Is TV the Future of Programmatic Advertising?

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When we speak of programmatic, we often think of display advertising – which is understandable given its market dominance. In 2015, digital ad spend in the UK stood at an impressive £1.8 billion, and it’s rising.

However, there may be a new kid on the block, in the form of programmatic TV advertising. It may not be that well-known yet, but as the importance of data-driven targeted ads increases, we expect this to change.

This blog will explore why programmatic TV advertising could be so effective, where it stands today and what we can expect for the future.

Programmatic TV advertising: Why could it be so effective?

TV advertising is a great channel for brands to gain awareness. The average person in the US spends a whopping 5;11 hours watching TV every day. However, the buying and selling of TV advertising distinctly lacks the efficiency and data-driven precision of digital – which leaves a perfect niche for programmatic to fill.

• More efficient purchasing process

The manual nature of traditional TV advertising is one of its primary flaws. From requesting ad time and purchasing, to displaying the ad and measuring its success – the manual processes involved in TV advertising can be slow and tedious.

By using programmatic, automated technology, advertisers can purchase ad space and serve it instantaneously. As a result, the purchasing process requires little resource and is extremely quick.

• Increased targeting

TV advertising doesn’t come cheap. During the 2016 Superbowl, a 30-second ad reportedly sold for as much as $5 million. When making such an investment, it is crucial that your TV ads are showed to the right audience to maximise ROI. However, this can be difficult to control through traditional TV advertising – but not when you add programmatic to your strategy.

Programmatic TV advertising collects and sorts a complex mix of user data, segmenting users into specific audience types. Advertisers can then choose which specific audiences they serve ads to, increasing the chances of gaining the viewer’s interest and engagement. No more channel-surfing necessary.

• More detailed user response

Traditionally, the success of an ad is measured by increase in sales, website traffic, or improvement in brand image. However, with programmatic, these measurements can be more accurately measured as advertisers can identify how the viewers respond to the ads. This includes changing the channel and time to change channel.

Because these responses can be gaged instantaneously, improvements can also be made instantaneously in real-time optimisation, rather than having to wait days, weeks or even months after the TV ad campaign is over.

So, where is programmatic TV today – and what is its future?

Programmatic TV was expected to have boomed in the last few years, yet it has failed to do so. A major reason for this is the lack of ad inventory. Currently the inventory largely consists of local cable companies rather than national or prime time ad slots as the latter fears that ad inventory will become commoditised and so drop in price.

Despite this, a number of companies have dipped their toes into the programmatic TV world and are demonstrating its potential:

– Sky

This UK-based broadcaster is taking the lead with its programmatic tool, Sky Ad Smart. This allows Sky to display different ads to different households based on demographic data it collects.

According to Sky Media, using data from 500,000 homes and 50 million viewing occasions, channel switching during Sky Ad Smart ads was 33% lower than standard ads, showing that their ads were gaining better engagement.

– TubeMogul PTV

In late 2014, Tube Mogul launched TubeMogul PTV, a TV programmatic software solution that has the potential “to span over 80 cable networks and hundreds of local broadcasters, reaching over 90% of American households.” It is also able to target according to age, gender, income, education, ethnicity, number of children and even pet ownership.

Future of programmatic TV looks bright

Programmatic TV may have a long way to go. According to International Data Corporation, programmatic TV will reach almost $1 billion in the US by the end of this year alone. Though this may seem impressive, it pales into insignificance when you know that this would only make up 1/70^th of the total TV advertising marketin the US last year.

However, many still believe it is a time-bomb waiting to go off. To mark 60 years of TV advertising in September 2015, Campaign hosted a debate made up of leading industry experts to explore the future of TV advertising – and lo and behold, programmatic TV was the focus.

The general consensus was that the industry, as worded by Moneysupermarket.com’s David Harling, has “an appetite for programmatic”. However, there are two major problems holding it back. Firstly, there is a lack of understanding about programmatic TV. Secondly, marketers feel that media agencies are not providing them with open access to their campaign metrics.

Once these issues have been solved, there should be little else holding programmatic TV back.

With the development of technology and an increasing demand for tailored content, programmatic TV is certain to take-off. Creative ads may gain engagement but this is no longer enough. To ensure a solid ROI, ads must also be as targeted as possible – and this is exactly what programmatic promises to offer.