Three Misconceptions Holding Programmatic Back at This Year’s Upfronts
Still hurdles to overcome in making the technology work for TV
For the past few years, during the spring lead-up to the upfronts, I felt sure that the coming year would be a turning point for programmatic buying. But I’m not sure it has quite happened yet — so what about this year?
Based on the technology, scale, and capabilities of programmatic TV advertising, I believe programmatic could be playing a much bigger role in television advertising transactions, unlocking efficiencies for advertisers and sellers alike. Viewing on platforms that enable programmatic activations is skyrocketing. But while eMarketer estimates that over 80% of U.S. households that subscribe to pay TV are addressable, programmatic buying makes up only 10% to 20% of TV ad buying.
Why the disconnect? Why has a capability with a wealth of potential benefits for our industry reached a plateau? More importantly, how can we overcome any hurdles to get programmatic working for more TV advertisers? Here are a few challenges and how we can overcome them as an industry.
Uncertainty About Quality
For some advertisers, “programmatic” still brings to mind images of auctions on low-quality, remnant inventory that was prevalent first in digital display media, and later in digital video. Of course, this is no longer true, as programmatic TV advertising operates in the same high-quality inventory as traditionally bought TV — including live sports. When the industry can embrace programmatic as a buying strategy, rather than a definition of inventory quality, we will be taking an important step towards its future.
A Perceived Lack of Value
The future of programmatic comes down to the numbers: does the benefit outweigh the added cost?
The simple answer is yes, it should, especially when programmatic is executed directly with the most optimized supply path that eliminates middlemen and unnecessary tech taxes. While the upfront costs may be higher, the ROI is higher too thanks to advanced targeting and the ability to optimize campaigns in real time — making programmatic as cost-effective as direct buys, or even more.
But it’s not just cost benefits. In addition, improved automation, reporting and ease of use make programmatic a measurable and quantitative value-add for buyers. And, when executed in tandem with direct buys, programmatic can unlock TV as a full-funnel marketing vehicle.
Fear of Losing Control
Both buyers and sellers fear losing control in the either-or scenario of guaranteed vs. biddable activation strategies. In guaranteed activations, buyers can feel like they lose decisioning power over inventory, while in fully biddable activations sellers can feel like they lose control over how and when a buyer is going to activate.
The key to maintaining control on both sides is communication and collaboration. Yes — even though the buying is automated, the relationships still matter! When a buyer, seller and ad-tech partner can agree to deal types, parameters and goals ahead of time, and then manage those criteria holistically through a direct tech connection, they can ensure they are not relinquishing control or transparency they need for their campaign management.
The Future of Programmatic
In its ideal state, programmatic buying for TV and premium video advertising is an automated, biddable environment that provides control and optionality for advertisers and lets them buy and manage their TV buying much like they would a digital campaign, while maintaining the high quality and ROI of premium video and TV advertising. With this type of programmatic approach in place, advertisers would expect more effective return on media spend, while publishers have the chance to open up new revenue streams.
At this year’s upfronts, we can lean more into the automation and efficiency offered through programmatic — but also shake hands, take a lunch and meet new possible partners. By building out relationships and connecting with those on the other side of the programmatic paradigm, you’re creating the win-win-win for the buyer, seller, and the advertiser.
In the coming weeks, negotiations about transaction models and data will be just as important as negotiations about programming and pricing. So watch out — the programmatic upfronts may finally be here.
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Mark McKee is general manager of FreeWheel, a Comcast-owned advertising technology company.