Future of TV Briefing: How TV and streaming advertising’s programmatic deal model is being updated

This week’s Future of TV Briefing looks at how the streaming ad market’s programmatic guaranteed vs. private marketplace debate is reaching a compromise.

• Programmatic preferred
Apple and Paramount look to sell a streaming bundle, Disney’s not selling ABC and more

Programmatic preferred

This much holds true: TV and streaming ad buyers would prefer their programmatic purchases to be conducted via private marketplaces, whereas sellers would pick programmatic guaranteed deals. Binary as those inclinations are, they not only continue to coexist in the marketplace but appear to be blending a bit into a kind of compromise between the PMP model’s bidding control for the buyer and the PG model’s revenue assurance for the buyer.

Case in point: With programmatic figuring more largely into this year’s upfront deals, PMP deals became more of a part of the upfront alongside the more upfront-friendly PG deals. However, some of those PMP deals bore hallmarks of a PG deal, like guaranteed spending amounts.

“We have PMPs that are more of a fixed commitment or at least have some guardrails of spend plus-minus X dollars and you’ll get something within reason,” said one agency executive.

These firmer PMP deals seem to reflect, in part, sellers securing more programmatic control over their inventory while also seeing a surplus of inventory available to sell programmatically, as covered in last week’s Future of TV Briefing.

“What we’re seeing is really leaning more into biddable and saying, ‘Okay, we can bring some of the good qualities of biddable — meaning, you can decision on which impressions [and] when you’re going to pulse this budget up and down — but the budget is still firm because it’s committed through the upfront and we keep the spirit of the upfront intact,” said Leo O’Connor, svp of advertising at Paramount.

These firmer PMP deals also appear to be part of a trend toward PMPs — with Disney recently opening up Disney+ to PMP deals after previously limiting the streamer’s inventory to direct and PG deals — and that trend seems to be a reflection of the TV and streaming ad market becoming a buyer’s market in 2023, as the volatility of advertisers’ budgets intensified, the pool of available inventory expanded and flexibility once again became a focal point.

“This year we’ve seen a lot faster transition from PG into PMP. And that’s where things are starting to get a little bit tricky. For PMP, there’s obviously a lot of benefits for an advertiser to shift their spend to a PMP environment, especially when there is a lot of supply in the market because it gives them a lot more flexibility,” said Tyler DeNicola, vp of programmatic revenue and partnerships at A+E Networks.

And yes, that trend seems unlikely to abate anytime soon. “Our goal is to do as much PMP as possible because it gives us more control. It’s more efficient. That’s where we’re trying to move in the future,” said a second agency executive.

However, there’s only so much room to move to PMPs at the moment. “We have challenges with what everybody can fulfill from a PMP perspective,” said the first agency executive. 

Additionally, because PMPs put buying control in advertisers’ and agencies’ hands, there’s the risk of their actual spending falling short of their commitments. As a result, sellers have implemented what DeNicola described “as flexibility with guardrails” to strike a balance between buyers’ desired programmatic pliability and sellers’ coveted revenue security.

“Sure, you can shift from programmatic guaranteed to PMP [and] you’re going to give us a guaranteed budget, that’s great. But our expectation or requirement is that we’re going to look at pacing and if pacing is not delivering to 100% in full, we then have the right to shift over to programmatic guaranteed or direct IO,” he said.

In a way, this trend toward toward PMPs tied to firmer commitments embodies a broader shift in the TV and streaming ad market away from the traditional upfront model, though not too far away.

Over the past few years, the endeavor model has popped up more and more in the upfront market. Instead of being locked into fixed spending commitments, this model sets spending thresholds that unlock perks like seller-reserved inventory as advertisers and agencies meet those marks. In fact, the first agency executive referred to the firmer PMP model as “the endeavor PMP.”

“In order to get that endeavor PMP, we need to commit a decent chunk in linear and a decent chunk in either [buying streaming ads directly through the insertion order model] or PG, as far as the complexion of the entire deal is made up,” said the first agency executive. As a result, while the endeavor PMP model is on the rise, “the endeavor PMP has been still a smaller piece of the pie.”

To further underscore the non-zero-sum nature of the TV and streaming programmatic market, PG deals aren’t on their way out. In fact, “we see a steady interest in PG, despite what you may hear from some folks in the marketplace that it’s all moving to biddable. We’re seeing a huge amount of interest in PG,” said O’Connor. 

And here’s the kicker: Those PG deals aren’t necessarily exclusively PG deals. Said O’Connor, “You can layer PMP on top of it as a way to pulse [spending] up and down on those moments you want that.”

What we’ve heard

“It does feel more volatile [than a year ago] because the volatility is the same, but we’re holding [ad dollars] for longer. We’re seeing budget releases being closer to airtime for things not planned or bought upfront. … That’s a different level of volatility.”

— Agency executive on advertisers’ budget volatility

Numbers to know

30 million: Number of paid subscribers that NBCUniversal’s Peacock now has.

$10: Monthly price for a bundled subscription to Netflix’s and Warner Bros. Discovery’s Max’s ad-supported tiers through Verizon.

30 million: Number of total new U.S. subscriptions that streamers are expected to add between 2023 and 2029.

-5.1%: The predicted year-over-year percentage drop in U.S. TV ad spending next year, excluding political ad dollars.

32%: Percentage share of TV viewers that initiate access through smart TV apps as opposed to a set-top box.

$7.7 billion: How much money TV network and streaming service owners will reportedly pay Nascar, in aggregate, to air its races from 2025 through 2031.

10%: Percentage of Entertainment One employees that the Hasbro-owned studio will lay off ahead of its sale to Lionsgate.

What we’ve covered

TikTok tops brands’ holiday wishlist:

• More than a third of brands and retailers are creating original content for the short-form video platform.
• A similar share are advertising on TikTok.

Read more about TikTok here.

Innovid study examines impact of measurement and optimization gaps across CTV campaigns:

• The study showed 63% of advertisers measure performance on one platform but optimize on another.
• Two-thirds of agency executives similarly said they use different platforms for measurement and optimization.

Read more about CTV measurement here.

What we’re reading

Apple and Paramount plot streaming bundle:

Apple and Paramount are in talks to sell a bundle to their respective streaming services, the latest example of streaming’s embrace of the bundle, according to The Wall Street Journal.

Disney decides against selling ABC (for now):

Disney CEO Bob Iger has reversed course on considering a sale of ABC, according to Reuters.

YouTube battles ad blockers:

YouTube’s crackdown on ad blockers has triggered the latter group — and its users — to respond by trying to circumnavigate the video platform’s efforts, according to Engadget.

Cord-cutters set to outnumber pay-TV subscribers:

The rubicon may soon be reached when the number of TV and streaming viewers who have canceled traditional pay-TV subscriptions — or never signed up for one — will exceed the number of those who are currently subscribed, though the latter count doesn’t include streaming pay-TV subscribers, according to The Streamable.

Kick’s growth and growing pains:

The rival livestreaming platform to Amazon’s Twitch has amassed 21 million accounts, but its ascent has raised scrutiny over its lax content moderation practices, according to The New York Times.