After years of steady progress, the industry's vision for advanced television is finally beginning to materialize. Just this year, U.S. spending on automated, targeted TV advertising is on track to more than double to $700 million. Though this represents only a small fraction of overall television ad-buying, it's clear that the efficiencies of the digital marketplace are gaining traction in TV land. (Note: When we say "Advanced TV," we mean everything: programmatic, OTT, CTV, TV Everywhere—basically the future of buying and selling TV-like content.)
But while the future of programmatic TV is undoubtedly bright, exactly what that future will look like remains uncertain. Today, programmatic television consists of a hodge-podge of different inventory that can be purchased via a range of different software platforms. Some programmatic TV buys merely apply advanced data sets to person-to-person direct deals. Others use real-time bidding to automate transactions in which marketers bid on individual impressions. With so much variety available, it's anyone's guess which kinds of arrangements marketers and content owners will settle on long-term as this segment of the market continues to mature.
More than anything else, this abundance of choice requires media buyers to embrace a strategy of intelligent trial and error. By sampling the many tools at their disposal and taking stock of the results, marketers can begin optimizing their campaigns for the platforms and inventory that deliver the greatest return on investment. At the same time, content owners are rapidly testing out different bundles and offerings on their end. This kind of experimentation is how we as an industry will identify the Advanced TV workflows that will lead us into the future.
Following in digital's footsteps
In a way, what's happening in advanced television is similar to the evolution that has played out in the digital video space over the past decade. When marketers first began buying online video programmatically, they did so through an OpenRTB standard that exclusively supported open, second-price auctions. Over time, stakeholders across the digital ecosystem worked together to open up new trading configurations like private marketplaces and automated guaranteed deals, allowing advertisers and publishers to strike the right balance between the efficiency of automation and the control that comes with a more manual implementation.
The programmatic TV space is enjoying the same healthy evolution right now. Just this past fall, NBCUniversal began allowing marketers to purchase linear TV inventory on major networks like NBC and USA via the same automated buying software they use to execute digital video campaigns. Through this offering, marketers can apply their own data to buy ads on the shows their target audiences are most likely to watch. Meanwhile, more than 200 marketers ran “addressable" political ads—or those targeted to individual households—on satellite television this past election season. Whereas NBCUniversal's solution shows the same ad to everyone watching a given program, these political advertisers were able to show specific viewers a different ad from the ones others saw.
Since each of these options comes with its own set of strengths and weaknesses, it's up to brands and agencies to figure out for themselves which combinations work best for them.
Advanced TV is ripe for a test-and-learn approach
Fortunately, Advanced TV enables this kind of tinkering by delivering quickly the data marketers need to understand whether their ads are actually driving results. For instance, those who buy digital or addressable TV ads can use customer purchase data to determine how many of the people who saw their ads went on to buy their products. In addition, the precise audience buying of programmatic gives marketers the power to run smaller, more targeted campaigns whose results can be easily compared to non-programmatic national ad buys. Finally, glass-level data from device manufacturers can tell marketers which ads people are watching at any given moment, providing the real-time feedback advertisers have become accustomed to in the digital realm.
With programmatic TV expected to grow into a $4.4 billion category in the U.S. by 2018, the time is now for marketers to begin undertaking these kinds of experiments. By doing so, they'll be able to develop an intelligent buying strategy that puts them ahead of the curve as programmatic continues to spread throughout the TV marketplace. Seeing what buyers want from the future of TV will continue to inform the experiments that content owners and distributors are pursuing. And as more and more in the industry come to determine their individual best practices, they'll start making real headway toward the differentiated, flexible and highly efficient programmatic TV marketplace of the future.