optimizing for audience
Having multiple creatives, such as those used for ad pause or Ad Bloom, allows you to generate insights about how various audiences respond to different types of messaging. Running A/B tests in a DSP (demand-side platform) such as DoubleClick can be done efficiently, so that you can quickly build up an understanding of which ads are more effective for different age groups or people with varying interests.
Using the incredibly granular segmentation options of programmatic, video ads can be targeted based on demography, life triggers, interests and what customers are in the market for. Over a short space of time, the target audiences of a brand can be translated into their far more precise digital identity, gradually refining the content and placement of an ad to maximize relevance and performance.
The future of TV advertising
Programmatic TV will finally bring data to the ads served on both short- and long-form content. For the first time in history, advertisers will be in a position to optimize TV advertising according to the detailed, immediate feedback it yields from audiences. It is conceivable, in the same way that Netflix has been doing with its own content, that every component of a TV advertisement will be measurable by its impact, by every stylistic and structural choice.
Media agencies, the ones serving those ads, should expect to become more integrated than ever with the teams creating the ad in the first place. Far from heralding the death of creativity in advertising, programmatic will enhance it in the only way that’s ever been important: enlightening advertisers about how an advertisement actually affects its audience, thus shaping their creative decisions entirely based on the individual.