This op-ed by Alphonso CEO, Ashish Chordia, originally appeared in MediaPost.
By now, you’ve likely heard all about how programmatic will one day remake the television advertising marketplace. But despite a decade of enthusiastic speculation, the market for automated, data-driven TV buying remains a long way away from reaching maturation. This year, it’s expected to account for a little over $2 billion in U.S. advertiser spend—less than 3% of the total television marketplace, according to eMarketer.
Still, while programmatic isn’t about to become the dominant means of TV advertising tomorrow, there’s no doubt it’s moving in a positive direction. Over the past year, networks started recognizing how programmatic can help them grow their businesses, and new tools are making it easier for TV advertisers and publishers to execute automated, data-driven transactions.
The promise of programmatic TV
One of the most enticing facets of programmatic TV is that it allows advertisers to use automated data and buying tools to reach a precise audience of their most valuable customers. For example, rather than relying on broad age and gender demographics, programmatic TV buyers can identify and reach 18- to 35-year-old males who are in the market for a new car and make at least $100,000 a year. In essence, programmatic TV combines the full-screen attention of television with the targeting of digital advertising.
We’re already beginning to see signs of what programmatic TV could look like in the connected TV (CTV) marketplace. There, a growing number of advertisers are using programmatic tools to target individual users in real time, across all kinds of premium content that consumers stream to their televisions.
While the vast majority of programmatic inventory on live, traditional television does not allow for this sort of addressable, one-to-one targeting, CTV offers a glimpse into what a mature programmatic TV might look like.
Signs of hope
Indeed, even in linear TV, programmatic tools are gaining traction. eMarketer predicts that U.S. advertisers will buy $3.8 billion in programmatic TV ads in 2019, a 236% increase from 2017.
Additionally, the format is beginning to overcome two of the biggest obstacles to its growth: a lack of technology infrastructure in the TV space, and the reticence of networks to make their inventory available to programmatic buying.
Last year, Viacom, 21st Century Fox and Turner came together to build Open A.P., a new technology platform that allows marketers to use standard data sets when making TV buys across different networks.
Recently, NBCUniversal has started making a programmatic push of its own. Within the space of a month, the firm joined Open A.P. and opened its programmatic inventory to Adobe’s Advertising Cloud TV platform, a tool for planning and executing programmatic TV buys.
Local broadcasters too have been piloting programmatic, and agencies such as Publicis are driving investments, according to a post on TVNewsCheck.
Of course, the news hasn’t been all good. In early April, Verizon’s Oath shut down its One TV programmatic product. Still, the company is reorienting its focus toward addressable TV, proof that it’s not giving up on programmatic TV any time soon, The Drum reports.
The way forward
Ultimately, programmatic TV is an idea that makes too much sense not to take off eventually. For advertisers, it delivers the precision and efficiency they’ve always wanted from their favorite medium. Meanwhile, publishers like NBC are starting to appreciate how data-driven buying allows them to reap even higher CPMs from the inventory advertisers desire most.
In the near term, vendors, publishers and advertisers must work together to build the infrastructure necessary to make automated, data-driven TV buying a success. After all, programmatic TV will one day be a major tool in every programmatic marketer’s arsenal. There’s much to gain for those of us who get in on the ground floor.