Five Reasons Programmatic TV Is Set To Skyrocket

TV advertising is far from dead; it’s just ready for a massive change. Programmatic TV, the automation and optimization of the TV ad buy, is the sea change bound to transform the industry. Goodbye fax orders, goodbye one-time planning with fixed campaigns, goodbye GRPs. Why?

1. TV is by far still the most convincing advertising medium. You simply can’t put 30 seconds of stunning visuals accompanied by mesmerizing audio into a small screen video ad or an even smaller 300x50 static banner. While TV is battling for eyeballs, 70 inches still trumps five-inch mobile or 14-inch laptop screens.

2. With the automation of TV ad buying, handling costs will massively decrease, allowing for smaller initial budget sizes. This will open up TV advertising to a vast new client base, creating more demand and a more robust marketplace.

3. While TV is always identified with its massive reach, programmatic TV will allow exactly the opposite: granularity. As programmatic TV adds more data, such as detailed audience data from Rentrak to each TV slot, automation will allow for more finely detailed planning with just one mouse click.



4. Probably the most exciting part of programmatic TV is that it opens the door to define entirely new success metrics. While the current buying process focuses on targeting audiences based on Nielsen’s TV panel, this will soon be a hypothetical concept of the past. Why shouldn’t an advertiser book TV inventory that generates the most social buzz on Twitter and Facebook? Why shouldn’t an advertiser purchase airtime that results in the most website visits — or even offline store purchases? Today’s technology allows for combining data in a smart way beyond the traditional 16,000 household panel. The optimization algorithm will then automatically and continually allocate budgets to the best-performing TV inventory slots, allowing the advertiser to get the maximum out of a campaign.

5. While programmatic TV initially seems to be a threat to incumbents, it actually is a tremendous opportunity. Agencies and broadcasters won't lose; the focus will just change. More technologically driven capabilities means more complexity, and agencies need to help advertisers set up and run programmatic TV campaigns. The move to programmatic online advertising did not lead to the demise of agencies. Instead, an entirely new set of capabilities emerged in the form of in-house trading desks. More liquidity in the market means more revenue for broadcasters. More targeting capabilities due to added data means more potential for price differentiation, again resulting in increased revenue.

Industry experts estimate programmatic TV advertising to be 3% to 5% of the TV ad market this year, already translating into hundreds of millions of ad dollars spent. Right now programmatic TV is still in its infancy, still working on the technology, building the first big case studies, establishing trust in the market, educating the players. This will all happen by year’s end, with 2016 being the breakthrough year for programmatic TV.

10 comments about "Five Reasons Programmatic TV Is Set To Skyrocket".
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  1. Henry Blaufox from Dragon360, June 30, 2015 at 12:52 p.m.

    The reasons given by Mr. Schroeter are presented logically, and are quite convincing. But is it perhaps a stretch to predict ain his conclusion that breakthroughs in adoption will occur as soon as 2016?  

  2. Jim Rice from Piiku, June 30, 2015 at 1:06 p.m.

    Bingo.  Really strong points.  

    However, my question is, "When will pushing ads, al biet automated with programmatic, be replaced by 3-way real value exchange between consumers, advertisers and content at the point of consumption?"  

    Advertisements, when consumed, are currency in the value exchange process.  Programmatic on the buy / sell between brand and content although much more efficient, leaves out the consumer (the third leg of the stool) in the equation other than they are an object.  Consumers don't like being objects.  This is why consumers DVR ad skip.  It represents their rebellion to having ads pushed on them without choice of currency.  

    My point is, 3-way value exchange that is inclusive of the consumer; no .... consumer centric is where the industry should go because it would yield CPMs that reflect an accurate exchange of value between the advertiser and the consumer of the ad.  Content owners would find more monetization options for consumers to access their content and consumers get what they want when they want it and actually pay for it.  That is critical in the video world and has been, as we all know, illusive in the digital print media sector.  Hey, its hard to dial back from "free."  

  3. Henry Blaufox from Dragon360, June 30, 2015 at 1:21 p.m.

    Mr. Rice,

    Perhaps one measure of the effectiveness of advertising to granularly targeted audiences will be a reduced percentage of skipping compared to present methods. We will have to wait and see.

