Commentary
AMC Gives Hope To Programmatic TV Buying
- by Ilana Nolte , Op-Ed Contributor, October 7, 2015
Kudos to AMC Network for starting to offer a percentage of their TV ad inventory through programmatic buying. The announcement last week brought media agency leaders a sliver of hope.
The buzz surrounding programmatic TV has been heating up for some time. However, AMC is one of the first and only premium suppliers offering some of their TV ad inventory through programmatic buying.
The reality is that true programmatic TV at scale is not quite here yet. In a report earlier this year, IPG Mediabrands told Ad Age that programmatic TV is expected to surge over the next few years. This is not the case.
Agencies need to educate the industry and marketers on the realities of today to avoid confusion, celebrate and commend milestones, such as AMC’s announcement, and accelerate drivers for programmatic TV to arrive at scale sooner than 2019 as currently projected.
In the most basic definition, programmatic TV is the use of technology to connect TV media buyers and sellers in a uniform, automated environment. Programmatic TV utilizes a combination of Set Top Box (STB) data, third-party syndicate audience data and clients’ customer data to scientifically identify audience profiles based on analysis and then target them with 100% accuracy.
Unfortunately, tech infrastructure is not set-up to deliver this at scale. The industry is lacking advanced targeting, real-time bidding, supply-side platforms and private exchanges.
More importantly, programmatic TV in the truest definition requires on-demand purchase. Since the networks desire upfront commitments for the majority of their inventory, there is little inventory available to purchase through these methods at scale at this point in time.
Not to mention, network inventory is far from uniform and differs in sophistication by network and is still being managed in excel. Doesn’t sound automated, does it?
But this doesn’t mean we don’t have the capabilities of better audience targeting with TV these days. We just need to clarify what this means. When industry professionals say programmatic, what they are really saying is data-driven TV.
Addressable TV is one form of data-driven TV that is available more readily today.
While traditional TV buying is based on a broad demographic group such as adults 18-34, addressable TV uses customer data and syndicate audience data to identify targetable households that are purchased via the MSO providers: DirecTV, Dish, cablevision and Comcast.
This equates to roughly 42MM households. By EOY, we are expecting TWC, Cox and Verizon to bring the total HH’s reached to over 60MM (half of all TV households in the U.S). While this buying is not performed automatically, this "matching" against more granular and specific audience profiles drives more effective audience targeting of TV ads.
So what does all this mean for TV buying today?
Regardless of how it’s purchased, whether it be upfront, scatter, programmatic, or via addressable/hyperlocal, the TV space is a sellers’ market, while the digital space is a buyers’ market.
It is up to the agencies and marketers at large to recognize this reality, so we can accelerate change and enable true programmatic TV at scale sooner than later. We need more Networks like AMC to start selling their shows programmatically so we can drive more relevant advertising for viewers with more valuable targeting for marketers.
Some very good points, Ilana. The most important being the fact that in TV, for the most part, the sellers are in charge, not the buyers. That doesn't mean that the buyers do a bad job; it does mean that the sellers---especially at the network level---control the marketplace and, in line with some ideas put forth by the buyers, they--the sellers--- make the rules.
As for the assumed magic of superior targeting offered by using "big data" set usage ratings merged with "third party" product use/purcahse data, then, again, merged with Nielsen's ratings to attain "100% targeting efficiency", this is a fine theory but it is also unattainable, since any TV seller has to sell 95% or more of his available GRP inventory one way or the other and the resultant "packaging" or bundling requires the buyers to accept content that is not perfectly targeted at one's prime prospects. I also question the definitions put forth for this so-called refined targeting as it relies on highly suspect data as well as naive assumptions regarding what targeting actually entails. But let's save that for another discussion.
The "Theory" has won awards for both Netflix and Amazon. And it is just getting started. 1st inining. Unless of course you don't care about costs and risks.
Well written with the nitty gritties involved in it. AMC has taken a good step. Somewhere, at some level Programmatic TV has to be adopted. The question is the scope and how!. Will the networks open their private inventory to get hooked up with private exchanges for sale? and are they operationally ready to accept the on demand purchases? I would like to understand this more!
Rajaram, as the number of ad-supported channels and platforms continues to rise while ratings fragment it is likely that some advertisers and their agencies will be willing to buy a certain amount of their TV programmatically, as this is a time saver and allows a certain part of the total budget to seek out more cost efficient target group tonnage. I seriuosly doubt that this will include most major sports attractions, news shows and many entertainment programs that are offered by the networks and larger cable channels. The big sellers have no incentive to lose control of their "premium" inventory and negotiating power by going programmatic. As a result, automated buying will probably be focused on very low rated content that is not seen as worth the bother to handle manually and, in most cases, programmatic will account for a fairly small share of total TV spending by advertisers with this mindset.
That said, there are many areas where programmatic can be applied. I have mentioned in previous posts, the possible use of programmatic to dispose of suddenly cancelled and perishable time. I also believe that spot TV might be amenable to programmatic as there is little to differentiate between one station's news audience and anothers or the kind of viewer that is attracted by a rerun of "Seinfeld" in Scranton versus Peoria, providing both are aired in the same time period and face local news on competing stations. Thus spot buys are more of an add-on tonnage buy for national advertisers who use network TV or national cable to obtain "umbrella" coverage.
To sum up, the key words are---in my opinion--whether the content is more of a COMMODITY, whether it is VERY LOW RATED to the point where Nielsen won't issue rating estimates for it, whether it is on channels that MIGHT NOT BE CONSIDERED otherwise, whether is is seen as not worth the TROUBLE, and most important, the "wow"and perishability factors which make the "premium" shows so much more MERCHANDISABLE for advertisers concerned about their image.