In the summer of 1939 one of the earliest recorded TV commercials aired in the U.S. It was during the first-ever televised Major League Baseball game between the Brooklyn Dodgers and the Cincinnati Reds. NBC ran experimental commercials for three sponsors: Procter and Gamble, Socony Oil and General Mills. All three were radio sponsors and, as a courtesy, were each given a free televised spot between innings. Radio sports announcer Red Barber made history when he donned a gas station attendant's cap and plugged oil, then held up a bar of Ivory soap and then sliced a banana into a bowl of Wheaties. It wasn't pretty, but everyone watched; and it gave way to an era with one screen that had unmatched power to reach the masses and build the most iconic brands in the world.
It's amazing to think back and realize that in its early days, TV was an advertising backwater. Even 10 years after those first TV spots ran, radio was still the dominant advertising medium, representing more than $210 million in spending compared to a paltry $12.3 million for TV. But viewer attention shifted quickly, and by 1954 TV overtook all other mediums in terms of ad spending.
Fast-forward 60 years, and the TV ad market had grown up. U.S. TV ad spending topped $64 billion last year, and is projected to grow between 3% and 5% per year over the next five years. For the better part of a century, TV has been the most important branding medium—the largest screen in the house that rightly commands the lion's share of ad dollars.
The problem for advertisers is that since 1954, the methods for buying TV haven't fundamentally changed. Just like in Don Draper's day, billions of dollars are still spent on handshake deals, and local buys are primarily negotiated over the phone. Advertisers sometimes can't target beyond age and gender or make on-the-fly changes—and sellers still face issues around inventory valuation and scaling revenue.
Amid all the background chatter about technological disruption, it's easy to forget that that from a viewer's perspective, this is the golden age—more content is available on more screens than ever. To viewers, video is video. Regardless of whether someone is watching on a TV or a tablet, viewers are watching everywhere.
Globally, $8.3 billion was spent on video advertising last year, compared with $197 billion on TV. While programmatic buying is widely hailed as one of the most effective methods for executing campaigns, TV has remained largely unaffected—until now.
Advertisers are beginning to buy TV spots programmatically, with several companies (including TubeMogul) vying to provide the software that powers it.
There are several reasons programmatic TV holds tremendous promise for advertisers:
- Flexibility. Instead of adjusting strategy months into a campaign, do it in days.
- Better targeting. Move beyond basic age and gender or network ratings and spend more effectively to reach more granular audiences.
- Analytics. Verified, third-party measurement breaks down what networks and dayparts are driving results as the campaign proceeds.
- Operational efficiency. Planning and buying TV across upfront, spot and MSO markets is logistically challenging. Automating that process liberates planners to focus on other matters.
- Eliminating silos. Buying TV and video through the same software platform enables true cross-screen planning, buying and optimization—all fueled by data.
While initial forays into programmatic TV have shown promise, it's important to remember that programmatic TV is in its early days. Barriers to growth include:
- Fear of change. As with any new way of doing business, change is met with suspicion. However, software can be complementary—data makes ads more valuable, not less. Many advertisers will pay a premium for that relevance.
- Infrastructure. The technology needed for full end-to-end automation is still being developed, and there is work to be done before seamless, hyper-targeted TV advertising can be realized.
- Concern of commoditization. Broadcasters fear losing control over the value of their ad inventory. When they think of programmatic, they sometimes think "race to the bottom." Really, it's more like the programmatic direct video advertising market: Scarce inventory layered with data drove up publisher CPMs and led to better results for advertisers.
- Programmatic: one word; many meanings. At its core, programmatic means software-driven automation (not real-time bidding).
We're optimistic that programmatic TV will continue to grow for one reason: Marketers embrace change that delivers value. Together with broadcasters, distributors and technology providers, marketers can make the vision of programmatic TV a reality.
About the Author
Keith Eadie is chief marketing officer at advertising software company TubeMogul.
About the Sponsor
TubeMogul is an enterprise software company for digital branding. By reducing complexity, improving transparency and leveraging real-time data, our platform enables advertisers to gain greater control of their video advertising spend and achieve their brand advertising objectives. TubeMogul was incorporated in 2007 and is headquartered in Emeryville, Calif.