MediaRadar Blog

programmatic tv confusion

Why Is Programmatic TV Advertising So Confusing?

Over the top television (OTT) is a relatively new phenomenon-turned-mainstream in the media world. As major players — first Netflix, then Amazon and now Apple — built up their media offerings, advertisers have had to figure out how to keep up with the shift toward Internet-native media formats.

At first, programmatic advertising and TV advertising were in two completely different classes. Brands with the budget continued advertising on traditional TV while shoring up their programmatic media across different formats. But as Smart TVs become the new norm, these lines are increasingly blurring. It stands to reason that programmatic TV advertising is next up in Ad Tech.

But what, exactly, is programmatic TV advertising? Is it addressable? What benefits does it offer? The tech is in its early stages, so we’re all naturally a little confused by it.

Television Trend Report 2019

Programmatic Advertising for OTT: Opportunity vs. Capability

OTT distribution channels (or streaming platforms) may have a while before they completely take over traditional television, but they are certainly doing enough to warrant a “What’s next for advertising?” type of conversation.

With OTT, advertisers have the opportunity for both programmatic advertising and addressable TV advertising. While programmatic simply means the ability to buy ads on a platform according to a prearranged formula (similar to ad spend for Google Ads), addressable TV advertising means the ability to show different ads to different households while they are watching the same programming.

Addressable ads can now reach 65 million US households — this isn’t something for the future, this is happening right now.

Despite the opportunity, there are a number of holdups to putting addressable ads into practice. To start, it’s a complex undertaking. When you start mixing direct TV ads, popups on mobile video, banner ads on web platforms and more, figuring out pricing, opportunity and targeting can quickly get confusing.

Add to that the complexity of the marketplace itself and things may take awhile to untangle. The Wall Street Journal reported that “Silicon Valley heavyweights” with a direct-to-consumer laser focus and “traditional media companies” looking to figuratively keep up with the Kardashians are competing in at least five distinct categories.

These companies are vying for consumer attention in increasingly complicated combinations, replete with subscription entertainment, TV streaming, ad-supported online video, cable/TV bundling, and sports.

WSJ Media Competition

At the same time, media sellers haven’t quite caught up. Despite the high number of households that can be targeted by addressable TV, media buyers complain that there isn’t enough inventory — only 12.5 percent of ad slots having addressable capabilities.

The Value of Programmatic TV Advertising

But the multiplex holds promise — for both media platforms and media buyers.

Rany Ng and Anish Kattukaran at Google call programmatic TV advertising a solution to the inefficient traditional TV buying and selling model. The solution could “applying digital advertising’s efficiency models to TV advertising.” For their part, the Google video platform seers define programmatic TV “as a technology-automated and data-driven method of buying and delivering ads against TV content… [including] digital TV ads served across the web, mobile devices, and connected TVs, as well as linear TV ads served across set-top boxes.”

For media platforms, the approach allows better integration across distribution channels, translating into an ultimately better experience for the consumer. For media buyers, the benefit is summed up by Ng and Kattukaran: it is data-driven and addressable. Media buyers can pinpoint ads based on not only demographics, but keywords and potentially browsing history as well.

IAB member Dino Bongartz provides an example of the benefit: a ‘switch in’ banner for digital display and Smart TVs.

Nespresso Ad

The banner ad allowed the advertiser to target audience based on keywords, include a clickable call to action and go without interrupting the viewer’s experience.

On the Horizon for Programmatic TV Advertising

The opportunity of addressable TV advertising through OTT tech is hard to ignore. We see multiple media and telecommunication companies making moves toward the capability a core part of their offerings.

For example, T-Mobile will partner with Viacom, adding content to its pending streaming service as they prepare to enter the so-called streaming wars. CEO John Legere’s words deftly sum up what both platforms and advertisers will need to offer consumers in order to stay competitive: “TV programming has never been better, but consumers are fed up with rising costs, hidden fees, lousy customer service, non-stop BS. And Macgyvering together a bunch of subscriptions, apps and dongles isn’t much better.”

Apple and Disney have made headlines recently for how they are either entering the space (in the case of Apple) or transforming their offerings to meet consumer demands (in the case of Disney). Others, like Comcast and AT&T, are making similar moves. Comcast has made new hardware investments, and AT&T’s Xandr will be making an addressable TV specific pitch during upfronts week. In a time reserved for major broadcast and cable networks, data-driven TV advertising may just become central to the conversation.