• by Joe Abruzzo , July 15, 2014

Programmatic buying is getting a good deal of attention -- and recent articles have speculated on leveraging infrastructure created for digital programmatic to accelerate the rise of programmatic in television. While this may be easier said than done, several programmatic vendors are investing heavily in building the infrastructure that will be required to deliver a programmatic TV capability. Things are progressing quickly and the results are encouraging.

For TV, the benefits of programmatic will ladder up to: more simplified and effective workflows, improved targeting efficiencies, flexibility in moving/canceling inventory and more timely performance reporting.

In comparison to online display programmatic, the initial expected benefits for TV programmatic will be modest. In comparison to traditional TV buying procedures, TV programmatic will represent a significant step forward.

Workflow

Each of the programmatic vendors is developing systems for improving the buying-selling workflow. Automating workflow requires systems designed to communicate order specifications, place, and confirm orders. The systems then extend to trafficking and delivery of spots to ad servers, and ultimately to reporting of in-flight impression delivery and campaign performance reporting.

Inventory Sources

Each of the programmatic vendors is affiliated with one or more multichannel video programming distributors (MVPDs) and at least one of the satellite networks. Affiliations with national cable network also exist but on a more limited basis. The amount of available TV inventory tends to be limited to the unsold portion of available inventory – so scalability is currently limited.

As additional MVPDs align with programmatic vendors, programmatic TV will enjoy increased legitimacy. And as national cable networks evaluate how to best monetize this opportunity, the amount of TV inventory that is available to advertisers is likely to mushroom.

Targetability

Targeting at the impression level is the ideal case, with an opportunity to segregate message delivery to specific households. This capability is limited to cable/satellite systems that currently offer household addressability: Dish Network, DirecTV, and Cablevision. The number of targetable households is currently small, ranging from approximately 3 million for Cablevision to approximately 8 million for Dish Network to approximately 12 million for DirecTV. With the merger of Comcast and Time Warner, expect a rapid expansion of this capability.

In cases where household level addressability is not possible, programmatic vendors are offering targeted linear TV buys – for example, rating points on ”high target composition” networks, where viewership is concentrated around specific people segments.

In each of the above cases, targeting is enabled through the use of first- and third-party databases.

Automated Bidding

In cases where bidding on individual TV impressions is an option (addressable households), auctions take the shape of a futures market with the bidding process taking place before and up to air date.

In the linear case, media agencies negotiate a “best cost” with the programmatic vendor for the purchase of a specific number of ratings points across an agreed to network/daypart mix. Ironically, these types of buys need to be monitored on a weekly basis to ensure adherence to ingoing network/daypart agreements.

Flexibility

Programmatic TV offers advantages in the area of flexibility. Flexibility includes the ability to get in and out quickly, and the ability to optimize while in-flight. Lead times required to secure TV inventory programmatically tend to be shorter than the traditional purchase process.

For linear TV schedules, advertisers have the ability to optimize and shift commitments between network These decisions are supported by weekly or bi-weekly reporting that allows closer tracking of buy performance.)

An additional advantage is favorable opt-out clauses offered by programmatic vendors, allowing inventory to be cancelled 7-14 days prior to air date, which compares favorably to traditional TV upfront buys where cancellation options must be taken 60 days out from the quarter start date.

Of course, policies will vary by programmatic vendor, but flexibility is a definite advantage of programmatic TV.

Reporting

The final stage of the workflow is back-end results reporting. Summaries of performance can include impression delivery and CPMs with summaries across networks, stations, day-parts, and targets.

As discussed above, programmatic vendors are able to provide reporting on a timelier basis -- either weekly or biweekly -- a major improvement over traditional television buying procedures, where finalized performance summaries are typically not available until 45 days after the end of the quarter.