At the Next TV Summit one panel discussed the future of broadcasting with a look at programmatic video. The panel included Lauren McKinnon (Samba TV), Robert Dalven (Videology), Sean Downey (Google), Jay Prasad (TubeMogul), Aaron Radin (NBCUniversal) and Frank Sinton (Beachfront Media) discussing how programmatic online video and mobile are reshaping the advertising landscape.
Programmatic video or TV was a much discussed topic at the TV conferences of the last two weeks. While programmatic video describes the automatic purchase of video content for advertising, the main topic of the discussion was not on how it is done but on how it may affect the business models.
The panel defined programmatic TV as the data driven automation for advertisers to find their target market and place the advertisements. The panel argued that programmatic TV is very different from digital advertising as established on PC and digital signage networks. They see that today, technology does not allow the insertion of programmatic ads into linear TV. To make this clearer, it would mean that you would not necessarily see the same ad as your neighbor watching the same channel from the same provider. It would require cable boxes to be individually addressable, which is technically possible but it would also require different ads of the same duration, otherwise you have to deal with time shifts in the regular programming.
One aspect of programmatic video is the access of more statistical data for the advertiser, which would allow advertisers to address a more defined target market. From the perspective of the advertisers this adds value to the content. If you combine this with premium content it equals the highest value an advertiser can find.
The panel cautioned that for less attractive content, this may mean that content may either not sell or would sell at a discount, causing the producer to fall short in its income. From a producer’s aspect it may be preferable to sell advertisement spots bundled up-front for a fixed amount, instead of gambling on a higher return through programmatic video mechanisms. From an outsider’s perspective it seems that programmatic video will start in mobile and video on demand platforms (already started) and work its way into linear TV. Within linear TV this change may only happen if demand falls below inventory.
On the other hand the panellists pointed out that one of the biggest advantages of programmatic video is the availability of viewer data to the advertisers and ad agencies. If such data would be made available to advertisers, one of the drivers behind programmatic video may go away for the linear TV world.
They see that there are more changes and technological developments needed to make programmatic video successful in the linear TV space. It will require new inventory management, a database, agreed measurement tools and the willingness of all players to work within the same system. Which is very little to wish for, it seems.
The panellists see this field in its infancy for now, commanding less than 5% of TV advertising this year. However, they see 2015 as the potential starting year for programmatic video in the US.
According to BI Intelligence, the US market of programmatic video is indeed basically non existent today, while other platforms like desktop display is already using this approach. Nevertheless, they see great potential for this approach in coming years. On a total TV advertising basis, this is still less than 10%. Even by 2018 it will only approach 20% of all TV advertising.
These changes will affect the TV industry in coming years in more ways than we can think of right now. – Norbert Hildebrand