Earlier this month, the Programmatic TV Standards Group— an organization made up of industry vets, agencies, third-party measurers and vendors formed to bring enforceable standards to programmatic TV— announced that they were setting baseline parameters for national and locally distributed inventory. This has the potential to have an impact far beyond traditional TV networks. It could even end up changing the way television is viewed altogether.
Standard #1 The first standard that the group has confirmed they will be addressing is the definition of audience distribution. Traditional TV ad-buying is based primarily on geography. As television advertising looks to become more data-driven, however, advertisers will expect much more specific audience segments and inventory. Programmatic is, after all, built on the idea of getting the right ads in front of the right people. While many might agree that their geographic location says certain things about them, it hardly defines their consumer habits, and in an age of content overload, advertisers need to be able to target their content to very specific customer bases in order to get the most ROI from their campaigns.
More Is Needed While the group has not publically acknowledged it yet, another critical set of standards that must be established will be around how success is measured. In digital advertising, there are various metrics available to advertisers, and so measuring success becomes more of a factor of filtering and applying the right metrics that mattered to that brand.
Since television isn’t anywhere near as interactive as the Internet (yet), there needs to be a set standard in place for establishing metrics that can be used to accurately measure an ad’s impact. Without such metrics, marketers will basically be using lots of data to set up their artillery only to fire into the dark and hope they hit something.
Programmatic TV isn’t a new concept, but it has been progressing at a very slow pace, especially given the explosion in popularity that programmatic video has seen recently. This sluggish progression has to do with how entrenched the traditional TV ad buy structure is and the hesitation of those in charge to change it. To be fair, for the past 60 years, there really hasn’t been a good reason for them to change. The system of regional TV ad buying has been effective. Even with the onset of digital advertising, television networks were never centralized enough to be pushed towards adapting to the digital age.
Change Is Coming Even without standards for programmatic TV, television networks are finally feeling the pressure of the internet age. Companies like Netflix and SlingTV bring television to digital mediums, providing customers with access to their favorite shows on any device. Networks are making efforts to adapt, such as putting their shows on-demand and offering streaming services on their websites, but in order to push the medium into the future, they have to throw the weight of advertisers behind the push to digital. That is where programmatic TV comes in.
By offering advertisers the ability to buy inventory programmatically, networks can tap into a much larger source of advertising spend. Of course, one of the reasons networks have been so resistant to change is that the traditional ad buying system allows them to set higher prices for ad space. However, though opening up their channels to programmatic ad exchanges may drive prices down, it will also provide a much broader supply of clients that can fill their ad schedules.
There is also a fear of what types of brands may appear on primetime television alongside a networks tent pole program. As we have seen in digital, premium publishers often put controls in place that limit the types of advertisers that are allowed to bid, and be displayed on their sites. Creative control is incredibly important to these pubs online and that will also be manifested on the television – perhaps to an even greater degree. So, another hurdle we have to cross is making broadcast executives comfortable with a somewhat opaque understanding of what ad will show up alongside which program. I would expect that, for the most premium shows, a private marketplace will be where only an approved set of advertisers are allowed to bid on a particular program or daypart. This could potentially increase CPMs for highly in-demand programming, limiting the exposure networks will have from an overall programmatic TV strategy.
Before any of this happens advertisers have to have some kind of assurance that buying TV spots programmatically will be beneficial, and that’s why effective and enforceable standards are critical. They not only provide structure, but also a sense of legitimacy that will help get many, more traditionally minded television higher-ups get on board.
Programmatic TV is on its way, and setting standards is the first step to pushing the snowball down the hill. Networks are now realizing that if they don’t adapt, companies that offer streaming services will be able to tap into the programmatic movement quickly, attracting and retaining more customers. Hulu has already started moving into the space and we’re sure Netflix will not be far behind. Establishing standards will help bring advertisers to the side of network television, and allow the platform to continue enjoying the success it achieved throughout the 20th century.