Television, the grande dame of commercial media, is now at an inflection point.
There are competing definitions for what “TV” means. I’m OK with “passive consumption of long-form video.” Regardless of the semantic nit-picking, two dynamics will shape the direction: how consumers get what they want, and how advertisers get what they want.
Right now, we are experiencing the convergence of several trends impacting TV: namely, sufficient bandwidth to carry great quality video to a living room; big data; cheap pixels; and software to manage monetization.
The future is here! The big TV jukebox in the sky is here. Drop a dime and binge all night.
But where does that leave advertising, programmatic or otherwise? A quick look at history will give us a few clues.
1. With opt-in, electronically distributed content, winner takes all. How’s it going for the second-best Google, or the second-best Amazon? Why? Cause why would anyone go there?
2. Power will continue to shift toward content. The Web is just as flat for video content as it is for any other content. Remember portals? Tech intermediaries will have a role, however. They will power ad insertion, decisioning, delivery, and attribution, as they do today in the online ecosystem. Aggregation makes little sense for Internet content, but it does make sense for advertising. Of course, publishers will pull control back with private exchanges and the like. Technology is generally fungible.
3. Programmatic will set the stage to democratize access to TV advertising, currently the province of fat cats. Today any man, women, or child on the planet can buy Internet advertising if they have a credit card and a creative execution. Clearly, access to advertising will be an outcome of the Webification of TV. Judging by watching Hulu lately, it's already there.
4. TV advertising will become biddable, and that will disadvantage big buyers. With bidding markets, you don’t win with raw scale or rate-card volume discounts. You win with the ability to outbid a competitor based on the margin you can sustain from the resulting sale. That ability is not a function of scale, but of understanding the audience from whom you can derive margin (data, analytics). With a scarcity of high-quality inventory, however, bidding will increase publisher margins, notwithstanding irrational fear based on Internet remnant inventory.
5. Technology will enable consumers to find what they want in the increasingly fragmented maze of lean-back video content. This will make room for a slick content search function a viewer can connect to any viewing platform. (Google? You there?). This will begin the flattening. Great search didn’t kill portals; it obviated them. If distributors make more money than the content owners deem appropriate, content owners will be tempted to disintermediate them.
6. Those who built their business by locking consumers into their proprietary bandwidth will be threatened (they are today). Super-high bandwidth wireless might be the undoing of cable companies, or they might invest in it.
Programmatic TV will increase the diversity of advertisers and the margins of publishers by increasing the scope and scale of access to the medium. Still, cord-cutting will compromise TV reach, to the extent that subscription TV trumps ad-supported TV. However, sky-high CPMs will be a temptation no capitalist worth their pink sea salt will be able to resist.
Subscription channels will eventually cave to the temptation of advertising revenue. As subscription-based providers let advertising pee into their streams, advertisers will celebrate.
Targeting will be good. CPMs will be high. Consumers will be able to select their ad loads. Sellers, by balancing ad and subscription revenue, will see increasing returns.
TV, once searchable, will go the way of all Internet content. As long as the content gets the whole screen and then the ad gets the whole screen, it will seem like TV: an experience we seem to like, and during which we seem to tolerate advertising quite well.