FreeWheel Cofounder On The Profound Differences Between Programmatic TV And Display

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JonHellerThis upfront season, a number of media conglomerates flirted with programmatic TV. ABC, for instance, is beta testing data-driven ad sales via video ad server FreeWheel’s new FourFronts Programmatic tool. Likewise, NBCUniversal’s ad sales chief Linda Yaccarino has spoken of opening up portions of premium network inventory to programmatic sales.

As marketer and media company interest accelerates, Jon Heller, cofounder and co-CEO of FreeWheel, spoke with AdExchanger about the realities of programmatic in TV and where FreeWheel now stands in light of the Comcast acquisition.

AdExchanger: Can you give an update on Comcast and whether your current partnerships (such as Amazon) will continue?

JON HELLER: There’s no change because we’re still FreeWheel, we have the same people running the company and will be for some time. The whole reason we thought the deal with Comcast made sense is because television is a supply chain. There’s sports leagues and music labels who need to work with programmers or studios to curate and source content and then they syndicate it and distribute it across MVPDs (multichannel video programming distributor) and Web portals and then there are seven [or so] companies that bring you the Oscars or NBA basketball and they all have to play very well together, which means the vendors inside the supply chain have to play together.

If you make things work really well across that whole supply chain like we’re doing with our programmatic initiative and buying technology, then the whole sea rises and it brings up all ships. There is no change in what we’re trying to do.

How does programmatic work in the TV space?

As you can see from our customer base, we focus on TV and premium branding and long form, which is an extraordinarily different environment than display pretty much on every level. So when we say the word, “programmatic,” we actually mean automation and the use of data for advanced targeting, but it still has all the traditional elements of a negotiated buy done in advance, so they may negotiate and arrange for it in May and it won’t actually air until September. That means forecasting and guarantee of delivery, which is very traditional in television, are necessary.

How does this impact the buy?

When we say, “programmatic,” it’s how can you enable that with automated execution once it goes to air, and in a way where the advertiser can use their data to enhance targeting, and where the publisher can forecast against it in advance. So when [publishers] sign an order and promise delivery on a certain volume, they know they have it, and they know they can do it, which is totally different than how others may use the term – such as a bidded exchange, or a real-time bidded exchange.

How long have you been at this?

We’ve been working on it since early fall of last year because there is a definite role for machine-enhanced targeting and data and automation in premium, it just needs to fit those needs I mentioned. And we see an opportunity during the upfronts through the summer and fall season to [bring together all parties] at the table from our side, the buyer side technologies, agencies and TV publishers, so they can figure out the most efficient way to execute at this.

From a tech perspective, what are the challenges?

If it’s going to work, it has to scale… and that’s not just a question of technical pipes connecting, but parties on both sides of the table working through the business rules of the road and we’ve got a pilot with a collection of parties at the table to make this work in the appropriate way for premium in television.

With ABC and NBC pushing into programmatic premium reserve, will others follow suit?

It’s still early stage. I don’t believe there’s going to be any real particular role for bids. It won’t move to a market-bidded model. It’s still negotiated, but in order to figure out those negotiations, the marketer needs to figure out how much budget and media plan [to] allocate toward the traditional TV upfront, traditional TV scatter, video on-demand and digital dynamic in different fashions and how much am I going to do based on Nielsen and comScore demo comps vs. content targeting and this very enhanced proprietary data targeting.

I don’t think the buyers have fully determined what the optimal mix is…yet. If you sell ads, you have a revenue plan you commit to your CFO that has an equivalent mix – how much should I sell in these different equivalents of the market so that I can optimize the value of my business? I think this year is where the rules of the road are being shaken out in terms of how to transact but I don’t think people have gotten to the point where they’ve solved their mix questions and they’re ready to do this at high volume.

Will direct sales remain a majority?

The big media companies are also some of the biggest and most developed and scaled brand advertising sales forces, which is an asset in its own right. They’ve probably got more scale and experience in understanding a model of upfronts and how to manage inventory allocations and future commitments, scatter market, etc. and to them, TV is TV. These are guys for whom the ability to determine where to allocate their inventory and sell directly is what they do and they do it better than anybody.

Because TV is scarce supply as opposed to display, there’s just less of a role for that outsourced, remnant monetization because there isn’t that much remnant. It’s very different than the world of display… where you have more of an infinite supply. All of the different controls you give the marketer enhance the value of the message of the marketer, which makes the inventory even more scarce and premium.

What are your thoughts on video viewability?

If there’s something that, an advertiser, at the end of the day will use to determine if they will pay for something or not, whether it’s viewability or a demo comp, it does not work unless the publisher can forecast against it and reliably understand how they’ll deliver against it and operate a media business against it. I think it’s early days yet on how that will play out for viewability.

 

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