TV Fears 'Race to the Bottom' With Real-Time Bidding

Getting Nets, Who Fear Losing Control Over Value of Their Ad Inventory, To Offer Premium Conent Is Big Challenge

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Programmatic buying might be common for digital publishers, but for TV networks, shaking up legacy media buying won't happen easily.

IPG media partners will test automated buying.
IPG media partners will test automated buying.

Interpublic Group of Cos. announced in August a consortium that includes A&E Networks, Cablevision, Clear Channel and Tribune to build and test an automated ad-buying system for TV and radio ads. While the amount of inventory available to purchase in this way is limited, it has opened up the conversation about the future of programmatic TV-ad buying.

There's no arguing the benefits of sheer efficiency, but there's a fear any inclusion of real-time bidding will lead to a "race to the bottom," said Paul Longo, senior VP–performance strategy and activation at MediaVest.

One of the biggest challenges is getting TV networks, who fear losing control over the value of their advertising inventory, to offer premium content. The inventory available is what media buyers refer to as "remnant" and is most appealing to direct-response clients.

Currently, IPG is not using an auction format like the systems used for online display ads, but Todd Gordon, exec VP-U.S. director at IPG's Magna Global, does believe some TV inventory will be bought in this way in the future.

Tech roadblocks
So what's holding up the process for TV? Unlike online advertising where there is plenty of inventory, there is still a huge demand for TV inventory and not enough supply, said Michael Law, senior VP–video activation, Carat.

Getting the industry to think differently about taking an audience-driven approach is also a challenge, said Mr. Gordon. Programmatic allows advertisers to more efficiently find inventory based on specific targets beyond age and sex.

While marketers are certainly thinking beyond Nielsen demos already, "many TV advertisers still want to be in a certain show at a certain time," Mr. Law said.

Another roadblock is technology. Until the bulk of TV viewers use smart TVs or two-way, web-enabled digital cable boxes, which allow for dynamic ad insertion, programmatic will have a difficult time becoming mainstream.

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