The future of programmatic TV is omni-channel

DataXu's Chris Le May looks at how the the emergence of an addressable programmatic TV market is helping to blur the old traditions that silo digital as a direct response (DR) channel.

Television has long been one of the most effective channels for advertising, but marketers have generally approached it as a separate component from the rest of the marketing mix. Separation has long made sense, as digital was regarded as a DR channel and TV remains known as a high impact channel to build brand awareness.

Developments in programmatic TV (PTV) now promise to bridge this gap by lending the precise targeting of digital to the mass scale and rich media experience of traditional TV. If further evidence was needed to bolster the pundits’ claims, this year Sky invest $10m in ourselves (DataXu) to explore new opportunities brought about by the rise of data and analytics in TV ad buying. So now that the industry is focussing its attention on PTV, we need to look closer at what’s next for this emerging — but sure to be game-changing — technology.

Setting the scene

Seismic shifts in the way we consume TV – at any time and on any device – have resulted in the definition of ‘television’ now encompassing the consumption of premium video content across all channels. The word has little concern for the restrictions of broadcast programming, or the living room sofa.

Consumers are not just dropping their Pay TV subscriptions because they view on the move; irrelevant advertising is also a key factor. Today’s consumers expect to be targeted in a highly personalised way - as standard. That is where PTV can make a starring appearance. It offers the rich media experience of TV at scale, but in a more targeted way than traditional advertising. Through PTV, brands can benefit from higher viewability, fewer wasted impressions and ultimately more engagement.

Depending on the type of PTV deployed (connected or addressable), ads can be tailored on either a household or individual basis with advanced audience data sets such as salary. Imagine that a high end car manufacturer wishes to market its brand new convertible. PTV would allow the ads to be shown to suburban households with high disposable income and no children. These can even drill down to reach consumers who have shown purchase intent, meaning marketers can finally interact with their ideal audience, and do away with strategies that pivot solely around scale.

Avoiding the PTV blooper

In the US, figures suggest that 1 per cent of the total TV ad spend will go to programmatic, with that figure climbing to 6.0 per cent by 2018.

However, these are not yet programmatic ads in the truest sense, as they are neither hyper-targeted nor in real-time. What has yet to happen is the sophisticated use of disparate data sets to inform the intelligent media buying that we see on digital.

Over on this side of the pond, we are still lagging behind our US counterparts. But this seems to be a strategic move by many European marketers. It has been speculated that many are holding back on purpose, waiting for the technology to advance before implementing it with all guns blazing.

Unfortunately, the European TV market is complex and convoluted. It can best be described as a tangle of programmatic partners, broadcasters, cable and satellite TV providers, connected devices and infrastructure owners.

Also, the issue of aligning and agreeing what a PTV spot will look like, how it can be accessed and through what kind of exchange protocol, must be addressed by all parts of the ecosystem. This is made even more complicated by a lack of standardisation. Formats, data usage and measurement all change according to what agency or vendor you use; so setting standards across PTV will be crucial to ensuring seamless trading.

What will move us past all of these problems is the appetite for PTV on both the buy-side and the sell-side. PTV represents huge savings in efficiency gains for buyers as there is so much wastage which can be eliminated, which is precisely what programmatic did for digital. On the sell-side, PTV will make investments skyrocket, so broadcasters and infrastructure owners are proactively moving forward of their own accord. All in all, there may be some hurdles left to jump before we see widespread adoption, but we are already starting to see major UK brands already starting to sit down with programmatic vendors.

PTV is part of a set change in advertising

PTV is another indicator of marketers moving away from channel-specific and towards audience-led communication. Whereas TV has traditionally been the marketing channel with the highest budget and least sophisticated targeting, PTV is set to address this. Yet by the time PTV reaches widespread adoption in the UK, it may be at a point where marketers all understand the underlying principal of programmatic: measure customers, not screens. Understanding customer behaviour is more important than the contribution of different channels, each of which is irrelevant in isolation.

PTV brings the highly personalised, targeted powers of digital to the TV screen. While some pioneering marketers are testing PTV’s potential, it is yet to come of age. It is weighed down by a lack of standardisation and the fragmented European TV market. Until these underlying issues are solved, it may be a while before we see lights, camera, action for PTV.

Chris Le May is DataXu's senior vice president and managing director for Europe and emerging markets. He will be presenting on the future of programmatic TV at this year's Dmexco conference, click here to find out more

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