Based on the number of times it was cited in recent upfront presentations, people’s perception of programmatic TV appears to have morphed from wry skepticism among industry insiders to an air of inevitability in a short time.
But how much progress have we really made in moving to programmatic TV? In many areas, we are much further ahead than many realize – even further ahead than our digital counterparts. But in other areas, candidly, we’re much further behind than many would expect.
To define terms at the outset, programmatic TV is the marriage of TV audience data with TV ad tech automation. This union allows the automated planning, buying, optimization and reporting of a TV campaign using advanced TV audience data.
Foundationally, programmatic TV is about technology and data. As a result, the first TV inventory providers to adopt programmatic have been the cable, satellite and telco multichannel video programming distributors (MVPDs) because they, too, are predicated on infrastructure, technology and data organizations. These MVPDs have made significant progress in driving the programmatic TV agenda and are already, in these early innings, realizing positive returns on their efforts.
The MVPDs are much further ahead than you might think. It is possible today to build a TV campaign in a matter of seconds through an easy-to-use web UI that is powered by sophisticated Python-based algorithms that access MVPD TV inventory across the US. An advanced TV audience data set, such as a network/daypart ranker of people who actively book hotels online, can be automatically ingested to optimize the campaign. All specs of the campaign, such as flight dates, target network distribution, hit-listed dayparts or weekday/weekend allocation, can be input and the plan is automatically generated in near real time.
More importantly, if the plan is bought, the execution is also fully automated. Inventory orders, traffic instructions, ad copy encoding and daily reporting are automatically distributed and managed through a networked hub of third-party TV ad servers that are integrated with traffic and billing systems across the US.
The entire end-to-end process is virtually touchless, the result of many years of ongoing investment. Through this tech and data, the MVPDs are now monetizing their inventory at enhanced value, while agencies and advertisers gain access to new TV inventory.
On the other hand, I recently talked with a digital demand-side platform (DSP) exec and asked how long it took to build a plan for an audience-driven campaign. Expecting the answer to be a de facto “instantaneous,” I was surprised to hear “an hour or so.” Compared to some digital DSPs and supply-side platforms that often hide behind a glossy UI with, in reality, an Excel spreadsheet back end, programmatic TV is not only further ahead than many think, but it’s also further ahead than many sectors of digital.
But programmatic TV is also further behind than many would expect. Contrary to much of the trade press coverage of late, programmatic has made much less progress in other categories of TV inventory, including local broadcast, network cable and network broadcast. It is certainly provocative to read about a single Super Bowl spot being sold programmatically during a local break in a mid-tier station, but in reality, no advanced tech is required to make that happen. The legacy traffic system can do the job just fine.
But the good news is that local broadcast is quickly following in the footsteps of the MVPDs and is beginning to make the technology investments for true programmatic TV. In many ways, building a local broadcast industrywide programmatic TV tech platform will be more challenging than for the MVPDs due to the heterogeneity of local program schedules. But once achieved, the financial returns should match or exceed those that have accrued to the MVPDs. Programmatic TV will allow agencies and advertisers easier and more flexible access to local broadcast inventory and increase its value for station groups.
This year, almost all of the cable network groups have announced TV audience data partnerships during their upfront presentations. NBI, NCS, Rentrak, Polk and the like have quickly become as sexy as the newest sitcom celebrity. The national cable networks will deliver on their promise of using the advanced TV data to plan, build and optimize campaigns with it, but it will largely be a manual effort. At this early juncture, data-driven TV for network cable can be successful through manual execution. Network cable inventory is much less complex than MVPD or local broadcast inventory to manage; consequently, and rightly so, it will be the last TV category to adopt full tech automation.
As for network broadcast inventory, I don’t think it will ever adopt programmatic of any significance. The need and the economic justification are just not there. Network broadcast will continue to be sold on context, not audience, given its uniqueness and very scarce inventory. There is little value to applying technology and data to solve a problem that doesn’t exist.
The MVPDs were the early trailblazers for programmatic. They tested and proved the economic value for themselves, agencies and advertisers early on. Local broadcast and network cable will use those successes and quickly follow. And while those two may be further behind than many think, we have nonetheless definitively entered into the inevitability of a new era of programmatic TV.