Programmatic TV: Not Ready For Primetime

cindystockwellddtData-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Cindy Stockwell, executive vice president and chief media officer at Hill Holliday.

Programmatic TV. It’s one of the latest industry buzz phrases. Agencies are touting it, businesses are being built around it, the press is writing about it and everyone is trying to figure it out. Even the terms of the discussion are up for debate, as illustrated by a panel on data-driven TV buying during the TVnext Summit 2014.

Regardless of the language being used, I see three challenges that must be addressed before programmatic TV can live up to the industry’s growing expectations. These issues are similar to those of programmatic digital: advanced targeting (but not necessarily audience targeting), automation-enabled infrastructure (but not necessarily real-time optimization) and a robust supply of inventory at different tiers.

Uncertain Targeting

In the digital arena, first- and third-party data allows us to reach, target and optimize audiences in real time in a myriad of ways. The closest we can come to this with television are advanced targeting and household addressability. Both are vastly different than audience buying in the digital world.

Advanced TV targeting uses third-party data to identify programs that overindex specific audiences. Brands and agencies are then able to reach their targets but they also end up buying everyone that watches those programs. Although we can’t eliminate those who fall outside the target criteria, advanced TV targeting generally makes buying more effective and efficient. Household addressable TV buys enable the targeting of households that meet specific criteria, but there is uncertainty that targeted individuals within households are the actual viewers when the impressions appear.

The Pipes

Infrastructure is a significant focus right now, with a growing number of companies trying to build and connect the demand- and supply-side pipelines. Part of the challenge is the wide array of technology platforms on both sides of the equation.

Consolidation has begun and will continue. Once there are fewer companies, there will be a greater opportunity to find common solutions that will make programmatic TV work smoothly at scale. This would be a first step toward automating a traditionally manual process. Real-time optimization, which creates additional efficiencies and success in the digital space, however, is still years away.

Tight Supply

The real challenge is inventory. In the digital world, programmatic buying advanced because there was essentially an unlimited supply of inventory and the majority of it went unsold, making data-driven real-time buying advantageous to both supply- and demand-side players. In TV, this is not currently the case.

Despite this, we are seeing some inventory opportunities. On the national side, the majority comes from satellite providers, “non-premium” dayparts, long-tail networks and connected TV. On the local side, where we see huge opportunity for programmatic TV and buying automation, 16 major ownership groups with a wide variety of technology platforms control much of the inventory. This inventory, available through an industry-adopted technology platform, gives us the ability to buy at critical mass.

It may take time for the stars to align. In the meantime, I think it makes sense to begin testing and learning. Some great candidates for testing to understand how advanced targeting and addressable TV can help extend a critical budget include: brands with defined target segments, those that have proven the value of TV in their marketing mix but are struggling with rising costs and those that would benefit from extending seasonal campaigns or increased geographic coverage.

There are some interesting experiments happening now. Companies like Adlens, for example, are seeing success with a programmatic approach. But as the challenges described above are addressed, expect to see broadcasters, brands and media buyers make the move to programmatic TV en masse.

Follow Cindy Stockwell (@cindymstockwell), Hill Holiday (@hillholiday) and AdExchanger (@adexchanger) on Twitter.

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