Advanced TV: The final piece of the programmatic puzzle

In my previous column, I made the argument that – contrary to conventional wisdom – TV continues to have a bright future as an advertising channel, even in a world of cord cutters and fragmented attention spans. This is chiefly because Advanced TV has brought digital reach to a screen that still has an enduring presence in our living rooms.

In today’s column, I want to reinforce the case that I believe TV is still viable and is also likely the linchpin of a truly holistic programmatic advertising ecosystem. Advanced TV has the potential to extend true programmatic capabilities to the largest screen in the home, and it’s the culmination of a digital advertising revolution that has been many years in the making.

Advertisers and agencies not prepared for this transition – which is coming more quickly than they might imagine – risk falling significantly behind. Brands and agencies should use the proliferation of Advanced TV as the catalyst to blow up any silos that exist in how they plan and allocate TV budgets and commit dollars to the platform through both managed and programmatic programs.

But first, let’s define what I’m talking about. According to the IAB, Advanced TV encompasses:

  • Interactive TV, which may appear as digital overlays on top of linear TV commercials.
  • Connected TV.
  • Over the Top (OTT) and Smart TVs.
  • Linear Addressable TV, where ads targeted to specific households are inserted into live programming.
  • Video on Demand (VOD) Addressable, where dynamic ads are inserted into cable programs through the cable provider’s set-top box.

Advanced TV: The final piece of the programmatic puzzle

This radical rethinking of TV budgets must happen, and soon, if brands are to be fully prepared for the coming industrywide shift to cross-screen programmatic buying and selling.

Why you might have ignored developments thus far

I understand if you might be skeptical. Programmatic TV was heavily hyped at inception, and it has been a disappointment for almost as long. While programmatic digital display advertising now accounts for 80 percent of US display spending, programmatic TV has largely failed to launch. It appears that traditional players in TV advertising have resisted changes to a model of buying and selling that has remained consistent for nearly a century.

They like how things have always been; it’s what they know, and change usually comes with risk. Networks don’t necessarily have the incentive to embrace true programmatic selling. There’s a limited amount of ad space in every hour, and that space almost always sells out.

On the technology side, the pipes that deliver most of the linear TV into our homes don’t carry tags and cookies that can track viewers with the same granularity that the internet provides. Nor are most systems set up to make split-second decisions about which ads to serve. These are often decades-old systems that were built in the hard-wired days, well before there was even an inkling of programmatic.

It’s not just hype anymore

Some progress has been made on programmatic TV in recent years. The major networks have begun to offer data insights that help marketers make better targeting decisions on linear advertising inventory with interfaces such as Open AP from Turner, Viacom and Fox. But these approaches still generally require manual processing to purchase inventory. You have to book a slot ahead of time and the creative has to be approved.

However, the advent of Advanced TV has brought us closer to making programmatic buying a reality. For one thing, Advanced TV is automatically set up for OTT streaming and VOD. In cases such as DirecTV Now or Hulu Live, linear TV is delivered through the internet, where the technology usually allows not only for addressable advertising, but also programmatic buying.

Programmatic buying is also generally available through Advanced TV hardware itself, for example, through “first impression units” – ads that run on the TV manufacturer’s home screen. In many cases, these ad units are both the first ad viewed when a consumer turns on the TV and the only and last ad viewed before entering an ad-free environment such as Netflix. And within the next year or two, we will likely see more options for programmatic insertions into linear TV through Advanced TV receivers.

Advanced TV’s growth will likely be the tipping point for fully extending programmatic to TV advertising. Sure, it might still be several years before the bulk of linear TV ad time can be purchased programmatically. A lot needs to fall into place for that to happen – for example, TV networks will need to agree upon common technology and measurement standards. But in the meantime, programmatic buying through Advanced TV will likely grow, and eventually, the value for buyers and sellers will become too great to ignore.

What we all stand to gain

If the most prominent screen in the home becomes the centerpiece of the programmatic ecosystem, advertisers will then be able to more easily direct the consumer experience at the household level. This means creating a threaded experience that accounts for the TV and all of the second, third and fourth screens in use in the household. Advertising can then be directed sequentially to an entire household, frequency capped as necessary, while allowing greater opportunity to direct the customer journey and gather feedback to better understand it.

Agencies and advertising teams may need to optimize their processes to capitalize on this opportunity now, because programmatic is growing quickly, especially as Advanced TV hardware becomes the norm. While programmatic was only 1.6 percent of all TV ad spending in 2017, eMarketer projects that $3.8 billion will be spent on programmatic by 2019 – a jump to 5 percent of all TV ad spending. While this is still a small fraction of TV ad spending overall, the acceleration is evident.

Advanced TV: The final piece of the programmatic puzzle

What to do now

It is critically important for agencies to reevaluate how they are organized and plan for clients – bring “TV” and “digital” people out of their silos to collaborate and better understand how programmatic buying can stitch all the pieces of an advertising plan together into a harmonious program.

While change is hard, we will all be better off when all ad inventory is available on an open exchange, available to be purchased in real time and truly measurable. Advertisers should be able to greatly improve their ROI when they are able to direct the consumer experience, and consumers benefit when they are the recipients of advertising that is particularly relevant to them.

Programmatic buying through Advanced TV is the final piece of the digital advertising puzzle, providing consumers and advertisers a holistic experience that is truly greater than the sum of its parts.

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