Guest Blog: Does Programmatic TV Buying Actually Exist?

Picture coming into focus as data enters the picture to shape strategy

During upfront season, the data race between television networks attempting to one-up each other with their targeting capabilities has heated up. Recently we have seen a trend of legacy TV networks, including Fox and NBCUniversal, announce their moves into the programmatic space and highlighting their competitive capabilities for advertisers. But are these new television network data deals actually translating the programmatic platform effectively from digital to the television medium? Or should they be labeled as something else?

Many advertising experts have argued that true programmatic cannot exist in a linear space. Instead, they say, this new television ad trading initiative should be called “data-driven, platform-based television.” Supporting this argument, many of these TV network deals don’t yet include their broadcast inventories or have real-time bidding capabilities—defining features of programmatic. Real-time bidding has always been a subset of programmatic. With these recent announcements, the TV industry seems to be interpreting programmatic as a term around transactions, not just using data and tech to automate workflows.

As I see it, programmatic TV is defined as anything IP-based that uses real-time bidding. These factors exclude linear television from being included in programmatic trading. However, similar to programmatic capabilities, these television networks are using data targeting and optimization that allow for the application of data to find specific audiences and improve the efficiency of TV ad buys. This type of data goes beyond the Nielsen’s demographics and allows clients to set guarantees based on a consumer segment.

With these data capabilities, it’s likely that we’ll see the evolution of what is referred to as “programmatic television” in the next few years as the network’s broadcast inventories and real-time bidding capabilities become available widely to advertisers and media buyers. With that, we should anticipate the replacement of Nielsen as the standard for television advertising measurement once this transition takes place. Automation in advertising means nothing unless the ability to specifically target individuals and audiences comes along with it. Nielsen’s data is limited in that capacity as it can’t provide advertisers with the wealth of valuable information (outside of general demographics around gender and age) that is out there that can better help advertisers reach the right audiences and budget their ad spend most effectively.

However, a subset of “programmatic television”— how we define programmatic television—already exists on non-linear television set-boxes, powered by the Internet. According to an eMarketer report from 2015, programmatic digital video ad spending was to more than triple in 2016. As digital video is the fastest-growing area of programmatic, internet-based OTT television has become serious competition for its linear counterpart gaining increasing amounts of attention from media buyers. Even with some viewers paying for an ad-free watching experience, the advantages of programmatic marketing on OTT are huge considering the expansive and increasing number of viewers and excellent targeting capabilities.

While programmatic on linear television isn’t quite where it needs to be to be considered a “true programmatic” platform, the potential for advertisers using programmatic on other formats such as digital video and OTT is already massive and continuing to grow. We can expect upfronts and NewFronts in the coming years to make the uncertain future of programmatic TV, as we and others define it, more clear to advertisers, publishers, and media buyers across the television space.

Jay Baum is senior VP of agency partnerships at Tremor Video.