Will Programmatic Advertising Take Over TV?

Illustration: Alvaro Dominguez YES Who needs ratings when you can buy TV impressions? All you need is a defined audience, the ability to deliver an ad wherever a person is viewing and automation to deliver that ad millions of times across multiple channels. Those are the basics of a programmatic vision for television—a vision that doesn’t care which show a viewer is tuned to but only who that viewer is. Programmatic is eating the media world, and that means television, too. Media buyers, advertisers and tech companies are preparing for a future that’s platform agnostic, that distributes digital video spots across screens whenever a person fires up a smartphone, tablet, connected TV or cable box. The question “Will TV embrace programmatic?” misses the reality: The medium already embraces it. Just last week, Clypd launched a software interface for ad buyers to place automated orders for TV ad space. Cox Media, representing local TV providers and Dish Network, among others, is opening inventory to demand-side ad-tech players like Google, Turn and TubeMogul. And brands are moving more and more toward programmatic buying. For example, Mondelez International, encompassing brands like Cadbury, Oreo and Wheat Thins, recently announced it would run all its digital video buys in North America through TubeMogul. Does a brand like Oreo care if its ad shows up on Food Network, Hulu or Facebook as long as its target audience gets the message? That’s how more media planners are thinking about ad buys, and what programmatic offers. Mike Zeigler, vp of business development at Cox Media, says buyers will be able to order TV spots seen by, say, 1 million men who are sports fans and aged 25 to 35. Ads will be served through cable boxes to households that fit the demographic and will keep being served until the target is reached. “When a client buys programmatically, they don’t know precisely when or where they’re going to run,” Zeigler points out. “What we believe will happen is that ad buyers will truly start buying audiences.” Programmatic TV is still in its infancy. Today, the best technology can automate insertion orders and leverage basic demographic data. There’s still no telling whether the consumer on the other side of the screen is the target for an ad for sugary cereal or his older brother or his grandma. Those on the tech side say to give it time—the more programmatic pipes that are put into place, the more marketers will know who is watching. Still, programmatic is feared among TV’s old guard, who’ve seen technology commoditize online ad inventory and don’t want to devalue premium commercial space in prime time. But there’s a crucial difference, and that is that programmatic TV buys, at least for now, are not subject to the real-time auctions that drive online ad sales. Programmatic TV can benefit everyone simply by automating the buying, selling, delivery and measurement of ads, the argument goes. To fight it is akin to telling a company in the 1980s not to computerize. —Garett Sloane NO Part of the problem with talking about a programmatic revolution on TV is that not everyone is clear about what programmatic TV means. Is it exchange-based real-time buying? As we’ve already seen, an advertiser can buy a lot of different TV spots via programmatic exchanges mostly by buying (at flat rates, not auction rates) time owned by MSOs like Cox and Dish rather than from the networks. Most everybody with a distribution agreement gets two minutes an hour to sell on a given channel. And some conglomerates, notably NBCUniversal, are experimenting with making inventory from smaller networks available on exchanges to test their efficiency. “Some networks are putting TV remnant inventory into platforms like Adap.tv and Simulmedia, [which] sell it in a programmatic fashion,” explains one media buyer. “It’s a lot of long-tail networks that put unsold inventory into these options—the bigger networks tend to sell their remnant for higher rates via direct response.” It is important, though, to understand what that toe in the water does not include. Nobody can buy, for example, any over-the-air broadcast inventory in these marketplaces—or, of course, anything that is sold during the upfront where ad inventory on new shows is sold at a discount in order to hedge against potential failure, then sold at a large markup in “scatter” after the season’s hits have been established. It’s just not a system that’s compatible with the rapid-response ad exchange—and it’s how networks amortize the massive costs of programming. It’s pricey to option promising properties, produce pilots from a few of them, send a choice few to series, and then give everyone a raise when one or two shows prove to be hits and take a write-off when others tank. Sometimes programmatic just seems to mean data-driven, and that’s already happening at forward-thinking TV networks. Jay Sears, svp, marketplace development at Rubicon Project, who sees platforms like Adap.tv and Simulmedia as the TV equivalents of early online ad networks, points out that the transition to data-driven buying in TV is much less radical than a massive shift to third-party sales. “The idea there is [that] the big ad-holding companies deploy more resources against strategy and programming and bespoke programming and fewer resources around faxes and Excel spreadsheets,” he says. Everybody with two laptops to rub together is trying to guarantee against ROI data culled from credit cards and cable boxes. But they’re simply buying it from third parties (or, in the case of NBCU, taking it from parent company Comcast) and using it in a proprietary way in order to leverage their own inventory and keep the market from becoming an early bird special at the buffet next to the old folks’ home. At the end of the day, networks own their ad inventory and are going to do their best to sell it at a premium, or demand that advertisers buy it in exchange for access to more desirable inventory on sister networks. Exchanges, even Web video at auction rates, remain a buyer’s market—so much so that multiple hedge funds have shown interest in buying and reselling the exchanges’ inventory. And if Wall Street sees inefficiency in remnant ads, you can bet TV does, too. — Sam Thielman

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Will Programmatic Advertising Take Over TV?

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