Programmatic TV: the State of Play


Tubemogul Programmatic TV has been available for over a year in the US, and even some premium inventory during the Super Bowl and Oscars has been bought programmatically. Australia is now following suit, and some European markets predicted to offer automated, data-driven buying of TV ads within the next 12-24 months. Here, Greg Collison, Director of Product at TubeMogul, a buy-side video advertising platform, explains what programmatic TV is, why we are seeing it adopted rapidly in the US and how PTV is likely to evolve in the future.

In its white paper on the subject, eMarketer calls programmatic TV ‘an automated, technology-driven method of buying and delivering linear TV ads.’ TubeMogul takes a broader definition by including video on demand (VOD) and addressable TV when defining programmatic TV as a concept. Of course, to consumers these distinctions are nonsense – we live in a world where viewers move seamlessly between devices and platforms.

In order to capitalize on today’s free-flowing consumer, it’s vital that TV is integrated into a cross-channel campaign in order to optimize spend and ROI across multiple screens – ideally using a single platform. That’s where programmatic TV becomes so valuable. No longer do TV teams have to sit in a silo. Instead, they can be integrated into a greater whole – and every aspect of a campaign can be planned, bought and optimized, including the biggest brand building tool of all – TV.

So why has it been embraced so readily in the U.S., while the UK lags behind? That is primarily due to differences between the two markets. Essentially there are three factors that allow the U.S. to lead the way:

• The U.S. is more advanced in the development of a single source of data for measurement. The transaction currency (GRPs rather than overall audience share, which often prevails in the UK) facilitates the process.
• The supply infrastructure makes it far easier to introduce automated buying and selling of TV ads. In the UK, several companies control virtually all of the TV supply. The American system, in contrast, has hundreds of local affiliates for major broadcast networks and cable companies that control regional ad inventory. Hundreds of national pay TV networks supplement that inventory. This means that there are more undervalued ad slots that can be sold on technology platforms.
• Demand capabilities and market willingness. A significant amount of premium inventory is simply unavailable for media buys in the UK since it is broadcast on the BBC, and the rest is controlled by a handful of entities. This means that premium inventory is sometimes more scarce – so there is a perception that nothing needs to change.

How does PTV work in the U.S. – and how will it work in other markets? In the U.S., the sellers of television ads can generally be divided into four categories: broadcasters (i.e. ABC, NBC), cable networks (i.e. ESPN, Discovery), distributors like cable companies or satellite providers (i.e. Comcast, Cox) and content syndicators (i.e. Sony Syndicated TV, King World). The ad market is broken up into local (spot) and national advertising. The local advertising market is used by both global brands and regional businesses to advertise locally. The national advertising market is purchased through broadcasters and cable networks to reach a national footprint.

The national TV market is led by broadcasters, cable networks and syndicators who are constantly battling for advertising budgets. Campaigns are mostly executed on a GRP basis but negotiated on a target demo CPM with year-over-year increases against prior pricing benchmarks. These buys are often split between upfront and scatter markets. The upfronts – held annually in New York – are where TV content owners premiere their fall show lineups and sell the bulk of their inventory to advertisers for the entire programming year. Broadcasters often book 70- 80% of their inventory during the upfronts, and cable networks commit 50-60 percent.

The local advertising market is composed of local broadcast affiliates (i.e. Fox 40, ABC 10) and MVPDs (i.e. Verizon, Comcast), which sell advertising that run in a set of DMAs or zones. The local broadcasters and MVPDs sell advertising that is inserted into local commercial pods (allocations afforded local networks) within the same national linear TV stream, or within content that is sourced from the local group such as local news or syndicated shows. Broadcasters apportion their ad opportunities between themselves and their local affiliates (i.e. NBC New York), typically having a 16-minute split. In contrast, cable networks (AMC, ESPN) split their ad opportunities with the local cable TV provider (i.e. Comcast). It is worth noting that MVPDs still carry the broadcaster channels even though the sales teams of the MVPD and the local broadcast affiliate are competing. Most MVPDs have no ad rights on broadcast shows. The local market is typically planned on GRPs, as measured by Nielsen’s local panel, and bought using on-target CPMs or CPP. Purchasers of local spots range from small or local businesses (i.e. automotive dealers) to large national brands that aggregate groups of regions, known as a local-national buy. Local buys are done on weekly schedules. National-local buying is especially challenging because it often involves aggregating multiple MVPDs, complex file delivery and slow reporting. This is where the opportunity for programmatic TV comes to life.

With PTV, local broadcast affiliates can load their inventory to a platform, allowing brands to stitch together regional – or even national ad campaigns. Marketers can access a single platform, determine what slots are available in various local markets, use the data to match it to their targeting needs and then plan, buy ad optimise their campaign.

Despite the benefits of this automation, feedback from advertisers makes it clear that it’s not just the automation of the buy that is proving important to PTV clients. Rather, it’s also the ability to use data through the planning, execution and buying process that is proving to be enticing. Typically, the way TV was bought in the past, a planning team might use indexes to target inventory towards audiences. They might then hand it to their investment team who would say they use data for the entire buy – but the reality is that few look at the entire buy outside a demo. The result is that you are not sure if you hit the right audience.

Programmatic TV is about being data and audience-driven through the whole ad buying process. To do this effectively, you want bigger data in the front end and more audiences to help you choose what to buy. The more data you have, the more targeted and effective you can be.

After the buy is made, marketers can look at reporting within software to quickly understand reach. Regular optimisation allows advertisers to adjust buys mid-campaign to ensure success. If an ad isn’t generating engagement or achieving the right frequency, why keep running it during a certain programme or on a specific channel? Programmatic TV allows the industry to finesse this mid-campaign to avoid unnecessary spend and – instead – target spend on the channels and programmes that are actually working.

In the UK, initial pickup from broadcasters is likely to be seen on undervalued or ‘zero-rated’ inventory such as late-night slots. By taking first- and third-party data and merging it with data provided by the broadcaster, it is possible to find hidden gems within these broadcast periods. For example, home electronics retailers and computer games manufacturers may see data reveal that 18-24 male audiences tune in late at night and switch on a TV while they play games on their computer or a second screen. By taking advantage of this information, these advertisers can then stitch together an affordable national campaign simply by buying affordable inventory that is targeted (and viewed) by their core consumer. It’s a win-win situation as the broadcaster can sell under-valued inventory while the retailer gets great rates for a national, broadcast campaign on the biggest branding tool in everyone’s household.


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