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What programmatic TV means for UK marketers

The way TV ads are bought and sold is about to change. But with all the promises and pains that come with programmatic trading, marketers are still uneasy as to how it could impact their TV media strategies.

Programmatic has been a dominant part of the online display trading market for some years – Sky among one of the biggest spenders – and increasingly so in the video and mobile advertising arenas. The one bastion for it to breach is linear TV, a medium that despite commanding billions of ad spend is yet to offer much audience targeting beyond demographics and show genre – with the exception of Sky's AdSmart product.

However this is set to change. Advertisers wowed by programmatic’s impact on digital returns, are pushing broadcasters to move with the times when it comes to trading. In the US, this shift is already apparent with high-profile spots during the Super Bowl and Oscar awards being sold in an automated fashion, while there are signs the UK isn’t too far from something similar.

“It’s no longer a question if [programmatic TV] will happen in the UK but when,” Nick Reid, UK managing director of Tubemogul, told delegates at the Digital Convergence conference yesterday (25 February). He used Channel 4’s decision to erect an online, private marketplace selling inventory on its TV catch-up service 4oD as an example of how broadcasters are starting to prepare for the future.

But what does programmatic TV mean?

In a nutshell, it means using audience data to funnel ads to targeted places. Instead of being bound by show ratings to match ads to audiences, planners could target using their own first party data with data from broadcasters. For example, rather than bulk buy ads around a football match to reach 18-to-24 year-old men, a car maker with programmatic capability could target men in the same age bracket with an income of £40,000 who own an iPhone device.

“Traditionally the world of media was complex,” said Reid. “The challenge was combining the perspective of multiple different buying points. It was infective. Now advertisers and agencies can use one software platform to plan, buy, manage, track, measure and optimise their campaigns across screens and devices.

How is programmatic TV different from the online equivalent?

TV advertising, unlike online media, isn’t traded in real-time but sold by fixed prices and agreed upon inventory. Real-time ad transactions are not suited to the TV arena, where supply is limited and broadcasters are looking to secure bulk buys and long-term backing.

Reid said it is unlikely real-time bid pricing would be assigned to TV anytime soon, putting the onus on the “data driven automation of audience based buying” opportunities for advertisers.

Automation, not auction, is the reality for programmatic TV. An example of the model in practice is the way Channel 4 is selling media around its on-demand TV content.

“TV will always be traded and delivered in a way that’s similar to the world of Mad Men,” added Reid. “It doesn’t mean you that you will have real-time bid pricing because the transaction will for the foreseeable future be between the broadcaster and the advertiser.”

What are the opportunities of programmatic TV?

It all revolves around going above and beyond the standard demographics. Advertisers can move beyond age and gender to target ads and start to be more nuanced by bringing in things like income and households, claimed Reid. “You can start to consolidate all your media into one platform the ability to reach audiences and then you can really start to look at true cross screen planning and buying measurement,” he added.

Companies like Freewheel and Quantcast are coming to fore with ad servers and supply side platforms primed for broadcasters. Just as they have done in the online arena, these services are able to drive greater yield and understanding of broadcast inventory in a way that makes it easier for programmatic trading to occur.

Why isn’t programmatic TV here already?

The technology is certainly here to support programmatic TV but there are bigger issues at roots slowing its arrival. Chief among them is the limited supply of buying points in the UK with only a handful of broadcasters making moves into the programmatic space. Commercial broadcasters are sitting on a plethora of data though have yet to install the platforms needed to allow that automated transaction between advertisers to take place.

There is also a fear among some media owners that programmatic will devalue inventory. However, “some feel TV at the moment is already undervalued. So actually premium data could improve that value,” said Reid. “The way traditionally TV is bought has not changed. There’s an emphasis on maintaining the status quo. But I think what’s already happening is that there’s demand from advertisers to look at the opportunity [of programmatic].”

The other major hurdle is sales channel conflict. Reid assured that it was not a major issue because it had already been addressed during the advent of automation around display ads. “Now businesses are really starting to use programmatic and automation to drive greater yield and efficiency.”

Is programmatic TV worth the wait?

Yes, according to Reid. He believes there are great media efficiency rewards to be reaped around from the arrival of programmatic TV. “I think for advertisers the ability to be much more efficient in terms of reaching audiences as they become increasingly fragmented is going to be absolutely key. The ultimate aim is to automate the entire buy across any screen.”

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