Staking a claim to new advertising territory, Dish Network and its Sling TV over-the-top service are embracing programmatic auctions as a way to sell its inventory of spots.
Sling is running several different types of auctions and has used the technique as more than a way to sell remnant inventory it couldn’t unload otherwise. It sold spots during both the NCAA men’s basketball tournament and the NBA Playoffs — some of its best-quality and most in-demand inventory — to the highest electronic bidders and scored big returns.
Now, taking advantage of the digital delivery system Sling uses, it is also employing auctions to sell some addressable impressions to advertisers.
“This is live, linear and on-demand television,” Adam Lowy, director of advanced TV and digital sales at Dish, said while outlining Dish’s auction program at the B&C and Multichannel News-sponsored Programmatic Summit. “That’s never been done before in live television.”
Inventory Control a Concern
As the TV industry slowly moves to accept programmatic buying and selling of commercials, a line has been drawn at real-time-bidding auctions. Networks have been concerned that in auctions, they’ll lose control of their inventory, spots will become a commodity and prices will ultimately fall.
Because Sling TV is over the top, it has a digital architecture, which means spots can be dynamically inserted into programming in real time, something that can’t always be done with TV that is broadcast or delivered through set-top boxes. That lends itself to being sold in the same manner as digital advertising.
“The digital underpinnings allow us to really do more targeting functions and bring programmatic into play and real-time bidding, because of how this television is being delivered,” Lowy said in an interview. In addition to Sling, some on-demand ads delivered to Dish Network viewers on digital devices can also be included in some of the auctions.
Craig Berlingo, VP of product at Tremor Media, a supply-side platform that hosts some auctions for Dish, said auctions are making inroads at other OTT and TV Everywhere players, too.
“I think Dish is doing something pretty unique” by bringing high-quality TV inventory into the programmatic world, Berlingo added.
“Dish has experimented with and has found some success in allowing the auction dynamic to happen on some of its premium stuff,” Berlingo said. “I think they’re definitely pushing and exploring a lot more than other publishers. There is TV-like inventory that you could watch on your iPad [being sold at auction] but it’s not TV.”
Sling’s earliest programmatic auctions have enabled buyers to bid on ads on networks grouped contextually — sports networks, general entertainment networks, kids networks.
In those auctions, Dish sets a price and guarantees a certain amount of impressions.
Sling protects itself by keeping its auctions closed. Bidders need to ask for an invitation to take part, which keeps inappropriate advertisers away from the programming.
Sling can also set a floor price for ads and impose other conditions, including limits on frequency, Lowy said.
“It’s very controlled, which is very important for us. In terms of our content, we want to make sure we’re putting the right stuff in there,” Lowy said, adding that private auctions are also “best for our clients and for our programmers.”
Bidders who are approved get a Deal ID — a unique identifier that enables access to bid for the available inventory. Highest bidder wins, but Dish and Tremor employ a second-price auction, which means that the high bidder pays one cent more than the second highest price.
That’s designed to encourage buyers to enter auctions by ensuring that they won’t pay an above-market rate for commercials, Berlingo said.
Encouraged by early successes, Sling held an auction for its inventory during March Madness, the NCAA men’s basketball tournament.
“We spoke to all our DSP [demand-side platform] providers — and there’s roughly 11 or 12 of them that we work with — and we told them what we were doing, and literally within a day or two we had it set up and it was running,” Lowy said.
Buyers were excited because they thought March Madness inventory was sold out, he said. “It was a real surprise to say, ‘We’ve got it and it will go in real time. Go ahead and start bidding on it.’ ”
The auction drew 90 new advertisers and sales were up 51%, which means Sling got higher prices than it would have by selling direct.
“One thing about programmatic that’s interesting is you can see how you’re doing pretty much immediately,” Lowy said. “You can look at your screen and know what’s resonating and who is winning the bids. You have a good understanding of what’s going on really fast.”
Sling followed that up with an auction of NBA Playoffs inventory. “It did great,” Lowy said, although not quite as well as the NCAA auction.
After that, Sling decided to create programmatic auctions for some of its addressable inventory. Sling looked at first-party data about its audience — on an anonymous basis, through third-party provider Acxiom — and found consumers who intended to buy a car in the near future and consumers who were in the market for a vacation. Those impressions were made available through an auction.
“We set that up right before Memorial Day,” Lowy said. “We told our DSPs and agencies that if you want to find true auto intenders or you want to find true vacationers, based on how Acxiom categorizes that, you can go ahead and bid on that audience.”
In that auction, advertisers weren’t buying ads in particular shows. They were buying impressions by specifically targeted viewers. “You’re buying impression by impression, bid by bid. You’re at the whim of when that household is watching.”
The auction drove up the value of those impressions and sales rose 83%, according to Dish.
The impressions that aren’t sold at auction don’t go to waste. “The way operations works is that other impressions fall down a funnel to the next options, which could be geo-targeted ads, general-market ads or direct-response ads,” Lowy said.
One of the first demand-side platforms to participate in Sling’s auctions was Adobe.
Auctions can increase how relevant ads are for consumers, making them more valuable and justifying the higher prices advertisers pay in auctions, Phil Cowlishaw, head of solutions consulting at Adobe Advertising Cloud, said.
The private nature of the auctions was important because it gives both buyers and sellers more control, he said. “Sling has an expectation and understands who is going to be coming into the systems, and the brand has control knowing that they’re going to be buying on Sling TV and that there’s that relationship [with Adobe] and therefore they can get super analytics and insights back from the Adobe Advertising Cloud to understand how their campaign is performing.”
Cowlishaw said spending through the Adobe Cloud on Sling auctions increased 90% from the first quarter to the second quarter.
Auction enthusiasts expect that more TV advertising will be made available for bidding.
“What’s nice about this is that it’s kind of the opposite of what happened in the banner world, where instead of driving price down, it drives them up,” Tremor’s Berlingo said. “Broadcasters are trying different things now and experimenting, but the connections are all there and it’s really just a matter of how do you get the right value for your supply in the marketplace.”
Cowlishaw expects auctions to grow, especially as the OTT space expands. “It’s the way people are starting to consume programming, especially live sports and that’s a big focus of our partnership with Sling,” he said. “Today, it’s going to be more focused on the fact that this is over-the-top, so that the auction can be created. I believe we will start to see it in linear television, but that’s going to take time. We’re already working with a number of partners in terms of what this future would look like.”
Lowy said advertisers are getting more comfortable with auctions. “Not only are they getting comfortable, but we’ve made it very easy for them to continue to come back,” he said. “It’s television, but we wanted to make it the way you buy digital.”
Prediction: TV Auctions Will Grow
Dish is also expanding its sales force as its programmatic business grows. In addition to account executives and support people, it is hiring d data scientists who can do measurement and reporting. Operating people are needed to work with supply-side providers.
Sales staffers need to understand new dynamics: how DSPs relate to agencies and clients, one-to-one impressions and how auctions work.
“It’s actually more important now to have the right account executives who understand the digital underpinnings and digital business than to just have a machine do it,” Lowy said.