• by John Piccone , January 23, 2015

I read with delight a series of announcements that appeared after the beginning of the new year. The first was the newsof a programmatic “first” in the TV space, when ESPN facilitated the bidding of avail on the set of ESPN’s “Sports Center.” It reminded me of the leap that Google’s TV Ads product had made by automating the process by which ads could be bought on TV through an interface.

Following fast on the heels of ESPN’s announcement was the latest news about NBCU’s focus on comprehensive inventory yield optimization through better data and targeting, just in time for the upfront strategic planning cycle. An important difference to note is that this audience targeting does not foresee the need for programmatic bidding, instead relying on the tried, tested and true eye-to-eye negotiations that have served TV well for decades. But, similar to the ESPN announcement, this approach also focuses on the reevaluation of inventory by its owner to improve the value for advertising customers.

How do these audience buying and selling initiatives improve the TV landscape for business owners and consumers? Do all parties benefit accordingly? Let’s take a peek into the crystal ball.

ESPN’s Programmatic Trading

Agencies: Operational efficiencies of buying and selling ads through interfaces will eventually reduce operating costs. Agencies will leverage their own or licensed advertising technologies in an effort to beat the market price as sellers upgrade their own advertising technologies.

Sellers: Depending on the class of inventory open to the bidders, the opportunity for incremental yield against underappreciated inventory improves. However, inventory pools will remain small until sellers have a comprehensive understanding of their inventory based on better data and different selling techniques.

Advertisers: Success measures such as return on ad spend will clarify the value of bidding practices, eventually moving marketing from a cost center to a profit center.

Consumers: Ads bought for price instead of purpose might not resonate as well with consumers.

NBCU’s Audience Targeting Platform

Agencies: Contextual and audience-based planning and buying will make their move beyond demo-based efforts. Price per spot (CPM) and reach (GRPs) will morph to become delivery metrics instead of success metrics.

Sellers: Same benefit as agencies, with the additional opportunity to reclassify inventory to improve yield and expand the advertiser list.

Advertisers: Audience targeting will put the focus on performance metrics beyond reach and frequency goals, thus clarifying which target audiences generated which results. Over time, advertisers will pay more for reaching the right people, a strategy that will drive more of their business.

Consumers: Better targeting improves creative output and ad relevance, enhancing the viewing experience.

The beautiful thing about these two distinct approaches is that they are not mutually exclusive. In time they will merge, and “the machines” will be programmed to manipulate the data, manage the process and measure the outcome of marketing objectives. Dozens of companies will put their best foot forward to own a piece of the process, relying on the simple fact that the forces of content advertising and distribution are colliding, and change is inevitable.