Why are advertisers so excited by programmatic TV?

Mitch Waters
By Mitch Waters | 18 December 2014

While the US has led the field in programmatic buying, deals reached here in Australia will see new ground broken with linear TV. So what use can a technology designed for the online world provide for the traditional television industry? Adap.tv’s Mitch Waters explains.


For most people involved in the online video advertising industry the word ‘programmatic’ has become part of their everyday lexicon. While definitions will vary slightly, most definitions will include the automation and the advanced use of data. The platforms that deliver this capability are the engine room for the algorithms that ensure the right message gets to the right eyeballs at the right time. They’re helped by rich data sets, used in the process of planning, buying, optimising and verifying.


The technology has largely been used for online advertising, with huge growth specifically in online video. As viewership habits fragment, the ability to follow the audience is more important than ever. TV has evolved, particularly with internet protocol television (IPTV); TV content delivered over the internet to a smart TV.


Sadly, right now, the IPTV opportunity is dwarfed by traditional TV audiences, who remain stuck on to old viewing habits. Nielsen’s multi-screen report for Q4 2013 shows we spend 92 hours per month watching conventional TV, and just six hours watching video on the internet, whether watching long form content on television, or short clips on our desktops, mobiles and tablets.


Hence, the real opportunity for programmation lies with traditional linear TV. That’s why AOL Platforms formed a partnership with Multi Channel Network, the advertising company that manages the inventory across 70 Foxtel channels. Through this we will see linear TV advertising bought and optimised with the same technology used to deliver online video advertising.


The next 12 months will see similar deals tied up around the world. The US, of course, is a far more fragmented market, so it has been easier to build programmatic TV marketplaces given the large amount of inventory and competing companies. The US has been running programmatic TV for over a year with open marketplaces the norm.


So, why are advertisers so excited about programmatic linear TV? In a nutshell, it automates what has been a very manual process that sees planning and buying cycles stretch over several weeks. A lot can change in that time – consumer habits, world affairs, you name it – and brands need the ability to execute a buy closer to broadcast.


TV buying is also fairly restricted in the tools it uses – it’s bought largely on age and gender. With programmatic buying, clients can start leveraging their own data to target TV campaigns more precisely.


This is excellent news for TV broadcasters, who may be seeing greater pressure on their ability to sell advertising on niche channels and TV shows that traditionally sit within the 1-2 TARP inventory band. This inventory band is increasingly becoming a war zone. You only have to look at the recent big deal between GroupM and YouTube to see that this migration is happening already.


Programmatic offers broadcasters the ability to demonstrate that quality audiences exist for this band of inventory, offering the sort of specialist targeting and insight that buyers have become accustomed to online.

Australia is leading the way in this shift to programmatic linear TV, largely because we have a pay TV company that has been investing and planning for this migration for several years and has access to incredibly rich TV datasets. We have one significant limitation, however – there’s no single measurement product across TV and online. In the US, Nielsen rolled out XCR product so buyers could measure unduplicated reach across online and offline activity. This is an extremely powerful tool for managing cross platform optimisation. We need the same approach here, so Aussie buyers can start thinking less about buying TV spots and more about reaching audiences, wherever they may be.


TV is not dead. Programmatic will not replace all TV buying, however I think we will see a shift away from spot trading to a programmatic solution allowing broadcasters and advertisers the time to work on tent pole sponsorships and integrations across all screens and channels over the next year or so.


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