• by Joe Mandese , September 16, 2015

In a sign of how rapidly the so-called “programmatic TV” marketplace is evolving, one of the medium’s most premium suppliers -- AMC Networks -- will begin selling some of its television commercial time programmatically. AMCN, the parent of AMC, BBC America, IFC, SundanceTV and WE tv, said it will begin offering a “percentage” of its TV ad inventory to advertisers and agencies that want to buy it programmatically.

While so-called “premium” suppliers have historically resisted participating in programmatic advertising markets for fear this would “commoditize” the value of their inventory, AMCN sees some upside from leveraging both data and technology. Among the chief reasons the networks are embracing programmatic selling is the ability to enable marketers and agencies to leverage their own “first-party” data to target the audiences based not on conventional TV ratings, but on how well they reach their brands’ customers.

“Our programmatic advertising initiative addresses our clients’ desire to apply their own data to more effectively target our networks’ valuable audiences,” says Arlene Manos, president-national ad sales at AMC Networks.

Manos would not disclose exactly how AMCN inventory would be allocated programmatically, and whether advertisers could leverage the technology to cherry-pick spots in high-rated shows such as “The Walking Dead,” but the goal is to leverage data to unlock greater value for advertisers that would push the value of AMCN’s shows up, not down, as some sellers in the digital programmatic marketplace have feared.

In fact, MediaDailyNews reported this morning that the online display advertising marketplace -- the fastest to embrace programmatic selling -- is beginning to decline at high rates, partly due to price erosion. But some observers believe that’s because the medium has become inherently commoditized due to an oversupply of audience impressions and a lack of differentiation among suppliers, something that is not true of most premium TV programming -- yet.

During an interview with comScore’s Gian Fulgoni at the audience measurement firm’s industry summit in New York City Tuesday, GroupM Global Chairman Irwin Gotlieb implied that network TV advertising inventory would remain scarce, precious and premium for the foreseeable future. Gotlieb, who was responding to Fulgoni’s question about whether the so-called “upfront” marketplace would continue to exist, said he believed it would because of the medium’s scarcity.

Gotlieb said the upfront is “nothing more than a futures market” and that “until there is more supply than there is demand we will have a futures market that we refer to as the upfront. If there was a day when supply exceeded demand for premium television, the upfront market would go away.”

How programmatic TV will ultimately impact the supply and demand of the television medium was a big part of the discussion during comScore’s summit on Tuesday -- especially the role that audience data will have on shifting perceptions of “premium,” “reach” and “delivery.” The consensus was that better data will unlock more value for both sides and that TV prices will go up, not down, as a result of data-based audience-buying of television.

“Programmatic makes us all smarter and more efficient. It will contribute to the ongoing efficacy of TV as a powerful advertising medium,” Todd Gordon, executive vice president-U.S. director of Interpublic’s Mediabrands’ Magna Global unit, which has been a big champion of the shift toward programmatic media-buying, said in a statement announcing AMCN’s new platform this morning.

Gordon was highlighting the two reasons why advertisers and agencies are embracing programmatic media-buying: efficiency and effectiveness. The automation part enables advertisers and agencies to buy media more efficiently, especially as media hyper-fragments beyond the capacity of manual media-buying. The effectiveness is enabled by applying better audience insights to the inventory advertisers and agencies buy, enabling them to more effectively reach the consumers they are seeking.

What Gordon and others on the “buy-side” don’t normally address is the ability to leverage market data to identify supply-and-demand patterns that can help them identify undervalued inventory, which is a huge part of what agency trading desks, and so-called DSPs (demand-side platforms) are in business to do.

To date, much of the programmatic advertising marketplace technology has favored the demand-side, partly because early exchanges established bidding protocols that favored advertisers in order to get them to buy programmatically, and partly because DSPs and trading desks invested in technology and data to identify and unlock the best market opportunities. That created an imbalance that helped drive the commoditization of the online display marketplace and fulfilled perceptions that the term RTB stands not for real-time bidding, but for “race-to-bottom.”

But in the past several years, corresponding data and technology have been developed to help the supply-side leverage market knowledge too, and a new generation of “SSPs,” or supply-side platforms have emerged to create more equilibrium and upside for sellers in the programmatic marketplace. AMCN’s deal is an example of just that.

One of the chief reasons AMCN is jumping into programmatic selling now is because of the technology partner it is working with, WideOrbit. While WideOrbit began life as a simple TV commercial trafficking system, it has invested deeply in the kind of markets-based “yield management” technologies used by suppliers in other industries and increasingly used by sellers in the digital media marketplace.

During a recent briefing with Real-Time Daily, Founder and CEO Eric Mathewson acknowledged that WideOrbit is morphing into the equivalent of an SSP for the TV industry. He said the company’s goal is to eventually extend that into other media, especially digital video and ultimately mobile and other formats, but that since TV is still perceived as the scarcest and most premium segment of the advertising marketplace, it’s the best place to start.

“AMC’s adoption of programmatic advertising marks an important step in the television industry’s evolution,” he said in a statement officially announcing the deal. “By taking full advantage of our platform’s capabilities to drive new revenue and streamline operations, AMC Networks will be at the forefront of this change.”

According to executives familiar with the deal, part of WideOrbit’s technology solutions for AMCN include the ability to simultaneously manage the yield on what its human sales team can reap via direct selling vs. what its automation technology can attain in the programmatic marketplace. By optimizing the allocation of its inventory between those two markets, they say the goal is to raise the yield of all its inventory, not commoditize it as some suppliers have historically feared.

“WideOrbit stood out as an end to end technology partner for programmatic TV due to their experience and development in this arena,” said AMCN’s Manos said in a statement.