Linear Handcuffs Slowing Progress of Programmatic

Related: High Hopes for Programmatic TV Ad Spending

The national broadcast networks are pushing ahead in the advanced advertising game, but if you ask about programmatic buying and selling, things are moving a bit slower than expected.

With traditional viewing waning, and old-fashioned demographic ratings eroding as a result, the networks are pushing for new yardsticks to measure their value to advertisers.

Part of most people’s definition of programmatic is using data to identify and target the viewers who are most likely to respond to an advertising campaign.

Another part of programmatic is making buying and selling more efficient by automating the process from end to end.

Both aspects could make TV more competitive with its fast-growing digital competition.

Inherent Challenges, Resistance

While networks said they’ve made progress on both fronts, there are aspects of linear TV that make it difficult to sell it the way digital sells advertising. And there is institutional resistance to change — despite widespread agreement that a better way is needed. Turner has been in the data-driven advanced advertising business for four years with its Audience Now product.

“I would say for the past three years, we have seen the number of our deals, the size of those deals in terms of volume and in terms of revenue against them, the number of advertisers, the categories that are now represented — literally it increased by orders of magnitude year over year. Triple-digit percentages,” Michael Strober, executive VP of client strategy and ad innovation for Turner and co-head of Turner Ignite, said.

“The problem though is, while we’re experiencing this momentum, it’s not enough,” Strober added. “I honestly thought that after doing this now for three or four years that the industry would be further into this than they are.”

To Strober, there is plenty of blame to spread around, from media companies to media agencies to the clients themselves.

Among clients, some are using data and audience buying and not only are they getting a better return on their ad spending, “but they’re getting a huge leg up on their competition in understanding how to market in this age of advanced advertising and the use of data and analytics,” he said.

Others don’t have a clear enough idea of exactly who their target audience is in order to define it for advanced advertising approaches like Open AP, the coalition of Turner, 21st Century Fox and Viacom that aims to make audience buying more attractive by letting a company describe its audience once and share that definition with multiple media companies.

On top of that, “some clients are so fixated on efficiency and cost savings that they’re missing the mark,” Strober added.

Unless clients change the yardstick they use — and judge their agencies by — the industry will never get out of the jam it’s in, Strober said.

And bigger changes are afoot, with additional data and more one-to-one addressable households.

“Innovation and technology, they’re coming at such enormous speed,” he said. “And this industry, in my mind, is not currently prepared to make those kinds of adjustments and we will just be obliterated because clients will find other paths to get to consumers.”

On the automation front, the industry is laying in the electronic pipes that will enable more programmatic buying and selling.

“The infrastructure of the current television ecosystem is hardwired in a way that doesn’t allow you to do that at the same level as we might do in digital today,” Krishan Bhatia executive VP, business operations and strategy for NBCUniversal’s Advertising Sales division, said. “But what we are hopeful about and seeing increasingly is that there are lots of partners that we’re testing and rolling out that are starting to add meaningful automation, even in the current state.”

NBCU recently made a deal with researcher 4C Insights that created an API, or application programming interface, that lets clients access NBCU advertising inventory while using 4C data and other data sets.

The arrangement “basically makes the buying of television both smarter and more efficient,” Bhatia said, noting that the approach is similar to the way social media inventory is bought.

Retailer Target was the launch partner for the 4C initiative and NBCU is looking to create similar API arrangements with other partners.

But selling programmatic ads in live programming still has issues, he said.

“Workflow automation and the API development for television inventory that’s then coupled with client CRM [customer relationship management] data or other third-party data actually takes at least two major steps in the right direction,” Bhatia said. “You may not be able to digitally ad-serve, but you’re building a plan that’s data enabled and you’re transacting a plan in a significantly more automated way.”

More automation will also move the industry away from ratings and towards impressions, which will make it easier for client to make apples-to-apples comparisons between the kind of premium video that TV networks sell and other forms of video.

Bhatia said industry trends point to a more programmatic future, between increased digital viewing through virtual MVPDs and other streaming platforms, the networks pushing to help sell traditional TV data and increased automation.

“If you take all of those three things together, I think it’s really starting to move the needle. I think over the next three to five years we will see a very significant transition towards that and we want to be ready for that, and we think we are,” Bhatia said.

Vendors Also Have Dilemmas

Technology companies looking to serve the TV business don’t have all the answers either.

“Ninety-nine percent of the companies that have entered the programmatic TV space do not have the an approach that will satisfy TV sales teams,” Long Ellis, a former network executive who has spent years in programmatic with companies such as, Google, Flurry and Mass Exchange, said.

Instead of trying to replicate the replicate the current process, an approach that allows for buyers to bid for the highest-performing inventory is the key,” Ellis said. “But the magic in successfully pulling this off means the sell side needs technology to automate the pricing and inventory management so it can handle the complexity of selling at this granular a level.”

It’s frustrating to see how available date is not being applied in the linear TV world, Ellis said. “The holy grail is allowing advertisers to buy the best performing content no matter where it is viewed.”

Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.