Is TV Ready For Programmatic?

Originally Published in: Mediatel

June 6th, 2016

Too many television executives are missing the point; programmatic is a vehicle for creativity, and is not there to replace it, writes Exchange Lab’s Chris Dobson. 2014 has a lot to answer for. That was the year that ‘programmatic TV’ swept across the trade media, rolling from the lips of agencies, advertisers and ad tech companies so freely that you’d be excused for thinking it had arrived already and was in full swing. This hyperbole may have driven a more guarded response from some of the more traditional TV veterans. The fact is that two years later, programmatic TV reportedly still only makes up $1 billion of the reported $70 billion spent in programmatic in the US in 2015. Forecast growth is slow also; eMarketer predicts that by 2019, programmatic TV in the US will only make up $11.8 billion 13% of the total TV ad market. Much of TV has largely ignored the biggest shake up to the media industry in the past 50 years; programmatic media buying. In fact, in many conversations TV executives seem to think ‘programmatic’ is a competitive move rather than a way of instating maximum value for publishers and matching audiences to advertisers. Now that data is becoming an essential part of the life of marketers, advertisers will demand that the data becomes more connected. Currently measurement methods are misaligned across channels. The media industry must rise up together and demand one form of measurement for all media channels. After all, TV is just another screen. For advertisers funding the networks, why should they expect any less information that they would get on any other channel they spend through? It’s not going away… So why is there a reluctance to change? Programmatic is essentially the automated process for buying and selling media – with a primary focus on efficiency. This can be applied to any medium that buys or sells media – including digital display, radio, OOH and TV. It is also still a common misconception that programmatic is purely a performance based tactic; it is also useful for branding and through the use of video. In a roundtable I attended for Broadcast on the next generation of TV advertising solutions, one executive said “Television doesn’t need to explain itself because we’ve had a robust medium for 40 years that absolutely delivers return on investment and people believe in it now more than ever.” Audience viewing habits are changing now faster than they have done in those 40 years. People are turning away from linear TV and watching content that suits them on other devices. The next generation of users wants choice, and are in a hurry to get it. Viewers now process a lot more information and are less likely to sit down and watch a scheduled programme for an hour like they used to. When I go into Netflix, I’m happy to identify myself to the platform so that it gives me the content I want. All that data is going to come into play in the future and in the same way that digital has eaten every other media, there is a big shock coming for TV. How will TV companies adapt to the tsunami of Generation Z and the change In TV viewing habits over the horizon? Simon Daglish, group commercial director at ITV recently said in a Mediatel article; “Data insights are certainly important, but which algorithm ever said a gorilla should play the drums to sell chocolate, what data said that you should have a Russian speaking Meerkat selling a website that doesn’t exist for an insurance aggregator?” For me, he is missing the point of programmatic. Which traditional TV auction said that a gorilla should play the drums to sell chocolate either? TV doesn’t design creative – creative agencies do. Humans may schedule in the specific TV time slots, however it’s not the TV stations or auctions that are determining the creative output. There seems to be a confusion here between creative (which is not disputed) and how audiences are matched to advertisers. Programmatic is a vehicle for creativity; it doesn’t purport to be creative – although it certainly helps test creative effectiveness. It stands for efficiency by automating manual approaches and uses data to back up (but not wholly replace) human hunches. It also gets the maximum value out of inventory opportunities when focused on biddable auctions. The real question shouldn’t be: is programmatic ready for TV? Instead, we should ask: is TV ready for programmatic? For TV, targeting is a fundamental issue. Programmatic relies on data integration and it could be argued that TV is not fit for the purpose of this task. And where we do see TV data available, it isn’t at an individual IP address level, but rather at room level. There is precious little detailed data available and an archaic rating system in place. Connected TV offers a valuable opportunity for programmatic targeting – although it still has very limited scale – currently in the UK there is around 30% smart TV penetration. Could the relationship work? Another question that needs to be asked is could linear TV benefit from real-time bidding? Would they stand to make more money and if so, would that also be the case for flagship/peak commercial breaks? The answer is almost certainly yes. There are many reasons why for TV the relationship could work well. For example, the TV industry has already bought into the highest bidder concept – their methods of ‘pre-emption’ – an auction system to manipulate breaks to get a higher price – has been carried out manually for decades. Essentially, the highest bidder wins the ad slot, similar to programmatic auctions. Secondly, there is an active but restricted supply and demand marketplace, meaning that bidding can take place and marketers are looking for targeting precision as well as broader reach. Similar to programmatic, the supply is also a mixture of premium and non-premium audience sources, which means that there can be clear parameters set up for safe branding. There are some glimmers of light; addressable TV also holds many of the same values of programmatic – using data to target viewers geographically, demographically and behaviourally, achievable in real-time. It’s only the source and volume of data that is challenging. When you look at it, TV and digital have more in common than most assume. It’s time for the industry to embrace the new opportunities rather than resist them. TV networks may not measure every audience behaviour to the nth degree, however marketers are demanding accountability. When most TV networks models rely on advertisers to fund their stations, wouldn’t it be worth listening to their customers to ensure the business model survives the next 40 years and beyond? The pace of change means that 10 years is a long time in media now and Generation Z represents change like TV has never seen in the way they consume. The crux is adapt or…?

Written by:

Chris Dobson

CEO of The Exchange Lab


Cool stuff for you to check out





Seasonal Shopping is Changing and Programmatic is the Only Way to...


can we tell you a secret?

We've got tip sheets, videos and more
just for you...

Take me there!