Programmatic TV Growing, But A Number Of Barriers Stand In Its Way
- by Philip Rosenstein , September 1, 2016
The programmatic TV (PTV) ecosystem is growing, but a 4C white paper on the subject points to a number of barriers that are inhibiting its wholesale adoption -- particularly a fear that PTV will rip control away from suppliers and force CPMs down.
The PTV market is expected to grow from $706 million in 2016 to $2.160 billion -- or 3% of the TV market -- in 2017 and up to $4.428 billion -- or 6% of the market -- in 2018, according to eMarketer. Growth is there, but barriers are holding PTV back.
4C spoke with brands, media buyers, planners and sellers, and narrowed down the difficulties in adopting PTV to four main issues: apprehension from career TV professionals, confusion about what PTV actually is, a lack of infrastructure needed to run PTV -- and perhaps most important, an apprehension from suppliers that the adoption of PTV would significantly lower CPMs.
“Programmatic TV is definitely a more efficient way of buying, especially if the whole process becomes automated. However, it is still in its infancy, as both buyer and seller behaviors need to be changed. In an industry like TV that has had the same processes in place for a very long time, that can require a few years,” stated Brett Adamczyk, vice president of business development and strategy at Videa.
The white paper addressed other interesting points, asking respondents about the strongest benefits PTV can bring the industry. Roughly 58% of respondents say that PTV’s biggest advantage is the ability to target audiences more precisely, 13.5% found lower CPMs as the greatest benefit, and 10.7% saw the most benefit in the automation of the transaction process.
Another question was which metrics were best for measuring PTV's effectiveness. The largest group -- 19.7% -- of marketers said that brand lift is the best way to measure the success of PTV, 17.7% pointed to increased purchase intent as the best metric, another 17.7% chose better media efficiency, and 17.2% said they would look at direct-response metrics first.
I liked the white paper. PTV will be in single digits for a few years yet, but there will be a tipping point associated with market penetration of smart TV boxes, etc.
It really depends on what you mean by "TV Programmatic". If you mean a system where the sellers maintain tight control of most of their avaiabilities and insist on offering program packages with advantageous discounts for said buys, plus the right to counter bid if they "lose" a buy----not once but several times----then it's possible that "PTV" will gain some traction, especially at the local market level which is a tedious pain in the neck for national ad agencies to handle. But even this will require all of the major sellers to participate and include all of their avails, not just low rated, marginal programming. And that's quite some way off.
Regarding the national TV buying scene, the dream of better targeting depends not only being able to cherry pick among the seller's program schedules while still buying at an "efficient" CPM---which works against the sellers' interests and, hence, is a no no, but also in breaking up the long established "corporate" buying system which lumps the daypart, network type GRP requirements of all brands into a single massive purchase and, of neccessity, uses a single broad audience metric as its rating and audience guarantee "currency". There is no way that programmatic or any other targeting system can make such a buy while at the same time improving each brand's targeting efficiency. Period. Like other allocation models already in use, programmatic might be useful for determining how to assign the various corporate buys to each brand---but that's all.
In short, programmatic, as used in digital media buys must adapt to the realities and needs of buyers AND sellers if it is to become a major player in TV. Also, there is the question of cost. At present an advertiser's fee for having national TV purchased and serviced is around 1-3% depending on the network type mix. Assuming that programmatic was adopted, what would the price of using it be and would this be cost effective for the advertiser?