There's a lot of confusion about what full programmatic TV will bring.
Last month, while I was at TV Connect London, I noticed that while programmatic TV was the big buzz word on everyone’s lips, there was a lot misunderstanding about what it actually means. On the advertising side, there’s equal buzz – and equal confusion – about what terms like IPTV and OTT TV mean.
As someone who straddles both industries in my job as Video Product Manager at Improve Digital, I wanted to take the opportunity to clear up some of the confusion and offer an idea of what the future will bring.
What does full programmatic TV mean? It is a method of automating the process of buying and delivering ads that maximizes the monetisation of video content. Full automation will mean a wholly user-targeted, content-integrated viewing experience.
But that’s the future. What’s the situation now? While we’re waiting for the advent of full programmatic TV, video content is currently delivered via two methods: traditional TV using a set-top box (IPTV) and online video (OTT TV). Each one offers distinct advantages and challenges to advertising sales.
So which should we focus on when thinking about the development of full programmatic TV? Both. That’s because both of these methods will grow towards each other and lend their strengths to creating the holistic, integrated programmatic advertising viewing experience of the future.
Traditional TV offers audience, online offers cross-device marketing
Traditional TV advertisement budgets are shifting to online. The European total online advertisement surpasses TV to record €36.2bn in 2015. Online video is 16.7% of the Display ad spend (€13.9 bn in 2015) (source: IAB Europe ©2016 IHS).
While the budgets are shifting traditional TV is where the audience still is. This guarantees brands wide audience exposure, while exposure on online video is fragmented because of the many different online video platforms.
But, although consumers often reach for the ease of accessing video content via their remote controls, they’re also accessing online video content anytime, anywhere. And with the amazing potential of user data and user tracking, online video offers the opportunity for the type of targeted, cross-device marketing that brands can only dream of now.
As we move towards programmatic TV, we should see the audience capabilities of traditional TV being applied to target more specific viewers. How?
By combining demographic targeting with online user data targeting
When we talk about demographic targeting in the traditional TV model, it means marketers look at programme category and timeslot to determine who in a household is likely watching. They might be guessing at a range of individuals, ages and other factors.
Obviously, this type of guess-work isn’t only lacking in precision, it also fails to reflect what is happening in real-time. As I’ve already mentioned, online video is able to track individual online behaviour in real-time, and track it over time to target users effectively.
Now think of combining information from both methods and you can start to imagine the targeting potential that full programmatic can unlock. We’re already seeing this in a few, select places in the industry, but we need to see more to create the personalized, frictionless ad experience of the future.
And we need a frictionless ad experience to monetize high-quality content
Quality is the last piece of the puzzle that should go into creating the future of programmatic TV.
In traditional TV, the two ground rules for maintaining viewers’ attention are “Content is King” and “Never Go Black”. That means that content providers and owners are skittish about ads being served up in real-time that they can’t view or test beforehand.
On the online video side, although there’s a lot of experience with the power of programmatic advertising, allowing ads to pay for high premium, long-form content isn’t built into business models, where subscriptions pay for content.
The solution to both these problems is to implement programmatic advertising in small steps and pilot projects, so that the results can be tested on both the traditional TV and online video side.
While TV has the biggest reach, the blueprint for programmatic TV has already been set by online video, so building further on that knowledge is the low-hanging fruit.
With all the strengths that both traditional TV and online video can bring to the ad ecosystem, they will slowly grow towards each other to form the kind of holistic, integrated viewing experience that consumers and advertisers want. When that happens the industry has to be ready to support the best of those two worlds – and the TV experience of the future.