Programmatic: The Future of TV Buying
I probably do not have to tell you this, but I will anyways: consumers are shifting the way they watch TV from linear to streaming. Here is something I do have to tell you: advertisers are largely still buying streaming ads the way they bought linear ads. Time for advertisers to make the shift too, and be better off for it.
To put this in context, over 87% of US households are actively streaming programming on a weekly basis, according to Kantar. This will only grow as two of the most popular SVOD (Disney+ and Netflix) apps make the transition to AVOD.
In this new connected environment, we can pivot from network primetime and leverage software and data capabilities to adapt to the intent mindsets of consumers and create a ‘personal primetime’ that reflects the preferred viewing experience of these vitally important audiences.
BUT we are a long way from that point. CTV is bought is still largely via direct sales or IOs (insertion orders) from publishers. The current split between direct vs. programmatic buying is 60/40 in favor of direct transactions. The move toward the programmatic transaction of CTV has continued accelerating but still lags behind that of IOs. According to Pixalate, 94% of CTV inventory is now available to be bought programmatically.
Based on AVOD streaming services' reach and streaming inventory availability, now is the time to activate all the advantages programmatic brings to the table. The benefits of programmatic buying include control, flexibility, real-time targeting, and optimization.
Control. With the advent of ACR data, we can now account for linear viewership in addition to digital exposures. This allows the programmatic buyer to control for holistic reach and frequency inclusive of linear at the glass level. The advertiser can then send a relevant message to the viewer’s opted-in devices such as a mobile phone to help close or reduce the time to transaction.
Flexibility. Programmatic CTV is the ultimate scatter market governed by the principles of supply and demand with very little needed in the way of commitments. For advertisers with shifting budgets and objectives, there’s no better way to transact. It's the anti-upfront!
Real-time Targeting. The ability to dynamically insert an ad into a TV program to reach a desired audience on the largest screen in the home is too impactful for advertisers to ignore. As viewing time shifts from linear to streaming, advertisers must take advantage of the abundant CTV advertising audiences that are available programmatically. In an IO engagement, audiences are predefined and set at the time of negotiation. The opportunity for real-time decisions is minimal. Programmatic buying enables real-time decisioning.
Reporting. With the rise of programmatic, advertisers have become accustomed to having results at their fingertips. Automated reporting and attribution are just some of the benefits that could be realized. In CTV, most viewership occurs in-app with limited click functionality, and as a result, most events occur post-view. With the shift to programmatic, advertisers are able to look at the views and understand what action was taken, whether it was a traditional pixel-based action, or a TV-based action such as gameplay, app open, or tune-in. Being able to see this data across multiple publishers and then make optimizations is an advantage most advertisers cannot pass by.
With all of these benefits, the shift to programmatic feels inevitable, but there are still areas that need improvement to realize the potential of TV and the addressability of digital.
The first area is transparency. TV ad buyers receive very granular delivery reports including content pod position and program. Programmatic platforms and publishers still have some work to do here. Many publishers do not pass program-level information and the pod position is still very much in the nascent stages. There is hope that with more adoption of the oRTB 2.6 spec, this can be solved.
The second area that needs to be thought through is pricing. Historically, CPMs for TV and now CTV have been fiercely negotiated during the upfront. If the execution of that upfront is going to go through programmatic pipes, a balance must be struck.
First, additional tech costs are incurred when utilizing software to deliver a campaign. These costs need to be weighed alongside targeting efficiency and taken into account when CPMs are input to ensure overall efficiency is delivered.
Second, the industry needs to decide if AVOD is Broadcast, Cable, or both. The average CPM for US primetime TV ads shown on broadcast is 86% higher than those of the average cable spot. That is a big disparity in pricing.
Finally, a common currency needs to be established to ensure year-over-year savings are delivered for marketers. There are a lot of proposed solutions each with its own limitations.
There are of course other challenges but these are the most commonly referenced in our conversations with media and planning teams.
Scaled CTV audiences offer advertisers the chance to unlock the power of TV with the precision and accountability of digital, but this cannot be fully realized without the further shifting of CTV dollars to programmatic transactions. We are still in the early days of streaming advertising but paired with the control and real-time addressability that programmatic brings, the power of the medium can be unlocked.
