Will Programmatic TV Go Mainstream This Year?

We hear industry pundits assert that 2015 will be the year of the connected TV, with some 138 million units of Internet-enabled television units (25% of all sets) forecast to ship to consumers, according to one estimate.

If that’s the case, one can’t help asking: Will programmatic TV also go mainstream this year? Or put another way, will advertisers follow consumers as they consume TV content in digital channels?

The answer is decidedly yes if advertisers agree to shift their television budgets to programmatic video. According to Adap.TV’s semiannual State of the Video Industry, a survey of 900 industry players, that migration is already under way. The study found that 31% of brands see video ad budgets coming from money previously budgeted for broadcast TV, and 13% from cable TV.

Television has long been the favored tool of brand marketers, offering broad reach, incredible speed, standardized units (the 30-second spot), ample room for creativity, and very familiar metrics for buying and measuring reach.  Still, “if programmatic buying practices demonstratively improve the efficacy or efficiency of TV, and if that resulted in 10% of the U.S. TV dollars shifting over, that would be more that 2x larger than the entire U.S. digital video market,” notes Steve Katelman, executive vice president of global strategic partnerships at Omnicom Media Group (disclosure: a client of my company).



Katelman has a point. As eMarketer reported in June 2014, U.S. digital video is approximately a $6 billion market, while TV tops $68 billion.

Clearly, marketers and agencies stand to reap huge benefits from programmatic. In addition to showing up in the channels where Millennials and others spend most of their time, programmatic lets marketers eliminate waste by focusing their ads on qualified audiences, measure consumer reaction to their messages, and tweak their creatives based those reaction.

According to Katelman, agencies -- as the primary TV ad buyers for the past 50 years -- will play a vital role in the growth of programmatic TV. That expertise makes for a pretty relevant positioning in the industry.

Some Formidable Challenges Still Yet to Conquer

But programmatic TV is not without its challenges, and transparency is chief among them. Advertisers have balked at ad networks’ media arbitrage and lack of disclosure among DSPs and agency trading desks. To shift their big TV budgets, brand managers will want to know how much they’re paying for impressions, and what their dollars get them.

Education is another challenge. The folks who purchase TV will need to understand the value of programmatic buying, which can best be understood if it’s translated into TV language. “Television has its own nomenclature,” Katelman explains.

Finally, there’s reporting. “Part of the allure of programmatic is that it should provide a better understanding of media’s effectiveness. However, this better understanding means new KPIs,” says Katelman. In other words, the industry needs to develop new metrics for programmatic TV, and consequently, for programmatic branding. These metrics must be simple enough to convey value, but concrete enough to be meaningful.

Moreover, the industry will need to develop points of comparison so that buyers can see what they get when they buy branding programmatically instead of through traditional channels, including TV.

So will 2015 be a breakout year for programmatic TV? My guess is that it will see substantial growth, but won’t dominate the brand marketer’s budget yet. Rather, 2015 will be the year that the industry puts many of the pieces in place for making programmatic TV a reality.

4 comments about "Will Programmatic TV Go Mainstream This Year? ".
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  1. John Osborn from Turnstilâ„¢, March 11, 2015 at 2:37 p.m.

    Excellent overview and conclusions Ben. I love when writing clearly explains and supports ideas that all sides and levels of expertise can benefit from.

  2. Ed Papazian from Media Dynamics Inc, March 11, 2015 at 3:17 p.m.

    Ben, "Millennials" don't spend the majority of their TV/video usage time with digital platforms---not even close to it. Most of that time is spent on "linear TV" and advertisers need not fear if they want to reach the 18-34s via linear TV; there are ample opportunities do do so, mainly on cable and syndication. Also, Millennials are not the exclusive prospects of most TV advertisers. Indeed, only one in twenty TV time buys uses 18-34 as their targeting criterion; the rest---the vast majority---- buy on 18-49 or 25-54, with some---mainly pharmaceuticals---- using 35+. Why is this the case? The answer is simple. Millennials account for, perhaps 30% of the average product's business while the middle aged segment, because it has higher incomes and has amassed savings and some measure of net worth, is, in most cases, a more important part of a brand's customer base. In other words, Millennials don't rule either the marketing or the media world. What you and others seem to be doing is taking old skewed broadcast TV and comparing it to younger skewed alternative TV/video viewing options as if this difference in audience profiling spelt the doom of "linear TV". It doesn't, because broadcast TV---by which you really mean the broadcast TV networks ---- is a minority player when it comes to generating total TV audience impressions. The five broadcast TV nets account for about 20% of all linear TV viewing; basic cable dwarfs that with over 50%, and then there are syndication, local station fare, etc. Let me assure you that millennials have lots to watch on cable and certain forms of syndicated program content. As for the claims that programmatic would bring accountability to TV with everyone knowing what the going rates are for reaching audiences for every seller, incredible improvements in targeting efficiencies, knowing how consumers respond to messages, etc. it all sounds terrific but I have yet to see a plausible explanation showing how, as a practical matter, these goals can be attained.

  3. Maarten Albarda from Flock Associates (USA), March 12, 2015 at 10:09 a.m.

    On the other hand, with programmatic TV ad buys in ESPN's Sportscenter and The Super Bowl earlier this year, you could argue that it already HAS gone mainstream this year.

  4. Ed Papazian from Media Dynamics Inc, March 12, 2015 at 10:37 a.m.

    Maarten, one of the big sells for programmatic buying is its ability to sift through all of the possibilities, match each avail with the advertiser's desired demos---or some other targeting surrogate-- and buy those that offer the greatest targeting efficiencies. How can one take the so-called ESPN and Super Bowl "programmatic" buys seriously when no alternatives were considered? How did the "trading desks" determine that these "buys" offered the best targeting and efficiencies? A lot of people are mouthing the word "programmatic" so as to be in with the new thing, without really understanding what programmatic---as used in digital buys--is all about. Electronic paperwork shuffling is not programmatic as its advocates define it----or am I wrong about that?

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