Programmatic TV: Lots of Talk Lately, Not Much Real Action

Most Processes Still Not Automated, Inventory Limited

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If there's an ad-tech sledgehammer headed for the traditional TV paradigm, it hasn't hit the screen yet.
If there's an ad-tech sledgehammer headed for the traditional TV paradigm, it hasn't hit the screen yet. Credit: Apple

If you look at the headlines over the last couple of weeks, it would appear that programmatic ad buying for TV commercials was taking meaningful steps forward. ESPN said it will make 30 seconds during "SportsCenter" available to buy via online auctions, TubeMogul introduced a programmatic TV buying product, and Cox formed a private, automated marketplace in conjunction with Magna Global.

While these initiatives help incorporate some more data and automation in TV ad buying, however, the industry remains a far sight from really seeing traditional, national TV breaks filled with ads bought via automated tech.

As Rino Scanzoni, chief investment officer at GroupM, put it: "What is considered programmatic in digital" -- data-driven real-time purchasing, online auctions or private exchanges, with transactions handled by machines -- "is not taking place in the TV world."

Buyers and sellers are using increasingly sophisticated data, well beyond the traditional age and sex demographics, to make more targeted TV buys, Mr. Scanzoni said. But that's not enough to call the process programmatic.

"The only way TV is programmatic is because you're saying it is," said Jim Caruso, VP-product strategy, Varick Media Management. "Nothing about it is actually programmatic outside the way you can get data and optimize a little faster."

That's not to say that the TV buying being labeled "programmatic" isn't interesting or useful, Mr. Caruso said. It's just still very different from the programmatic ad buying shaking up digital media.

Another Big Reveal
TubeMogul introduced its programmatic TV buying product in front of a packed house of 300 brands, broadcasters and agencies last week. The platform looked slick, and the demo displayed logos from networks such as TLC, Lifetime, MSNBC and HGTV.

But TubeMogul isn't working directly with any of these national cable networks yet; the inventory is bought through third parties with access to limited chunks of their time. And the "programmatic" process still requires enough manual work to throw the label into question.

TubeMogul does let buyers view inventory availability and reserve inventory in its system, but trafficking the ads is still done manually. In a best-case scenario, a buyer would upload the ads into TubeMogul's system, company executives said, and then a TubeMogul employee would download them and place them into another system, copying over the targeting parameters. The company is currently testing deeper trafficking integrations, a spokesman said.

TV networks also still need to approve the ads before they run, both for standards and to make sure they like the fit with the surrounding programming. That step that doesn't exist in programmatic ad sales online.

Still, with inventory forecasting, pricing and the application of targeting data all getting automated, the process will be much improved for advertisers, according to TubeMogul CEO Brett Wilson. "From an advertiser's perspective, this will be a very seamless process, with one piece of software involved instead of multiple from their standpoint," he said.

At least some national cable operators are also starting to test the waters. ESPN said this week that it will begin selling some ads to appear during "SportsCenter" through a web-based auction.

The 30-second spots won't run during the traditional ad breaks, which will still be filled with ads sold the usual way, but play on a video wall in the new "SportsCenter" studio, said Eric Johnson, exec VP-global multimedia sales, ESPN.

"Programmatic means a lot of things to a lot of people," Mr. Johnson said. It includes providing some automation to the buying and selling process, he said.

In this case, ESPN will sell the limited inventory on a private exchange with minimum prices, using some elements of real-time bidding. Once inventory is purchased, there will be a 48-hour window before the ad actually runs. ESPN will look to shorten that window as its tests progress.

"As it exists today, you're not going to replicate the exact mechanism and data targeting on TV that exists online, but we are moving in that direction as we build out these systems," Mr. Johnson said.

ESPN's effort is an initial step to try out the technology and prepare for the expected increase in advertiser demand for automated buying, Mr. Johnson said.

The first such ads are expected to run in January, and ESPN is currently in conversations with media agencies, Mr. Johnson said.

As for Cox Media, the ad arm of cable operator Cox Communications, its new partnership with Magna Global will create a private, programmatic TV marketplace. Starting early next year, Magna Global's clients will be able to buy TV inventory through a single interface and target audiences across Cox's more than 20 markets around the country. The system is designed to allow the application of data and provide custom next-day reporting. It may be the most "programmatic" of the initiatives so far, but it still requires marketers to buy time via a patchwork of local markets.

Price worries
Beyond the technical challenges, TV networks haven't been eager to adopt a system has seemed to undermine prices online. TV is still the dominant medium in terms of ad dollars, after all, and buyers still gather every summer for the upfront marketplace, where they reserve commercial time for the upcoming year.

But a lackluster upfront this year and weak demand since then has perhaps prompted TV networks to think differently.

"More companies are receptive to sell and target inventory in different ways," one media buyer said. "They are looking at how they can compete with digital and are trying to find areas of growth."

As a result, the buyer said 2015 will likely see an influx of national cable networks experimenting with programmatic approaches, noting that every major network group has at least engaged in conversations on the subject.

To combat any risk of price erosion, Mr. Johnson said ESPN will limit its programmatic experiment to "custom, premium inventory," like the extra ads it will offer on the "SportsCenter" video wall, instead of regular inventory it couldn't sell.

Weather Channel will test selling a limited amount of traditional TV inventory programmatically early next year, said Melissa Squaires, VP-pricing, planning and operations, Weather Company. The network is currently speaking with an agency about making time available on a private exchange.

But traditional broadcast inventory is even less likely than cable to be auctioned via machine, and cable's hesitant pace suggests the biggest networks will keep the old model in place for some time yet.

Bigger strides have been made in programmatic sales of TV networks' long-form content that runs on digital platforms. During the summer, ABC conducted an initial test with Magna Global allowing some digital video ad inventory to be bought using data-driven targeting and automated purchasing.

Similarly, NBC began selling short and long-form digital content programmatically during the upfront. That let advertisers to use targeting to buy shows like "The Blacklist," for example, when they stream on digital platforms.

NBC's offering, which is part of its programmatic product dubbed NBCUx, allows data-enabled buying and automation, but not real-time buying. There is a set price and no auction model, said Krishan Bhatia, exec VP-digital strategy and operations, NBC Universal.

While programmatic buys are still a very small fraction of NBC Universal's overall ad revenue, Mr. Bhatia said programmatic represents 20% of some clients' spending with the network group.

Programmatic on traditional TV is still a ways out because technology doesn't enable the same data-targeting and automation as is possible online, Mr. Bhatia said.

And maybe programmatic as it is known in the digital world isn't necessarily right for TV. "This idea of machine-to-machine in real-time is limiting for TV," Mr. Scanzoni said. "The TV world can't function in real time. There's a finite amount of inventory that needs to be pre-sold. It can't be done the way digital is done."

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