Coming to a TV Near You (Eventually): Programmatic Advertising

shutterstock_360211148TV advertising may soon evolve into something that more closely resembles a growing segment of Internet advertising – a programmatic model that relies more on technology and less on human prognostication to make media buys. The majority of today’s consumers now watch TV programming on their phones, tablets and laptops, so it makes sense to shift advertising buying to align with the way audiences consume this media. Traditional TV media buying requires humans to gather ratings, analyze programming, determine which shows appeal to a target viewership, and then manually place buy orders to reach coveted demographics. Now, with programmatic TV advertising, many traditional functions of media buying are coordinated using a single platform.

What Is It?

Historically, advertisers purchased TV spots based on show ratings, which include general data about viewership, such as number of households, gender and sex. Advertisers try to reach specific audiences by buying spots on specific shows, such as The Walking Dead or Real Housewives.

Programmatic advertising flips that model on its ear by allowing advertisers to buy viewers instead of programs. Advertisers who want to reach women age 25 to 45 who own a home don’t care whether their ads show on Real Housewives, Meet the Press or Flip or Flop, as long as their ads are seen by women age 25 to 45 who own a home. Programmatic advertising allows advertisers to find, in real time, which shows their target customers are watching and then send ads their way.

Potential Benefits

Programmatic TV advertising, if done correctly, will greatly streamline the workload of media buyers. Using one platform, an advertiser can plan calendars, make purchases and measure the results of ads on multiple channels. With real-time results, advertisers can update their buys based on reality, not projections. With traditional TV ad buying, viewership reports are generated after the ad campaign runs, when it’s too late to react to what’s happening. Programmatic TV ad buying will also help reduce some of the manual media-buying workload that includes phone calls, emails, meetings and insertion orders.

Using programmatic advertising, brands will have access to more in-depth data about viewers, rather than general and macro numbers that are projected from post-airing ratings. Using this data in real time, advertisers will be able to better deliver targeted content to viewers, and not just based limited demographics such on age or sex. With programmatic advertising, advertisers can target users based on their behavior, including the screens they are using to access content, which allows brands to deliver messages that make a bigger impact.

Easier Said Than Done – For Now

Programmatic TV advertising won’t fully replace traditional media buying any time soon, based on the current state of the technologies available and psychological comfort level of ad buyers. While it would be great to find every TV show watched by large groups of women age 25 to 45 who own a home, the technology’s not quite there yet.

Innovators have entered the programmatic buying space, but haven’t found large numbers of early adopters yet. As with any new technology, numbers aren’t the main drivers for early adopters – it’s comfort level and willingness to try something new.

Online, programmatic advertising has driven down advertising prices because of the large inventories available. This won’t be the case for TV programmers; for one thing, supply and demand isn’t the same as with digital advertising opportunities (there are fewer TV programs than there are websites and pages). This could mean higher advertising prices for TV programmers, but a greater return on investment as well.

Other forms of programmatic TV ad buying (such as guaranteed and premium spots) shouldn’t change supply and demand, so being able to buy those ad spots using a different, more convenient programmatic technological platform won’t reduce advertisers’ willingness to pay more to purchase spots on coveted shows. Additionally, the real-time bidding model that works for digital advertising might be too risky for TV advertisers who want guaranteed eyeballs on hot shows; and again, the technology’s not there yet to make RTB work.

As growth continues to accelerate, it will be important for advertisers who aren’t using programmatic for their TV ad buys to at least keep current with the players and be ready to join the game or get left on the bench.