What’s all the Fuss? Programmatic TV

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Digital TV advertising

Paid Media Strategies series #4Programmatic TV

For no.4 in the paid media series, we take a look at Programmatic TV. We explain what it is and why you should be considering it for your future marketing campaigns.

It’s over 60 years since the first TV ad, for toothpaste, was broadcast in the UK. Today the market for television advertising is worth billions – for instance, during the 2014 World Cup it cost an estimated £60,000 for every second of ITV ad time. Over the years advertisers have played around with the form, whether it be developing long-running serials for BT and Gold Blend, high-concept ads like the Cadbury’s gorilla and the Budweiser frogs, or adverts aimed specifically at cats, but the ways that advertisers bid for ad space and the way that TV ads are shown to viewers, have changed remarkably little.

Programmatic TV

Now, though, Programmatic TV and automated advertising have the potential to revolutionise the market, to make it bigger, smarter and more efficient. It’s an initiative that is certainly still in its infancy, but with people watching an average of 3 hours+ of television every day, there is immense potential. While not all broadcasters have the technological infrastructure in place as yet, companies such as Sky (AdSmart) and Virgin Media are currently trialling versions of programmatic TV.

Of course TV is only one part of the digital equation as marketers chase their audiences across a variety of channels, and there are still concerns, particularly that programmatic TV will devalue advertising inventories. But exciting developments are confidently predicted by the industry within the next few years – if experts are to be believed, then programmatic technology will soon completely upend traditional TV advertising methods. So…

What is Programmatic TV?

Data-driven automation of advertising allows marketers to use a programmatic platform for bidding on individual TV impressions. Where previously brands would pay for their ad to appear to the entire audience of a show based on the number of likely viewers, now they can display their ads to subsets of that audience instead, for instance teenagers interested in mobile contracts, or professional men in their 30s. So Mr and Mrs Smith could be watching Coronation Street and see an ad for a shoe brand, while their next-door neighbours the Jones family could be watching the exact same show, but see an ad for a fast food chain.

The data, collected from a variety of sources, can be everything from household composition to financial and lifestyle needs, allowing for diverse combinations and therefore precise targeting that will ensure ads are much more relevant for their audience. There is no need for advertisers to determine the programme or channel for their ads to be displayed, as it will only appear when the targeted audience is watching. Ads are paid for on a cost-per-impression basis in a similar manner to online ads.

Currently, there are three distinct types of Programmatic TV in the UK:

  • Linear TV – Traditional television watching, wherein the same ad is shown to the entire audience through set-top boxes. Advertising is purchased through automated platforms, and both targeting and metrics use standard TV metrics.
  • Addressable TV – Individual households watch TV through selected providers such as BT or Sky, via set-top boxes. Some viewers watching the same channel at the same time may see different ads. First and third party data may be used for targeting, and this is currently the most scalable option, due to how many people watch addressable TV.
  • Connected TV – This can be either smart TVs connected to the internet, or devices such as games consoles or Apple TV. Usually the content is watched through apps such as the BBC iPlayer, with ads inserted depending on the specific household. Reporting is done with digital metrics such as delivery and completion rates. Connected TV is growing in popularity as more devices go online, and more data is collected on consumers through both online and offline behaviour.

The great opportunity for Programmatic TV lies in the evolution of consumer viewing habits – streaming, catch-up, mobile devices and multiscreen viewing are opening up new ways of displaying and watching ads. In turn, advertisers are sitting on vast quantities of data, while a lot of ad space is considered to be undervalued at present.

Historically, many brands have avoided or minimised spending on TV advertising, put off by the cost or broad-brush targeting involved. Programmatic TV offers a highly attractive solution to that, and other advantages besides…

Programmatic TV

Benefits of Programmatic TV

Beyond the obvious – richer, more relevant advertising so that viewers will be less likely to mute it or go and make a cup of tea, there are substantial benefits offered by growth in Programmatic TV.

Distributors and programmers can better monetise their ad inventories, while advertisers can put their own data insights to use, and brands stand to get better ROI. There will be less waste and risk involved in ad production and distribution.

For smaller, niche or location-specific brands, the playing field is now much more level. They can harness the proven power of TV advertising for much less ad spend and enjoy far better targeting – they can virtually cherry-pick their audience, restricting it to region, city or even post code, based on that audience’s known interests.

Best Practises for Programmatic TV Advertising

This is a nascent industry, with guidelines for platforms and advertisers still in the formulation phase, yet some best practises can be identified.

Early adopters could gain the most. At the moment uptake is low, but Programmatic TV is likely to advance significantly over the next few years, and now is the time to be making small experimental campaigns to get a good understanding of the medium and what it can offer your brand.

Look to any first, second and third party data you hold for insights that can drive strategy, especially if that data can be broken down by household.

Remember that more and more people are watching TV now on mobile devices, so focus attention in that area. Be creative with custom ads for different market segments and follow the example of online ads which need to be refreshed regularly to avoid going stale.

Do the math – if your product has a broad appeal then targeted advertising may not make financial sense. But if you feel the rewards are worth it, neither should you see this as simply an opportunity for inexpensive TV ads. It is instead a chance to forge a better connection with your target audience and simultaneously achieve good ROI.

Paid media digital TV

The Future of Programmatic TV

Currently, programmatic TV is nowhere near as sophisticated as automated buying for digital video, which partly explains why it hasn’t yet caught fire. Take-up is bound to be slower, as TV ad space is limited and at a premium, so in the immediate future there will probably be moves towards preferred partnerships and brands launching small, experimental campaigns. Resistance must be overcome from some TV executives, who feel it will result in a ‘race to the bottom.’

The next few years will undoubtedly see explosive innovation in programmatic technology as it becomes another option for advertisers looking to unify campaigns across multiple platforms. We will eventually see the ability for marketers to manage planning, execution and measurement all in one place, with possibly even the potential to adjust campaigns mid-flow for maximum engagement.

Programmatic TV is just at the start of its journey into the mainstream, but it will cover that ground rapidly.

Programmatic digital TV