Earlier this year, projections from IPG Mediabrands’ Magna Global noted that “programmatic TV” spend would top $10 billion in the U.S. by 2019. Now, new estimates give us a look at what the worldwide programmatic TV market could look like before the decade closes.
The International Data Corporation (IDC) this week released estimates that say programmatic TV will account for $17.3 billion in ad spend worldwide by 2019 -- up from $69 million in 2014. By that time, predicts IDC, “programmatic ad spend in linear TV will outgrow that in streaming video” and digital real-time bidding (RTB).
Before going any further, it is vital to note that the IDC report was sponsored by The Trade Desk, a demand-side platform (DSP) that has been at the forefront of programmatic TV advancements. With that said, the IDC attaches their name to the estimates in a 27-page report on the topic.
“IDC predicts extremely rapid adoption of programmatic TV advertising technology,” wrote IDC analyst and author of the report Karsten Weide, program VP of media and entertainment.
The Magna report defined “programmatic TV” as audience-buying (the use of tech and audience data to deliver incremental reach) and household addressable (serving ads directly to households in which the target resides.)
The IDC report has a similar definition, labeling “programmatic TV” as “the use of software platforms to automate the workflow of TV advertising and to improve the effectiveness of TV advertising through the use of advanced TV audience data.” This “mainly refers to advertising to linear TV,” notes IDC, but “also includes video on demand (VOD) distributed through cable network and satellite operators and time-shifted viewing of TV content from digital video recorders (DVRs), even though these applications stand much less in the limelight than linear TV.”
The fact that the IDC predicts programmatic ad spend in linear TV to surpass spend in digital video is significant. WPP CEO Martin Sorrell’s comments from earlier this week -- questioning the “faulty measurement” in digital video -- lends credence to the notion that video advertisers are eager to run data-driven campaigns but aren’t entirely sold on digital video. If programmatic TV picks up the way it’s projected, it could be the ideal spot for those frustrated marketers to dump budgets.
The potentially huge future of programmatic TV is also one reason why some analysts have been optimistic about the future of companies such as TubeMogul, a programmatic ad platform that has been heavily involved in programmatic TV. Earlier this year, BMO Capital markets noted that programmatic TV “remains a significant area of investor curiosity.”
IDC says it relied on its own previous research on programmatic TV; “in-depth interviews” with a dozen industry execs from vendors, media owners and agencies involved with programmatic TV and video; and interviews with 50 ad agency execs in 10 countries for the report.
“Generally, the bigger the network, and the more robust its business model, the less incentive it has for embracing programmatic TV,” notes IDC’s Weide in the report. “Cable networks such as ABC, CBS, ESPN, Fox, or NBC are at one end of the spectrum: These are big media companies with solid business models and billions of dollars in revenue. They have little immediate need to adopt programmatic and potentially a lot to lose if PTV upsets their existing business model.
“At the opposite end of the spectrum are MVPDs, which have a lot of inventory to sell but have a harder time selling it,” the report continues. “For these companies, PTV improves life immediately. Of course, PTV will also make them more competitive with the big networks, which will in turn nudge those to adopt TV as well.”
IDC projects that MVPDs will be the first to adopt programmatic TV, “quickly” followed by local broadcast TV. Next will come the bigger cable networks (ESPN, ABC, CBS, Fox and NBC are mentioned), followed by the network broadcasters (ABC, CBS and NBC are the examples).
But even some of those bigger broadcasters have already dabbled with the tech -- perhaps in preparation for a more effulgent embrace. ESPN, for example, has already programmatically-sold an ad on “SportsCenter,” and the company also launched a DMP, presumably to set itself up for audience-targeting.
“And The Weather Channel will test programmatic sales of limited amounts of inventory early next years,” notes the IDC report. (Fittingly, both ESPN and Weather Co. recently tapped new “Big Data” heads to lead the efforts.)
The full The Trade Desk-sponsored IDC report can be found here.