This story is part of a Digiday series on Programmatic TV, which examines how TV advertising is trying to act a little more like its digital cousin by introducing automation.
While TV networks are warming up to data-based advertising, it will be a long time before programmatic advertising truly comes to TV — if it comes at all.
Major cable network groups including Fox, NBCUniversal, Turner and Viacom now offer data-based advertising products, which are designed to help marketers use first- and third-party data to make better audience targeting decisions on linear advertising inventory. NBCUniversal’s NBCUx product, for instance, makes inventory available on a few demand-side platforms for buyers to build media plans against. Through its Vantage product, Viacom helps advertisers predict which of its networks and shows would be best for an intended audience.
What these products don’t do, however, is allow advertisers to bid on inventory in real time — like how programmatic advertising works for digital video and display ads. And it’s highly unlikely that TV networks will put up inventory in real-time auctions anytime soon.
TV networks have no reason to go fully programmatic
Of all the differences between TV and digital media, the most important one might be that there is a finite amount of commercial space on TV — roughly 15 to 20 minutes for every hour on the air — and digital is limitless.
“For the national TV inventory, at this point in time, there isn’t a need to have that inventory up for sale in a real-time bidding environment because the marketplace consistently sells out,” said Samantha Rose, vp and director of video investment for Horizon Media. “They’ve taken the steps to better targeting, which is absolutely the first step toward programmatic TV, but there needs to be reason for networks to put their inventory up for bidding.”
There might be an opportunity within the local TV advertising market through addressable TV, which allows marketers to target commercials to individual households through cable and satellite TV distributors. Trouble is, this market is much smaller: There are 42 million addressable households in the U.S. compared to 118.4 million total TV households, and cable and satellite providers have access to only two minutes of commercial space per hour. And most important of all: Addressable is not the same thing as programmatic.
“They often go hand in hand — programmatic can make addressable easier to pull off — but they’re still two separate things,” said Alan Wolk, TV analyst and consultant at Toad Stool Consultants.
Even if TV networks bought in, the technology isn’t there
Digital ad tech is built for internet-protocol-based systems, allowing the inclusion of tags, cookies and other elements that help advertisers track how an ad was delivered to a user. It’s a system that can support hundreds of decisions about which ad to deliver in milliseconds.
This does not exist in linear TV.
“TV is a closed, walled garden with a lot of different proprietary technologies,” said Dave Morgan, CEO of Simulmedia. “The tech has not been built for TV. And the systems that do exist have been built over decades; so they’re very hardened, and they were never designed for outside third-party systems to attach to.”
Even if a real-time bidding system existed for linear TV, it would be a management nightmare as networks try to make sure that there isn’t any “black inventory” airing to specific audiences, said Rose.
And that doesn’t even factor in the gargantuan task of teaching a decades-old industry to change its ways.
“The part that no one wants to admit is that TV networks, agencies and advertisers are filled with people who have been sitting around and doing the same thing for 100 years,” said Michael Bologna, president of GroupM’s Modi Media. “To turn around and teach thousands of people how to do something differently is not easy and not without risk.”
Programmatic TV’s future is tied to over-the-top streaming
If programmatic TV is going to move from dream to reality, how TV content is distributed needs to change. Lucky for those betting on programmatic TV, that’s starting to happen. More and more people are watching TV shows on digital platforms like Hulu, Amazon and even the networks’ own websites and apps. Pay-TV is also moving in the direction of digital as services like Dish’s Sling TV and AT&T’s DirecTV Now bring channel bundles to digital platforms.
In a scenario where most of linear TV is piped through the internet, programmatic TV might have a chance.
“In the TV world, the supply side says my hammer is bigger than your hammer, and I have no interest in playing your games,” said Morgan. “You probably won’t see dramatic change until there is a significant amount of Nielsen-defined TV viewing that’s happening in over-the-top environments.”
But even if that happens, some believe it’s not likely to bring automation to the bulk of TV — because, again, there’s still a huge demand for national TV programming.
“For national TV, it’s already traded very efficiently, so automation doesn’t save anyone any time or money, to be honest,” said Bologna. “Truth be told, to do it right, every single TV network would have to plug into the same platform, agree to the same data and usage, and they’re just not going to do that.”
Ross Benes contributed to the story
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