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July 12, 2016
Jessica Hawthorne-Castro

Dispelling the Myths of Programmatic TV

In March, Fox became the latest network to jump into the programmatic TV waters by making national cable inventory available in a private exchange to allow for greater automation and application of data, according to AdAge’s “Fox Takes Stab At Programmatic TV Advertising.

“Initially broadcast inventory won’t be available and the programmatic platform will not include real-time bidding,” states Fox’s Toby Byrne, in the article. “We are using technology and automation to enhance the transaction process.” According to AdAge, NBC Universal made a similar announcement in April, with plans to make both broadcast and cable inventory available in a private exchange.

Defined as the data-driven automation of audience-based advertising transactions, programmatic TV changes the industry standard of marketers relying on show ratings to determine desirable audiences for their ads. Instead, marketers use audience data to allocate advertising to optimal places. AdAge, which further defines programmatic TV as “all spending transacted through a technology platform rather than a traditional insertion order,” reported last year that such advertising spend will comprise 17% ($10 billion) of TV budgets by 2019—up from 4% ($2.5 billion) in 2015.

The definition of programmatic TV and the expectations associated with it both sound straightforward enough in theory, but in reality, they are complex. In fact, we’re seeing a lot of confusion swirling around the concept of programmatic TV. “As we saw in the early days of programmatic display, despite increased industry interest and new technologies, programmatic TV isn’t well understood by marketers,” writes Altitude Digital’s Jeremy Ostermiller in “Why Programmatic TV Doesn’t Equal Programmatic Video.” “In turn, they are hesitant to adopt this new method into their overall media buying strategy.”

Here are four things you should know about programmatic television:

1. In TV, the label “programmatic” is a misnomer.

In the digital world, programmatic automates all of the media buying processes, allows buyers to set parameters (e.g., bid price and network reach), and utilizes behavioral and audience data to adjust variables and determine optimal campaign settings. Using algorithms, programmatic filters impressions and manages other tasks that used to be handled on spreadsheets. In the television world, programmatic isn’t automated at all. On the 2-D measurement side of the equation, in fact, buyers are simply buying against a demographic instead of an audience or a commercial pod. They are buying the media, putting in their bids with the station or network reps, and waiting for approval on those bids. Incidentally, direct response media buyers have been buying against audience demos for decades, but we didn’t call it “programmatic.”

2. The broadcast and cable networks are still leery of programmatic.

“One reason programmatic TV hasn’t exploded is many broadcast and cable networks are hesitant to make their premium inventory available to programmatic buyers,” writes Videology’s Scott Ferber in “Programmatic TV 101: The multi-billion-dollar ad tech that’s transforming television.”“There remains a fear that data-driven advertising will commoditize inventory and decrease prices on premium TV ads.” Plus, he adds, TV networks lack the incentive to “change their ways” as online publishers have because they are still having great success selling most of their inventory through guaranteed, up-front deals in a scarce marketplace, compared to demand.

3. It’s too easy to fall into a “static” programmatic state.

Whether you’re buying digital or TV advertising—or some of both—you should avoid falling into a static programmatic state. In other words, don’t rely on the technology to make all of your advertising decisions. Rather than target one specific commercial pod, for example, you should take a more fluid approach by delivering specific, targeted content in a very customized way to a certain viewer type. If you want to reach adults in the 35- to 45-year-old range who like horses, as an example, then you may want to buy time on CNN from 8 to 10 a.m. Monday through Friday—rather than purchasing media against the third commercial pod on “Anderson Cooper 360°.” This will allow you to broaden your rotation and still specifically target a certain demographic. This strategy also allows you to get the discounted media rates and the flexibility to target a certain audience (versus specific programming).

4. To work, programmatic TV has to go beyond real-time bidding.

Simply layering technology on top of media inventory isn’t going to put the power of programmatic advertising into TV media buyers’ hands. For it to work in the television environment, programmatic will need to go beyond real-time bidding and automating inventory management and do a better job of incorporating the information, data, analytics and other elements required to make it a true end-to-end buying experience. Ultimately, programmatic TV will be rooted in the data science and analytics associated with campaign optimization. And while the industry is certainly moving in this direction, we’re not there yet.

We’re always ready for the term du jour in the fast-paced world of advertising and “programmatic” is currently on the plate even though there is nothing new about it. For now, TV media buyers should remain focused on creating customized media plans to reach specific consumer groups, demographics or geographic regions. By developing a great customer experience—and not just dictating to the customer—advertisers will be able to more effectively reach today’s consumers while continuing to hone their tech-enabled media buying processes. In the meantime, we’ll wait for the next trendy term to emerge and approach it with the same metrics-based rationale.

 

Jessica Hawthorne-Castro is the CEO of Hawthorne, an award winning technology-based advertising agency. She can be reached at (310) 248-3972 or via email at jessica.hawthorne@hawthornedirect.com.

 

 

 

 

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