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.