Five Reasons Programmatic TV Is Set To Skyrocket

by Andreas Schroeter, June 30, 2015, 12:04 PM 

TV advertising is far from dead; it’s just ready for a massive change. Programmatic TV, the automation and optimization of the TV ad buy, is the sea change bound to transform the industry. Goodbye fax orders, goodbye one-time planning with fixed campaigns, goodbye GRPs. Why?

 

1. TV is by far still the most convincing advertising medium. You simply can’t put 30 seconds of stunning visuals accompanied by mesmerizing audio into a small screen video ad or an even smaller 300x50 static banner. While TV is battling for eyeballs, 70 inches still trumps five-inch mobile or 14-inch laptop screens.

 

2. With the automation of TV ad buying, handling costs will massively decrease, allowing for smaller initial budget sizes. This will open up TV advertising to a vast new client base, creating more demand and a more robust marketplace.

 

3. While TV is always identified with its massive reach, programmatic TV will allow exactly the opposite: granularity. As programmatic TV adds more data, such as detailed audience data from Rentrak to each TV slot, automation will allow for more finely detailed planning with just one mouse click.

 

4. Probably the most exciting part of programmatic TV is that it opens the door to define entirely new success metrics. While the current buying process focuses on targeting audiences based on Nielsen’s TV panel, this will soon be a hypothetical concept of the past. Why shouldn’t an advertiser book TV inventory that generates the most social buzz on Twitter and Facebook? Why shouldn’t an advertiser purchase airtime that results in the most website visits — or even offline store purchases? Today’s technology allows for combining data in a smart way beyond the traditional 16,000 household panel. The optimization algorithm will then automatically and continually allocate budgets to the best-performing TV inventory slots, allowing the advertiser to get the maximum out of a campaign.

 

5. While programmatic TV initially seems to be a threat to incumbents, it actually is a tremendous opportunity. Agencies and broadcasters won't lose; the focus will just change. More technologically driven capabilities means more complexity, and agencies need to help advertisers set up and run programmatic TV campaigns. The move to programmatic online advertising did not lead to the demise of agencies. Instead, an entirely new set of capabilities emerged in the form of in-house trading desks. More liquidity in the market means more revenue for broadcasters. More targeting capabilities due to added data means more potential for price differentiation, again resulting in increased revenue.

 

Industry experts estimate programmatic TV advertising to be 3% to 5% of the TV ad market this year, already translating into hundreds of millions of ad dollars spent. Right now programmatic TV is still in its infancy, still working on the technology, building the first big case studies, establishing trust in the market, educating the players. This will all happen by year’s end, with 2016 being the breakthrough year for programmatic TV.