  4. Ed Papazian from Media Dynamics Inc, June 30, 2015 at 2:45 p.m.

    If true programmatic buying involves the objective and data-based evaluation of many alternative options to come up with the most "efficient " way to target a brand's consumer targets than the current percentage of true "programmatic" TV buys is not even 3-4%. Rather, it is Zero! As for the "breakthrough" coming next year this is utter nonsense. All that is really happening is that the term "programmatic" has been redefined----or promotionally hijacked--- to mean computer-assisted buys which are negotiated by humans at both ends---buyers and sellers. The mere fact that a computer processes avails or some audience and cost data or transmits buying notifications or ad scheduling and trafficking instructions does not make these  programmatic "buys".

    As for the presumed benefits, cited above, of the programmatic revolution as applied to TV, these are pure flights of fantasy.

  5. Ed Papazian from Media Dynamics Inc, June 30, 2015 at 2:48 p.m.

    @ Henry, not to worry, none of the "granular" targeting proposals so far outlined by various dreamers and soothsayers really target people who are "in the market" for products, let alone those who will be most receptive to a particular ad. So nothing will change.Trust me.

  6. Andreas Schroeter from wywy, July 1, 2015 at 9:59 a.m.

    I base my assumption on 2016 being the break-through year on our experience with many "digital-first" players who are now entering the TV world.

    For example, mobile gaming companies such as Supercell, King and Machinezone spent $130 million in the first quarter of 2015 on TV ads. These digital-first players - coming from the digital world of advertising - want to see tangible results (such as downloads) instead of hitting hypothetical GRP goals. Programmatic TV - or call it the semi-automation of a TV buy for now - helps them buy TV ads based on their own defined success metrics. 

    Now think of players such as Trivago, Expedia, E-Commerce companies - all doing TV ads. They will switch to a more metric-driven approach as well. Just adding all their budgets I believe that this will surpass $1 billion in 2016 which IMHO is a big enough market to call it break-through. 

  7. Martin Focazio from EPAM Systems, July 1, 2015 at 2:34 p.m.

    Programmatic + Attribution = $$$$

    "The opportunity to view" a commercial is a silly concept when 100% census level audience data is normal. 

  8. Doug Garnett from Protonik, LLC, July 1, 2015 at 6:59 p.m.

    I've been amazed at the over-statement of the potential of programmatic. Having worked with several programmatic buyers, here's the truth today:  They are agencies who place media in cheap outlets to drive low CPM but are not delivering on the granularity promise. The result is that NONE of these promises are delivered today.
    Will it be different in the future? Only time will tell. What I expect is that we will find programmatic's  claim to narrowly target "exactly who you want to target" isn't going to deliver in reality. Why? Because in the rush to enthusiastically sell programmatic services no one is looking at what will be lost in the shift. There will be important value lost by shifting to programmatic.
    In the end, some campaigns will be a bit more effective with programmatic. The tiny number that are shouted about will be those with huge advantages. What we won't hear much about is that the majority of campaigns won't see any effectiveness advantage. And some will be massively damaged by a shift to programmatic.

  9. Ed Papazian from Media Dynamics Inc, July 1, 2015 at 7:56 p.m.

    Andreas, those companies you mentioned are going to find that in TV the buyers can't dictate to the sellers what metrics or "rating currency" to use, nor can they demand that the sellers switch to a form of time sales that is against their interests. Anyway, none of these fanciful targeting systems that the programmatic enthusiasts keep touting for TV exist ----- nor are they likely to for some time, if ever.

  10. Andreas Schroeter from wywy, July 2, 2015 at 3:24 a.m.


    I absolutely agree with you, the rating currency won't change. But while the price is "fixed", these players can test and optimize for many things such as the TV creative, the network, the time of day or weekday. For example, we have seen one of our clients generate 50% more downloads with one TV creative vs. the other. We have seen another client generate 40% more sign-ups during the day instead of prime-time with the same budget. This is what DRTV players have been doing all the years, matching call logs to TV airings etc. The upcoming programmatic platforms "just" allow you to do this an a more automated way, changing TV creatives quickly, adjusting their media buy in days instead of weeks. True, much of it is still done over the phone today but as the technological integrations into the current TV systems advance, more and more of the operational stuff (such as exchanging TV creatives, shifting airing times from prime time to day time etc.) will become automated.

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