It will surprise no one even the least bit familiar with advertising that programmatic, as determined by the Association of National Advertisers (ANA) earlier this month, is the 2014 marketing word of the year.
What is shocking is that despite all the hype and hoopla accompanying the term, the television and advertising industries have yet to arrive at a consensus definition. Amazingly, the most popular topic in the media buying universe is also one of the least understood, as indicated by some of the comments pulled from the ANA survey.
“This was the word that has been thrown around the most and everyone is scrambling to understand what it means and how it would impact their business.”
“It is a word that is being used a lot by a lot of people, but still needs to be understood by most people.”
Familiar and mysterious at the same time, programmatic, as of the end of 2014, remains a paradox. There’s no ambiguity, though, around the fact that broadcasters and service providers have yet to meaningfully embrace programmatic as a vehicle for monetizing their inventory. According to multiple industry sources, only a tiny percentage – low single digits – of television ads are currently sold through programmatic-controlled transactions. An online article pegs the current size of the market at 1 percent.
The many reasons for this arm’s-length embrace of programmatic by the sell side distills nicely into a single factor: complexity. The television ecosystem, in stark contrast to the Internet, was much easier to automate. Automation—the heart of programmatic ad buying and selling—is fairly easy to impose on the digital ad placement processes. The Internet, after all, is a monument to technical standardization.
Different for TV
Television has technical standardization, but it’s never had consistency in the advertising ecosystem. How one broadcaster sold inventory was different than another! Networks packaged inventory in unique ways; MVPDs were very creative in how their promotions and advertising worked together on regional and addressable units. This uniqueness has exponentially increased as media companies and their advertisers packaged deals across all media platforms—the channels, digital footprint, C3-C7 viewing shifts, VOD, etc.
In this omniplatform environment, ad sale automation must be extended to include a diverse range of platforms, protocols and formats — simultaneously. Until that happens, programmatic TV advertising will remain largely on the sidelines.
Markets in Motion
The second major reason that programmatic has yet to make an impact in the broadcast arena is that the ecosystem is currently characterized by an abundance of moving parts. Not only is programmatic upending traditional relationships among brands, agencies, rating systems, services – on both the demand and supply sides – and technology suppliers, each of these entities is advocating or adopting proprietary approaches and solutions.
The prospect of automating ad buying is even pushing some marketers toward bringing digital media buying in-house.
The sell-side is wisely waiting for some of the dust to settle, casting a leery eye in particular on ad tech companies looking to hijack the hype surrounding programmatic by pushing half-baked solutions that are likely to be obsolete before they are out of the box.
Does that mean sell-side entities should twiddle their thumbs while all the market machinations sort themselves out?
Here’s a handy checklist that inventory holders can follow now to make sure they seize the programmatic opportunity as soon as possible, without making any costly missteps or stranding investments:
- Programmatic = automation. Forget, at least for now, auction/RTB. Concentrate your efforts on working inefficiencies out of the mostly-manual process of providing advertisers with the ability to place ads against your content, regardless of where and when that content is consumed.
- Find the right partner. Work with a partner that understands the ominplatform environment from both the buyer and seller perspectives. Leverage a modular, cloud-capable approach to add sales solutions that allow you to expand sales opportunities without the need to support dozens of discreet buy-side entities and platforms.
- Focus on your revenue relationships. Your advertisers are your key relationships—and shouldn’t be managed by an ad tech supplier. Your partner should focus exclusively on assisting you in maximizing your revenue and optimizing your operations. If your solution provider wants to talk to you about managing your inventory or offers you a service, time to find another solution provider.
- Stay open! There is still a lot of shake-out to occur. You’ll need an ad sales solution that is flexible and open. Who knows how the buy-side of the equation will come together, which entities you’ll need to interface with and which types of technologies they’ll be using? Only adopt solutions that offer open APIs and are adaptable to whatever standards or protocols the industry settles upon.
- Manage transparency wisely. Only you know which advertisers deserve to have deeper insight into your business—via reports, managed pricing, and deeper audience/viewer transparency. Invest in programmatic technology that gives you complete control of the kimono drawstrings. Sell-side fears of being forced into a so-called race to the bottom are rational and should be treated seriously by your solutions partner.
The degree that programmatic advertising will infiltrate the TV industry is one of the more hotly debated issues of 2014. (Here’s a thoughtful point/counterpoint Adweek blog on the topic.) What’s undeniable is that the number of TV ads placed through programmatic means will eventually expand beyond today’s paltry percentages. Networks, broadcasters and service providers in the coming year should focus on adopting strategies and solutions that enable you to participate in the programmatic marketplace – but on your terms.