Commentary

Is 'Programmatic' The Right Word For Automated T/V Advertising?

Five years ago the term “programmatic” began to be applied to ways of transacting automated, software-driven advertising deals on platforms more akin to the trading of stocks than traditional ad buys. Digital display was the sector in which it was first applied. Many tech start-up companies emerged and attracted advertiser interest by applying Wall Street-proven capabilities of software, algorithms and online connectivity to the cumbersome processes of digital buying of display ads. The promise of more marketplace information through this kind of buying was and is compelling to ad buyers.

Language certainly matters. In recent industry conversations, I perceive a hesitancy to use the word “programmatic” in the emerging T/V supply-side space. Instead, I am hearing more and more companies use the phrase “automated ad sales” rather than “programmatic.” Is this euphemism necessary?

I believe the more traditional providers of T/V, fearful when watching the programmatic display experience from the sidelines, have been cringing at the label. Some of those fears are legitimate. The initial mechanics and software for programmatic were developed on the buy side of the business, thus opening new levels of transparency into inventory value and market conditions. This makes publishers wary of dealing with buyers that may know as much or sometimes more about the inventory than the publishers themselves. But the sell side SSPs and exchanges are rapidly catching up.

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Another fear that publishers/content producers have stems from confusing programmatic with RTB, having seen some scary pricing drops for display inventory when RTB first came out. Five years ago, display-driven open exchanges led to a kind of Wild West where blind or semi-blind deals were happening way down the long tail, and pricing reflected these non-premium placements.

Online video, unlike display, is now at a place where demand outpaces supply, and sellers also now have increasing control over what kind of programmatic sales they use for video to increase revenues and profit margins. T/V buyers have always been more concerned with brand environment / brand safety than display advertisers. They won’t be leveraging long tail sites blindly to lower CPMs.

Quoted in a February 2014 post, Google’s Bob Arnold, digital media and strategy lead, North America, defined programmatic, noting that “the ecosystem is very complicated; a lot of terms are being used interchangeably. For example, many people call real-time bidding programmatic media buying, but real-time bidding is a subset of programmatic as a whole. So it’s going to take more education and a simplification of the ecosystem.”

That education process is still needed. But the good news is that the intervening year has clarified what options are available for those entering the programmatic world. And it is really no more complicated than some of the options for buying traditional television:

Traditional Television Buying subsets:

1) National broadcast/cable network buys (national footprint, locally distributed via “wired” networks).

2) Local broadcast/cable or “spot” (market by market).

3) National Syndication (e.g., “Jeopardy,” “Ellen” -- national footprint via “unwired” networks).

4) Upfront (long-term commitments for discounted pricing) vs. scatter (short term deals) marketplaces.

Programmatic T/V Buying subsets:

1)    Automated Guaranteed buys (Reserved inventory at pre-agreed/fixed pricing with one seller / one buyer. Also called programmatic guaranteed, programmatic premium, programmatic direct, programmatic reserved).

2)    Unreserved Fixed Rate (Reserved inventory at pre-agreed/fixed pricing, one seller / one buyer. Also called preferred deals, private access or right-of-first-refusal).

3)    Invitation-Only Auction (Unreserved inventory, auction-determined pricing, one seller / few buyers. Also called private marketplace or PMP, private auction, closed auction, private access).

4)    Open Auction (Unreserved Inventory, auction-determined pricing, one seller / many buyers. Also called RTB (real-time bidding), open exchange, open marketplace).

While the precise nomenclature for each of the programmatic buying subsets has not been universally settled, it will be. The functionality, opportunities and meaning of these four new subsets are clear, and can be easily understood. It won’t be hard for stakeholders to acclimate to the right jargon as they set up programmatically. Then the machines can do the work of communicating with each other. So. yes, “programmatic” should remain the term that it is, even for T/V.

1 comment about "Is 'Programmatic' The Right Word For Automated T/V Advertising?".
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  1. Ed Papazian from Media Dynamics Inc, March 13, 2015 at 3:47 p.m.

    I totally agree, John. The term 'programmatic" as defined in online media buying, should continue to be applied to its potential use in TV. That way there will be no confusion about terminology--- or intent---- when buyers and sellers contemplate the feasibility of programmatic as well as the theoretical pros, and the many cons, of this approach. Who knows, perhaps we will one day see a valid test of such a system with all of the players, not just a number of "long tail" cable channels, involved. Then we shall see whether the sellers are willing to be totally transparent in their pricing and whether programmatic can account for reach, engagement, merchandising and other issues, not just the lowest targeted viewer CPMs. It will also be interesting to see the surprised looks on everyone's faces when the initial tests indicate that the only way to obtain the promised "unheard of targeting efficiencies" is by dropping primetime broadcast network buys as well as sports, specials and news, while shifting heavily into daytime and especially, into very low rated, modest reach cable channel buys---- with many spots running after midnight. Once that, rather obvious lesson is learned, perhaps a new name will be coined for the process .I'd opt for "Semi-Programmatic", with whatever remains of these systems relegated to buying low priced eyeball tonnage, where ease of buying takes precedent; as for the rest---the important or "premium" stuff-----I suspect that it will be handled more or less as before, though the computers may help with the paperwork to a greater extent than is now the case. Of course, I could be wrong. It wouldn't be the first time. We'll see.

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