Forrester: Programmatic Will Take Over Online Video…And Then TV

tvAttention, traditional television media buyers: You may soon be replaced by an algorithm.

According to “How Software Is Eating Video Ads And, Soon, TV,” a new report from Forrester, programmatic buying has made serious inroads into the online video ad market.

As automation of media buys becomes more common and viewing hours of online video continue to rise (they’re growing by 24% a year, according to Forrester), marketing leaders will need to upgrade their planning and media-buying approaches to execute cross-screen video advertising campaigns effectively, and the TV ad marketplace could start to go through upheaval within three years.

“Marketers still think about video through the lens of television. ‘I need Nielsen ratings. I need to think about who the audience is for this piece of content.’ They need to flip that around,” said Forrester principal analyst Jim Nail. “Content is less relevant as you increasingly know more about who is watching that program. No advertiser wants the Olympic audience. They want the men, or the women, or an age group, or better yet people with a high propensity to use products in the category. That’s what programmatic will eventually enable.”

It’s already having an impact. The advantages of the more open and automated buying process will propel programmatic buying techniques to 30% of online display ad spending in 2017 from 21% in 2013, according to Forrester, and TV will follow.

“Media companies don’t want their content selling cheaper,” Nail said. “That’s why they’re appointing directors of programmatic. It seems they know it’s inevitable, and they have to meet the demands of their buyers. They need to put some smart thinking into what’s the best way to use programmatic within their overall selling strategy.”

The Forrester report predicts that there may actually be four programmatic models for video in the future:

■ Proto-programmatic: Firms such as Simulmedia and Viamedia are adopting approaches borrowed from programmatic buying and provide richer audience data than Nielsen ratings to drive program selection for TV inventory.

■ Programmatic direct: The buyer and seller, not the computers, will discuss and agree on terms of the contract. While the terms may include some fixed inventory, one of the areas for negotiation will be how much of the buy will be programmatic, the cost for that inventory and the factors that guide placement.

■ Private exchange: Publishers take the lead, creating programmatic marketplaces for their properties but inviting only a select set of advertisers to participate. “Networks may still host upfronts to show off their content,” Nail said, “but they won’t make deals over dinner. Buyers will go back to the office and use their computers instead.”

■ Open exchange: Any advertiser or publisher can participate in exchanges run by independent vendors such as BrightRoll and SpotXchange, much like they do today.

Will media buyers find themselves shoved aside as the computers take over?

“The role will become much more strategic and quantitative, and yes, all those entry-level associate media planner jobs will likely go away,” Nail said. “The people are who are able to sit with their clients, understand their goals, understand their audience, and then use data to define those objectives in a way the algorithm can target, those jobs will still be around.”

Nail added that new technology always causes growing pains and turmoil, but it shouldn’t be perceived as the enemy. “It isn’t about the technology, it’s about the strategy. Yes, there are new processes and new data that you can use to execute your marketing strategy, but if you don’t understand strategy in the first place, the technology won’t save you.”

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