Programmatic TV is a small, yet growing component of overall TV ad spend. eMarketer predicted that next year, U.S. advertisers will spend around $4.4 billion on programmatic TV ads. Here’s what you should know about programmatic TV.

The basics
Traditionally, TV advertisers have relied on Nielsen age and gender data to decide their desirable audience. But with programmatic TV, media buyers can use automation technology and data analytics beyond Nielsen age and gender metrics to increase the precision of their audience reach.

For instance, if a retailer wants to find 25- to 54-year-old female shoe shoppers with a household income of $100,000 a year, it will be able to identify inventory that matches this demographic across a TV network’s portfolio. After the campaign, performance data may suggest this demographic typically watches the TV network from 9 p.m. to 10 p.m., and then the retailer can adjust its linear TV buying there accordingly.

Major media companies like Turner and NBCUniversal are now making their network broadcast and cable inventory available for programmatic TV.

The difference
Different from programmatic display and video, programmatic TV doesn’t involve real-time bidding on TV inventory, and it is not an end-to-end solution.

“Programmatic TV uses digital and TV data sets for audience index planning. After that planning process, media buyers may still need to pick up the phone to talk to salespeople at TV networks, buying in a traditional way,” said Garrett Dale, svp of optimization and innovation for agency Kepler Group.

And programmatic TV is different from addressable TV. With programmatic TV, households in Florida, California and New York may still see the same ad, for instance, while with addressable TV, advertisers can do one-on-one targeting.

“Programmatic TV allows clients to purchase the units where their target audiences are highly concentrated,” said Aaron Radin, svp of partnerships and portfolio products for NBCUniversal.

“With addressable TV, you can do one-to-one delivery of a particular ad to a particular household.”

The challenge
From a seller’s perspective, Dan Aversano, svp of ad innovation and programmatic solutions for Turner, thinks the challenge has always been a Lumascape problem: There are too many vendors, and many of them play both the demand-side platform and the supply-side platform.

“They all come out of the gate and try to automate the workflow [of TV buying],” said Aversano. “We don’t have a workflow problem in TV. Digital has that problem. In TV, we need to solve the data piece.”

For media buyers, measurement is a big challenge. Sarah Scherer, media product manager for agency Goodway Group, said measurement for programmatic TV depends on the level of access an advertiser has to TV manufacturer data and set-top box data. TV manufacturer data includes the IP address, which makes it possible to report on location, networks, shows and the time spent watching. The IP address makes cross-device attribution possible. Set-top box data allows advertisers to target at the household level, making it possible to report on what networks a brand’s commercials ran and impression delivery by target audience.

“It’s important to note, though, that these data sets are very complicated and very fragmented,” Scherer said. “As programmatic TV matures, the measurement will become more streamlined.”

And when it comes to TV, there’s no perfect solution that allows advertisers to track all viewership and tie that ad exposure to both offline and online sales, added Dale. “Technology is improving, but holes in data partnerships and imperfect match rates make true 1-to-1 attribution at scale difficult at present,” he said.

The fragmentation
Standardization is also a big hurdle, as many different cable companies and TV manufacturers own the data needed for measurement. For instance, a media buyer may need different planning processes and data sets to run programmatic TV campaigns on NBCUniversal and Fox, respectively.

“In order to get measurement in a really good place, all of the TV manufacturer data and set-top box data would need to be centralized and easily accessible to all platforms that are making programmatic TV a product offering,” said Scherer. “The programmatic TV ecosystem would also need to decide on benchmarks and standardization of metrics.”

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