Pondering Programmatic Possibilities

Ad-tech vet Frans Vermeulen was one of the first employees of FreeWheel, the advanced-advertising company acquired by Comcast last year, taking a front row seat in what would become a white-hot market for multiscreen, digital video advertising. He joined the cable operator full-time last November as vice president of advanced advertising strategy. While his more distant past includes DoubleClick, Vermeulen isn’t ready to say that programmatic models are about to take over the world of TV advertising. As he recently told Multichannel News technology editor Jeff Baumgartner, he’s cautiously optimistic about the role automation will play in the premium ad game.

MCN: How do you define programmatic TV?

Frans Vermeulen: I think it’s the most-abused term in the industry … The continued automation of the advertising industry is how I define it.

Others mix up different flavors of automation — the use of data as a targeting parameter, other than a traditional Nielsen rating, or the actual trading methodology itself.

For me, it boils down to, what you are automating? Are you automating the negotiation of advertising itself regardless of what the trading methodology is — real-time bidding, or guaranteed transactions or an upfront deal? Or are you automating the human part of the negotiation, or are you automating everything downstream from that? That’s an important distinction to draw in any conversation about programmatic.

I haven’t seen in programmatic TV the automation of a guaranteed transaction, such as offering a guaranteed number of impressions or guaranteed ratings between a buyer and a seller.

MCN: What’s the biggest potential for programmatic TV?Is it really all about driving efficiencies and driving down costs?

FV: It depends who you’re talking to — the buyers and the sellers. I would say we look at it primarily around driving efficiency. Frankly, you can drive better margins by automating sales processes, either with the negotiation part upfront or everything downstream from the deal being signed. Margin is an important opportunity.

Then, as data becomes a more common element of how even linear television is bought and sold … that can give you a great amount of insight into what kind of linear planning you might want to be doing. As data weaves its way into linear and addressable and set-top box VOD and even TV Everywhere buys, you have the potential for more narrowly targeted campaigns.

But in order to scale that, it’s going to take a lot more campaigns to reach these very small targets and generate the same kind of gross advertising value that we’re used to in television. The Super Bowl had 70 spots, give or take, but imagine you’re at the local level … I might need hundreds of campaigns, in theory, to sell out that same amount of gross advertising value that flows through a particular event or platform.

MCN: Upfronts and person-to-person deals still represent the lion’s share of TV advertising, but how do you see the role of programmatic evolving into this process?

FV: I think [the traditional model] is going to maintain itself for the foreseeable future, but our job in the advanced advertising group … is to support not just our own advertising businesses (including NBC nationally and Comcast Spotlight’s local ad-sales business), but the other programmers and local ad sales forces that might want to run advertising on our various platforms.

As we look at the national side of the house, I don’t necessarily see programmatic having a big impact, although I think what you will see is the automation of all the deals that are below the line of the original master deals for the year. I do believe there will be increased automation and programmatic execution against a central upfront buy at the beginning of the year.

MCN: Should ad sales forces feel that programmatic TV is a threat or a complement?

FV: Frankly, it’s a little bit of both, as a lot of these digital concepts weave their way into the linear television ecosystem, especially from an economic value standpoint. I think you’re going to get some who are embracing what this might be able to bring — an advanced ad-sales capability that goes a bit away from how it’s been done for the last 30 to 40 years. But you’ll also get some folks who are less embracing of that. It will depend a bit on the person and on the business.