Commentary

TV Should Follow Digital's Programmatic Lead

by Chip Plesnarski , September 30, 2019

Television has held the No. 1 position for most people reached for decades and remains the most consumed media today. Even so, TV ad spend slipped slightly (0.05 percent) in 2018 to $70 billion. By comparison, per eMarketer, programmatic digital ads increased 21% and topped $100 billion, with Google and Facebook claiming $7 out of every $10 spent.

If TV is superior, why is it losing the lion’s share of ad dollars to digital?

The answer is multifaceted:

Programmatic digital increases accuracy and eliminates waste
Programmatic TV (PTV) is perceived as a threat, rather than an opportunity
Failure to transform legacy systems and infrastructure

Programmatic superiority

Digital has changed consumer viewing habits and preferences, regardless of medium. In fact, digital has spawned the two greatest challenges facing traditional television and its advertisers: lack of attention and intolerance for irrelevant commercials.

There is a lack of attention, due to the availability of massive amounts of content across multiple screens simultaneously. This leads to intolerance for irrelevant ads, and viewers have a choice whether to watch commercials or the myriad of commercial-free choices.

Programmatic digital delivers ads that more effectively capture consumer attention, while eliminating generalist and impersonal offers.

Fear of devaluation

Linear television sells advertising availability, based on a 24-hour calendar with pricing dictated by ratings. Historically, there’s been a fear to sell spots to programmatic buyers over concern of commoditization.

The fundamental difference between traditional buying (up front, fixed pricing) and digital streaming (variable) also plays into that fear.

In truth, programmatic (i.e. addressable linear, VOD, connected TV) should be viewed and sold as complementary, rather than feared as an attempt to cannibalize up front ad buys.

Failure to transform

Though most enterprise media leadership would be reluctant to admit it, advertising management is still frequently managed with spreadsheets and fax machines. There are numerous examples of manual tasks that can easily be automated, such as: checking inventory, retrieving assets from agencies, and extracting data from ad placement systems.

Programmatic TV (PTV) requires AI-driven automation — which requires leadership to optimize data and transform internal systems and processes.

Fortunately, industry leaders are embracing a hybrid-delivery model in response to growing consumer demand — and there are a number of incentives to do so.

Money on the table

Manual ad buying practices result in missed opportunities because it’s impossible to optimize in real time while waiting on reporting. Silo elimination is a prerequisite for data optimization and AI-driven automation.

Currently, there are hundreds of TV silos that must be negotiated and managed separately and uniquely. With programmatic automation, a single plan can be executed across all screens and media types with unprecedented targeting and real-time reporting.

Improved personalization

Targeting demographics, reach and frequency based on gross ratings points (GRPs) is as dated as manual ad management processes. Transformational programmatic TV automation leverages optimized first-, second-, and third-party data, as well as personal interest/opt in data, and personality-based tonality in messaging. That works together to deliver personalized content on a one-to-one basis.

Campaign unification

Eight out of 10 viewers watch TV with a mobile device nearby. PTV provides a singular platform to seamlessly manage the ad-buying process from planning to measurement. Regardless of what device ads are viewed on, management is carried out holistically.

Additionally, this unified approach empowers near or real-time campaign optimization — for example: dynamic ad purchasing in a live sporting event as a target viewership ebbs and flows.

Conclusion

Elimination of disparity doesn’t end with data and systems. Before any of the aforementioned transformation can take place, a systemic paradigm shift must take place within the industry. Broadcasters, programmers and advertisers need to align and embrace the potential of PTV — not base resistance on assumptions and misconceptions.

The technology for real-time bidding and measurement is already available for enterprise media companies prepared to claim the competitive advantage. All it takes is the right people working together to connect the dots.

media buying, programmatic tv, tv

6 comments about "TV Should Follow Digital's Programmatic Lead".

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Ed Papazian from Media Dynamics Inc, September 30, 2019 at 4:46 p.m.
Chip, some points that you might take note of. First, approximately 75% of national TV time buys are bought on a corporate basis with compromise demos such as adults aged 18-49 used as a audience tonnage guarantee "currency". This does not mean that the 7000 or so brands so involved are actually targeting adults 18-49.---or adults aged 25-54, the next most common TV buying demo. Many brands use much moore refined demographic sets and subsets to define their targets and many of their campaigns utilize fairly subtle mindset appeals to make their points. There is no sign that corporate time buiying---which minimizes any benefits that individual brand targeting might ghlean via programmatic---is about to change. Also, many advertisers buy into certain program types---sports, news, etc. and pay whatever is demanded---with some negotiation, of course---- no matter what the ratings are. This is because there are other considerations in such "must buys" other than targeting and CPMs. This, too, is unlikely to change in the near future.

Secondly, the claim that digital media has dramatically reduced the willingness of most TV viewers to pay any attention to TV commercials---are they really looking at their smartphone screens every time a commercial is shown on TV?---is a gross exaggeration. Yes, this happens about 15-20% of the time, maybe---which is a problem--but not a huge one. Why? most national TV adverisers conduct ad awareness level studies which produce lower numbers than in the 1990s but far from zero---as you implied. If it was really zero, then most of these brands ---who spend $45 billion on national TV would be belly up as their sales would have tanked long ago due to lack of ad support.

You can argue that programmatic will greatly improve tartgeting, thereby making commecials more "relevant", hence more viewed---which is a fair but not a decisive point. Why? Even if the computers had free rein to cherry pick the sellers' GRPs---very unlikely----and they switched most TV ad dollars away from premium priced news, sports and primetimre and moved them to cheap TV---"Judge Judy"----the sellers would immediately hike their cheap TV prices and nullify any numerical advantage gained. Then what? Back to high priced TV?

Reply

Neil Ascher from The Midas Exchange, October 1, 2019 at 9:59 a.m.

In addition to Ed's points, I would add that one major reason that programmatic spending has surpassed TV is very simply the cost of entry. Small advertisers that can take advantage of digital programmatic cannot afford either the cost of media or creative development for TV.

John Grono from GAP Research, October 1, 2019 at 6:08 p.m.

In the words of Darryl Kerrigan ... tell him he's dreaming.

Chip Plesnarski from SoftServe replied, October 2, 2019 at 4:15 p.m.

Hello, Ed, thanks for the comments. Your points are well received, obviously I don't expect to see an overnight transition to programmatic from more traditional forms; however, I do see growing opportunity in leveraging the technology and data capabilities that we have today. Ad campaigns can be much more complex than "demo targeting" and "genre targeting". Through data science, more specific targeting can be optimized and focused on the product's primary consumers and most eligible potential future customers. Also, looking at ad buys over the entire linear/digital spectrum with the use of advanced data and AI can facilitate more focused campaign that "trims the fat" on ad purchases. I wasn't trying to overstate "digital distractions", but I would declare 15-20% of $45B to be a notable opportunity for improvement.

Chip Plesnarski from SoftServe replied, October 2, 2019 at 4:16 p.m.

Neil, thanks for pointing that out and I completely agree with that. However, I also think large advertisers will also shift a portion of their portfolio to programmatic in order to optimize and more precisely target their campaigns to specific segments as that capability improves.

Chip Plesnarski from SoftServe replied, October 2, 2019 at 4:17 p.m.

John, I believe one day programmatic will even be able to optimize for audiences that would understand a “Darryl Kerrigan” reference… we can only hope!