Programmatic advertising consists of:
1. Aggregated inventory. To run programmatic advertising, diverse inventory is yoked together in small batches of impressions to form a single ad campaign. In television, this means the purchase of multiple networks’ inventory, from multiple day parts, on specific days of the week that a target audience is watching. No guarantee is given that any particular network will comprise any particular portion of the campaign. However there will be guarantees on total audience delivery, with daypart guidelines.
2. Audience targeting. The exact network or day part composition of the buy is not of paramount importance, because the campaign is primarily focused on reaching an audience target. While traditional TV buys are also audience-targeted (based on demos), the quality, type, combination, and prominence of the programming is of equal value to the audience composition. In programmatic TV, the audience is the key. There are nuances here:
a. While programmatic TV may seek to target the same age/sex combinations available in traditional TV, a programmatic plan may also be based on purchase data, lifestyle segments, even CRM files — any other data that can be overlaid with TV viewing information through a database match.
b. Programmatic plans are based on concentrations of audiences — not to be confused with “addressable,” one-to-one targeting. For example, for a CPG campaign, ABC Family / Daytime will be purchased because it shows an index of 186 for Moms, Weather Channel / Overnight because it indexes at 171, and so forth (illustrative data). This is done so that the final plan — harnessing the concentration of all these high-indexing fragments — delivers a final audience composition that is much higher than anything that can be bought through traditional means (and at a lower price). By contrast, one-to-one targeting, which finds a TV set or household that exactly corresponds to the target characteristic, should be defined as “addressable.”
3. Systematic delivery. Aggregating inventory and audience data are complex processes. To deliver campaigns on a repeated basis, using these complex processes, requires technology, or at least focused, specialized operations. We’re talking Adam Smith, not Don Draper. That said, the technology supporting programmatic TV is in its early stages compared to the highly developed exchanges, bidders, and private marketplaces of digital. While technology plays a part in delivering these results, many participants in the ecosystem are achieving an efficient process through people operations. As a result, “systematic,” rather than “technology-based,” is a more accurate characterization of the state of play. As with aggregated inventory and audience targeting, the goal of these “systems” is to create efficient delivery: plans created, orders placed, orders delivered, reporting supplied, in a fashion designed to be frictionless and repeatable.
How can you use this framework? At the very least, having the terms clarified can help you identify just how “programmatic” any given solution is, and not be misled by hasty or broad characterizations.
Naturally, others will want to add to, adjust, and clarify the definition I have offered (after taking up the theme from Mr. Welch).