Programmatic ad-buying is finally coming to television

The pace of change in the U.S. television business is notoriously glacial. There’s truth to the adage that buyers and sellers of the $75 billion spent annually on TV advertising will change their ways – calcified in the 1960s – only when that generation dies off. But it actually looks like programmatic, one of the biggest buzzwords in digital advertising, may gain some traction in traditional TV next year.

Online, “programmatic” means highly automated ad-buying, via price- and audience-based algorithms, automated order placement, and the like, and often involves real-time auctions and ad inventory exchanges. The topic came up the other day when I was comparing 2015 ad industry predictions with Lisa Joy Rosner, CMO of Neustar. Neustar is a company with its roots in phone number portability that’s re-inventing itself as a supplier of a marketing technologies and services. We weighed the obvious: Is it finally the year of mobile? Will TV dollars shift to online video? Will advertisers figure out social media? She was leaning toward ad tech consolidation, and was pretty skeptical about my suggestion that TV buyers would adopt programmatic techniques. Maybe she bought the argument I made in our Sector Roadmap report that programmatic is a relatively minor near-term disruptive force for marketing-tech platforms and buyers, while it’s a bigger deal for sellers.

The skeptical view

Perhaps “bigger fear” is a better description. Proponents of programmatic buying and selling envision it as the equivalent of commodities trading, where ad inventory is the commodity. No ad seller wants his wares commoditized if the result is much lower pricing – and a cut of that smaller pie going to an exchange or other reseller. Though programmatic is often associated with real-time auctions that could raise as well as lower pricing, it’s also equated with remnant inventory.

Amidst real disruptions in TV viewing and programming like cord-cutting and over-the-top competition, the last thing TV networks want to hear is that their ad dollars are going to be further shriveled and fragmented. Almost all TV ads are sold in a process that’s the opposite of automated. There’s the annual festivity of the upfront, where the networks try to lock in guaranteed sales with glamor, glitz, and those three-martini lunches we always hear about. Then prices go up for the proven hits in the scatter market. Campaigns aren’t managed in real-time. It’s Don Draper versus Lloyd the computer guy in Mad Men, though I think we know how that’s going to end.

Google once tried to automate TV ad buying and selling, but gave up after five years of trying to modernize the industry. Google’s latest strategies to tap into TV spending are oriented around YouTube and brand-lift studies.

Early action

Maybe Google gave up too early. There are signs of change a-coming:

  • There’s a horribly named technique called programmatic direct that could help sellers maintain pricing and preserve the premium content association that many brand marketers like. It started in digital display advertising, and is moving into mobile.
  • ESPN is experimenting with selling Sports Center TV inventory programmatically; even if sister network ABC only does it online.
  • Buyers, sellers, and ad agencies are gaining experience with programmatic via online video. Marketers and agencies have made investments in the infrastructure and processes to support programmatic online buying and are looking for payoff, as well as for cross-media planning and campaign coordination. Meanwhile, brand marketers are getting accustomed to real-time campaigns online, initially with social media and usually in response to events.
  • Companies you’ve probably never heard of that make tools for TV broadcasters and networks to replace the spreadsheets and faxes they use for insertion orders and traffic management have started offering honest-to-goodness programmatic tools and services. They include WideOrbit and Mediaocean, whose customer lists give them access to television spots. Meanwhile, online video programmatic specialists like TubeMogul are hooking up with these types.
  • Automated selling will probably catch on first with cable and satellite operators for the 2 minutes an hour they control via distribution deals with the programmers. Cox Media has been selling programmatically via startup platform clypd.

Connecting dots?

Those signs are encouraging. But programmatic’s real promise for television advertisers is the ability to buy audiences rather than using shows or timeslots as a proxy. We’re not there yet. And you can’t optimize what you can’t measure.

Many in the industry blame that on Nielsen, who sets the standard for measuring TV audiences and establishing the currency by which ads are bought and sold. Most regard Nielsen as a sluggish behemoth, ignoring that every now and then it’s ahead of its customers, and that its TV customers are primarily the programmers. There will have to be some kind of integration across shows, currency, and audience-tracking before automated TV advertising pays off.

Updated December 15 with explainer sentence added.

The trouble with Twitter? Bad, bad advertising

Almost a year after it angered users with its ‘quick bar’ advertising, and several months into its new Promoted Tweet service, Twitter’s ad platform seems as shaky as ever. Is targeted advertising a myth, or can Dick Costolo and team turn it around?