Traditional print publishers now sell video ads on mobile and online platforms, and radio stations have websites with video. YouTube is television for the next generation. Medium- and long-tail content creators unheard of 10 years ago now distribute video over the Internet. The walled television garden -- complete with surrogate-demo targeting, program ratings representing ad viewing, and over-cluttered ad pods that send viewers away -- is now leaking ad dollars. T/V is already a unified ecosystem. And now programmatic T/V appears. Will it support or threaten traditional television providers?
If you are a cable or broadcast television exec or manager who made it through the last two paragraphs, congratulations! By not evading the discomfort of change, and facing the threats to the way things have been (where wonderful and lucrative careers have been made), you now get a chance to consider how to turn the challenge of programmatic T/V into an opportunity.
How to Get There?
Embracing private- vs. open-market methods. Because the television networks were built on a closed distribution system, going to a completely open system makes no sense. In the online world, premium publishers still sell directly to big-budget brand advertisers that care about brand safety. Hybrid approaches to programmatic buying/selling have gained a lot of traction in the past year, and come under many different names: premium programmatic, private marketplace (PMP), automated guaranteed, unreserved fixed rate, programmatic guaranteed, programmatic direct, programmatic reserved, preferred deals, private access, first right of refusal, invitation-only auction, closed auction, buying with deal tags, and more. Mutual transparency and assurance of the environment translate to premiums for media providers. Is there a safer environment for video than the TV networks we all grew up with?
Streamlining the logistics of buying T/V. If programmatic is, as I heard recently, “buying media without insertion orders (IOs),” then the system dramatically improves on those cumbersome methods: requesting proposals, reviewing them, negotiating, going to order, processing the IO, inputting IOs into another database, scheduling the ads, verifying, reporting, and finally billing. As always, automation drives overhead cost reduction.
Disciplined pricing. With pricing floors an integral part of the programmatic process, there is no need to lose control of the value of inventory. Search has proven that when there is high value to an ad placement, competition for those dollars can dramatically increase pricing and profit margins. It is important to remember that programmatic does not equal RTB (real-time bidding/buying). RTB, generally understood as a process of open bidding for inventory, is a subset of programmatic.
Tapping new markets. Traditional television always had a minimum entry price point at the national level, so the largest advertisers ultimately comprised the client base. With premium programmatic, there is still a walled garden of ad supply. If the demand side expands to everyone with a budget, good things are bound to happen for media providers, since strong demand has always been key to television’s premium pricing. Also, the buying pool is becoming global: Big-budget international advertisers can now line up in the programmatic queue for U.S. television inventory as never before.
Embracing the business of accountability. Among the reporting standards offered in the online and mobile sector that advertisers find helpful: viewability, time spent with an ad, behavioral targeting, addressability and engagement. The same dashboards used for buying digital ads offer further refinements that allow the buyer to manage how, where, by whom and when ad messages are seen. It’s time for TV to get on the dashboard! There’s no other option for television providers but to move quickly to a census-based (vs. sample-based) audience currency, and embrace programmatic, in order to compete at all.
In the end, while the ad-supported T/V marketplace’s expansion has created new challenges for those in traditional television, the smart and courageous will not just survive, but thrive in the emerging direct/programmatic landscape.