Following the Road Map to Programmatic TV’s Future

As data-driven buying gains speed, brands must be ready

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The way we consume television has been fundamentally transformed. Gone are the days when we’d rush through dinner to catch the latest episode of our favorite primetime TV show — ours is an era of watching on-demand, whether in the kitchen or on the subway. But while consumers quickly change their television habits, advertisers have been slow to change theirs.

Programmatic television (PTV) — defined as TV inventory purchased through advanced audience data and software automation — has promised brands new ways of delivering hyper-targeted ads with advanced audience data and of reaching out to new audiences, such as hard-to-reach cord-cutters. It has also promised broadcasters the chance to increase the value of their undersold inventory.

Despite these promising offers, the journey to PTV has been long and slow. But in 2017 — after a year of successful experimentation with the capabilities of PTV — broadcasters and tech suppliers are picking up the pace. And brands must be ready for the ride.

Pack Your Bags — With Data

Last year, mobile became the most popular platform for video consumption around the world. By 2019, half of all U.S. households will have a smart TV. As viewers watch their favorite shows across devices and channels, they’re giving brands more detailed information about their interests and habits than ever before, from what kind of shows they like to watch to where they view them most.

That’s why on the road to PTV, brands won’t be traveling light: They’ll be accompanied by a wealth of valuable consumer insights. As more data sources become available, they can be collected, anonymized and used in the planning and targeting of linear TV ads. Instead of relying solely on basic demographic information like age and gender, brands will be able to layer that data with more specific insights. An adventure brand advertising a new line of men’s hiking jackets, for instance, can move beyond simply targeting men 25-54; they can reach out to a subset of those men who have watched videos on adventure destinations or browsed trekking equipment on their mobile devices.

With advertisers able to identify and target their ideal audiences, they’ll benefit from better campaign performance and increased ROI.

With a new method for buying, selling and serving ads, brands will need a new way to measure effectiveness. Since PTV sits somewhere between traditional TV and digital advertising, there’s a lot of confusion and disagreement over how to measure success.

This challenge is particularly evident when it comes to connected TV (CTV). Though CTV can provide enough data for in-depth digital style measurement, similarities to traditional TV have led some to turn to conventional metrics like the gross rating point (GRP), which measures advertising impact based on ad reach and frequency. But without an official product to measure GRP in CTV environments, even traditionalists will find it insufficient. It won’t give brands enough information about their detailed targets, either: While GRP can help advertisers reach a certain demographic, it won’t tell them how viewing these ads directly relates to the brand’s sales goals.

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That’s why brands will need to borrow tactics from the digital realm, paying attention to completion rates and cross-device consumer engagement. In 2017, we’ll likely see the emergence of new metrics designed specifically to measure CTV audiences, such as cross-device consumer engagement, which would measure whether someone interacts with a brand on their phone, tablet or desktop after seeing an ad on TV.

Preparing for Arrival

True PTV isn’t just a faraway or unreachable destination; some innovative brands have already arrived. Columbia Sportswear, for instance, has used PTV to reach out to highly specific audience segments with the benefit of television’s broad reach, resulting in a 1.36 times lift in activity on the brand’s homepage. Because of their overwhelming success, more and more advertisers, tech partners, and broadcasters are getting on board.

If the industry is able to jump the hurdles and continue on the road to PTV, brands will be able to unify their marketing efforts like never before. In fact, television is the clearest reminder that consumer behavior is inherently cross-channel, whether we are watching YouTube videos on our smartphones, Netflix on our tablets or Hulu on our smart TVs. Moreover, growing PTV uptake is a sure sign brands understand they need to stop looking at these channels in silos and move towards holistic, omni-channel marketing.

Chris LaHaise is TV solutions manager at DataXu, a Boston-based data-driven marketing firm.