Although eMarketer predicts it will account for 3% of TV ad spend by 2018, there is still plenty of work to be done before programmatic TV — in one definition, the “use of software platforms to automate the workflow of TV advertising and improve its effectiveness through advanced TV audience data” — can truly enter the mainstream.
What are the obstacles standing in the way of programmatic TV, and can they be overcome?
One of the fundamental operational issues facing programmatic TV is the time taken to transmit high-quality TV commercial files, which limits the possibility of real-time auctions. While lightweight display ads can be selected and served in milliseconds, TV ad files be hundreds of megabytes, taking much longer to load, queue and inject into the broadcast stream.
From a legislative standpoint, the restrictions on TV advertising are far heavier than those on digital. Commercials aired around specific shows must gain network approval, and ad content is closely scrutinized for legal notifications and evidence of back-up claims. While pre-approved content could overcome these challenges, networks are concerned about the loss of control that programmatic TV would bring.
Presently, there’s not enough inventory available for advertisers to buy programmatically on linear TV. Only two minutes per hour is allotted for programmatic advertising, and very little of that is available via real-time bidding (RTB). This scarcity is largely due to network concerns about revenue protection, with an expectation that placing inventory in open exchanges will lead to reduced CPMs.
Audience Targeting Constraints
Programmatic display ads are served in response to requests from cookie IDs, which represent users with defined profiles. This is problematic with TV, because no such common identifier currently exists. Add the potential privacy implications of combining consumer and real-time viewing data, and TV still has great strides to make in programmatic targeting.
Overcoming these obstacles will require ad-tech companies and TV networks working together to refine programmatic tech, put processes in place for acceptable content, and streamline user identification and data anonymization practices.
With the implementation of RTB causing revenue concerns and operational complexities, the short-term focus should be on programmatic guaranteed as a non-auction based model. The industry, as a whole, must agree on standardized rules governing programmatic TV if it’s to become mainstream.
While these changes are underway, advertisers can increase the efficiency of TV advertising by making use of attribution technologies already available to measure the impact of TV ads and optimize campaigns using real-time data – a major step in the direction of programmatic TV. Just like digital, TV is now an optimized media channel – even if programmatic TV is still many years away.
If 2017 is the year of anything, it will be the year of increased efficiency in TV advertising, as advertisers embrace attribution and optimization in preparation for a time when programmatic TV can finally flourish.