Programmatic TV - the buzzword that out-hyped 50 Shades of Grey

Daniel Rowlands, director of supply at SpotXchange
By Daniel Rowlands, director of supply at SpotXchange | 29 April 2015
Daniel Rowlands, director of supply, APAC, SpotXchange

There’s a reason the marketing industry grumbles about buzzwords. Each year a new crop of “trends” invade the landscape, accompanied by more hype than the cinematic release of 50 Shades of Grey.

Programmatic advertising has been one of these buzzwords for the past few years, albeit one that’s delivered on the hype. Until now.

With a crush of vendors rushing to fill the space, the latest ad tech catch cry is programmatic TV – the promise the TV industry will soon automate the sale of ad space in the same way online video has.

While it’s inevitable that in a data-driven, customer-centric world, programmatic buying will come to play a part in scheduled TV, the reality is ‘PTV’ is a long way from being realised in the Asia Pacific region, and when fully realised will take a mixed-methods form.

The assumption seems to be we’ll fall in line with the US, where NBC, Time Warner, ESPN and others are already using programmatic sales models for linear TV inventory.

But Australia is a much smaller market, and competition isn’t as fierce. The drive to make the quantum leap from a simple, pre-packaged sales model to a real-time, auction-based process just isn’t as strong.

In addition, the platform off which to take the leap isn’t there. With the exception of Multiview, MCN’s pay-TV measurement service, explicit audience data isn’t available to TV advertisers. The market relies on implicit data – geographic and demographic profiles – meaning the ‘addressability’ possible in the digital realm can’t be applied at a household level – yet.

In the US, 80 million households have connected smart TVs or set top box solutions bridging the digital gap. According to Neilsen’s most recent Connected Consumer report, only 18% of online Australians have TVs that are actually connected to the internet. This means that less than 4 million people are potentially addressable. Divide that across shows and networks, and you can see why the infrastructure (ad servers, supply-side platforms and data) is yet to be set up locally.

Another issue is the scheduled nature of TV. Real-time bidding works for online video, and is being applied successfully to catch-up TV, because it’s harder to plan for a certain viewer watching a certain piece of content at a known time. It has to be sold on the fly. In a scheduled environment, sales teams have the luxury of time to make the sale.

The time to future proof is now

While PTV is still a topic of some speculation, the time for broadcasters to dip their toes in programmatic waters is now.

With accountability pressures on ad spend, and competition for dollars from addressable channels and new players in the market (SVOD, for example), it’s inevitable that programmatic will come to play a role, even if we don’t see it take off fully across the industry for another three or four years.

Let’s recognise a few influencing factors that scream PTV is unavoidable.

1. The smartphone went mainstream in 2007
2. The first tablet was introduced in April 2010, just under 5 years ago
3. Internet speeds have since moved from 2G to 4G and beyond.

Prior to these advances it was simple for broadcasters to reach their audience, sitting patiently in their living rooms. Fast forward to 2015 and TV content is being consumed on the way to work, at lunch, in transit… virtually any where and at any time. It is a completely different world and the only way for both supply and demand sides to connect is via a programmatic solution.

But it isn’t an either or proposition. It’s about complementing the current process, not replacing it. Broadcasters and content owners can begin to take advantage of some of the basic functionality of programmatic by using it to bring efficiencies to the booking process.

The market often gets confused by the fact that there are different programmatic sales models. ‘Programmatic direct’ would be a great starting point for TV as it uses a traditional sales process, before introducing the efficiencies of automation to complete the workflow.

Programmatic deal types

As the market develops and the infrastructure is set up, marketplace-based programmatic can be introduced more widely. The advantage here for scheduled TV would be the agility to respond to rating spikes, events impacting on the show or category or changing consumer behaviour. Or to make adjustments on the fly and drive higher value from remnant inventory.

Once customer and behavioural data can be mapped back to households at a greater scale, broadcasters can take the next step and match buyers with their target audiences to increase mutual value on inventory, and let clients use their own data sets to target more effectively.

Fully realised, PTV has the power to give sellers operational efficiencies, better yield management, and value add with data-driven transactions, real-time optimisation and household addressability.

It will take a great deal of market education to transform legacy business models to take full advantage of PTV. In many ways the challenges broadcasters will face over the next few years are the same print publishers have been grappling with for five years or more.

Broadcasters will need to learn to package up content that crosses from broadcast to catch-up TV to online video clips, similar to how newspapers have with print and digital.

Broadcasters that take the lead from print and start to dip their toes in programmatic waters stand to gain the jump on their competitors. Without getting caught up in the hype, there are steps that can be made to ensure a profitable ‘TV’ industry into the future.

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