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(post) Programmatic TV: 7 Essential Terms

Programmatic TV: 7 Essential Terms

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Programmatic TV is an up-and-coming addition to the ideal marketing mix for traditional retailers and disruptors alike. As early as 2017, spending in programmatic and addressable TV began to rise, albeit still as a small portion of total TV ad spend.

In a previous post, we discussed programmatic TV advertising as a trend: why it seems so confusing, the promise it holds for brands and broadcasters, and the inherent limitations given the current market.

Getting to the Bottom of Programmatic TV

Programmatic TV: 7 Essential Terms

The takeaway from our previous post is straightforward enough: programmatic TV ads hold promise for both media companies and media buyers.

For media platforms, the approach allows better integration across distribution channels, reducing ad load and ultimately translating into a better experience for the consumer. For media buyers, the benefit is in data-driven and addressable ads. Media buyers can pinpoint ads based not only on demographics, but keywords and potentially browsing history as well.

But to take advantage of this promise, media companies and advertisers alike should have a clear idea of the shape programmatic takes in TV, and what potential it holds for them in particular.

Programmatic TV advertising isn’t just one thing.

Like traditional broadcast advertising, programmatic TV involves a range of interrelated terms.

What is the difference between programmatic and connected TV advertising, for example? What role do ad buying platforms have for programmatic TV?

With this brief glossary of the most important terms, you should be well on your way to a deeper understanding of how programmatic TV ads work.

#1: Programmatic TV Advertising

Programmatic advertising is nothing new — Google has monetized its search engine and websites have taken advantage of Demand Side Platforms (DSPs) to make reaching advertisers easier since soon after the dot-com bubble burst.

But programmatic TV has allowed the digital exchange to move into television, typically associated with more traditional ad buys.

Like digital DSPs, programmatic TV lets advertisers buy planned inventory that is sold based on how many impressions it will make. As advertisers pay for clicks on Google, they can also buy their inventory based on more than ad length with programmatic TV.

Programmatic TV also means marketers can optimize their ads with audience data, focusing ad spend on where it will matter most. As Digiday put it back in the day, “Programmatic TV advertising is the data-driven automation of audience-based advertising transactions.”

#2: Connected TV

Connected programmatic TV depends on over-the-top devices (i.e. Smart TVs, Chromecast, Apple TV, FireTV and now Xbox) to make television ads even more digitized.

Connected inventory in programmatic TV varies slightly, since the metrics its uses can take into account things like how many times the video was watched, how many people skipped the ad, and how many times the video was watched completely.

#3: Addressable TV Ads

Besides the lower cost (when compared to traditional TV advertising), addressable ads are the real draw of programmatic TV.

Addressable ads are essentially personalized ads deployed at scale on connected TVs. While YouTube ads can be highly targeted based on browsing history and demographics, they are typically limited to one creative (that is often showed multiple times to the same person).

In contrast, addressable TV ads let advertisers present different versions of the same ad (or completely different ads) to viewers of the same program — a live sports game, for example.

Read More: New Ad Trends: A Look at Addressable Television Advertising

#4: Linear Ads

This term can be particularly confusing, since ‘linear’ is used interchangeably for both the kind of addressable ads described above and more traditional media delivered through OTT.

Linear ads (or linear inventory) are purchased on a platform, making them part of programmatic TV inventory. But the ads are delivered linearly, targeted based on audience metrics and reported on with traditional viewing metrics.

#5: Programmatic Ad Platforms

This is where media companies can utilize ad networks to sell ads (demand side platforms) and where media buyers can find the audience reach that they need (supply side platforms).

For programmatic TV advertising to work at sale, DSPs, SSPs and ad networks all have to work together.

“Say you have a service with a million or so subscribers. That million number isn’t very exciting for a big advertiser,” says Jim Lombard, co-founder of Tetra TV. “So you need to pull together more ad opportunities and more households. That’s the opportunity for us to pool this inventory together, so we’re able to monetize it more effectively with reach and frequency. It serves that purpose of pooling inventory and creating scaled value.”

#6: Data Management Platforms

Data management platforms (DMP) aren’t directly tied to the ad seller-buyer relationship, but are a critical part of brands getting the most out of programmatic TV ads.

A DMP can be used by software and media companies to collect data on an audience, split the audience into segments and then offer these segments to advertisers to target users in specific campaigns and ads.

DMPs serve as the foundation of ad networks, as media companies, apps, and websites pool data together. Larger brands also use DMPs to identify and target promising prospects.

#7: Programmatic Inventory Metrics

Programmatic TV metrics are made possible through connected TVs or set-top boxes, which allow access to cable, over-the-air and OTT television. The source is accounted for when reporting on programmatic TV ad metrics.

The main metrics for programmatic inventory include impressions, designated market area reached, and cost (i.e. CPM).

While these metrics are already more specific than traditional TV, programmatic metrics will have to catch up for advertisers to get the most out of their programmatic campaigns. Social and search ads have gone granular, and programmatic TV will soon need to do the same.