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Programmatic Could Solve TV’s Ad Woes

In the world of advertising channels, television is still king, but it also has a problem. Television inventory still commands top dollar, and broadcasters have seen less flexibility in the price of their inventory than other media channels, but television ad rates are dropping. The industry saw a dip of 0.5% in 2018 and experts predict that with the exception of a bump from U.S. election advertising in 2020, the price of TV will continue to trend negative. Fortunately, as more and more viewers transition to streaming and OTT channels, which can be sold programmatically, TV has a chance to turn things around.

Programmatic potential

Traditional television advertising is slowing slightly, but programmatic television options are expanding. A growing array of tech platforms already make television content available digitally, and traditional broadcasters are scrambling to introduce streaming and OTT options that could also be sold through programmatic channels. While eMarketer estimates that only 5 percent of television inventory will be sold programmatically by 2019, that figure represents $3.8 billion, a far cry from the $640 million that flowed through programmatic channels in 2016. Programmatic holds the key not only to scaling ad sales across these platforms but to improving the ad experience beyond what traditional television can offer.

Traditional television advertising, despite its substantial value and reach, is ultimately based on guesswork. Advertisers buy based on who they think is watching based in Nielsen ratings, viewer demographics, and day part, but there’s no way to be certain who is on the receiving end or to connect those viewers to outcomes in any detailed way. Programmatic can change all that. Programmatic TV advertisers will know more about the individual viewers who log in to watch. This more granular detail will allow a level of targeting not previously possible in television offering improvements in a few key areas.

Ad load - You may have noticed that even primetime television has become increasingly stuffed with ads. To combat falling ad rates, broadcasters have shoved more and more seconds of advertising into their existing programming. With programmatic TV, advertisers will be able to buy against consumer segments, rather than by program or day-part, as a result of these more targeted ads, campaigns can scale without overloading ad breaks.

Ad frequency - Ad frequency, or the number of times consumers see the same ad during an ad break, is a challenge that has plagued traditional television, and even some streaming services. Frequent repetition of the same ad may diminish its effectiveness or even have a deleterious impact on the brand. Programmatic ad buyers can control how frequently an ad is shown to a given subject ensuring enough repetition to make an impact without leaving the consumer feeling spammed.

Ad integration - As with other applications of programmatic buying in digital media, programmatic TV will allow for a closer match between content and advertising. The result can be a less disruptive ad experience and a closer connection between the content of the ad, and the programming consumers choose to watch.

The programmatic future

The programmatic revolution has already transformed digital advertising. An eMarketer study projects that by 2019, 83.6 percent of all digital display ad dollars will be spent programmatically, rather than on direct buys. Once regarded as a quick way for publishers to dispose of remnant inventory, programmatic channels now account for over $45 billion in digital advertising transactions annually. Programmatic has continued to gain strength because it fulfills one of the key promises of digital advertising, it makes buying and selling inventory more efficient for publishers and easier to scale for advertisers. As more and more of what we consider “television” shifts to digital channels, it’s almost inevitable that television will undergo a similar transformation. For television advertisers, that increasingly looks like great news. 

Greg Sobiech founded DELVE almost a decade ago to help clients make sense of their data to execute efficient media buying. With nearly two decades of experience in digital marketing, he understands how to deliver high ROI for his clients through programmatic media buying with a unique analytics approach. Prior to founding DELVE, Greg held senior marketing positions at Digitas, Bath & Body Works, Community Connect and ooVoo. He holds a B.A. in Economics from Clark University.