The TV advertising industry has undergone gradual evolution thanks to the digital breakthroughs that touched every business market. Usually, for identifying the best placement for the ads marketers pay attention to TV media kits: in this way, they can determine the number of viewers who watch a particular TV program per information provided by the TV channels. But programmatic TV breaks this standard as its high-tech method focuses more on leveraging automatically-collected data to look for a precise target audience. It helps advertisers allocate ads in an optimal spot.
So, what is programmatic TV exactly? How does it work?
Programmatic TV (PTV) is a digital solution involving data-driven algorithms to enhance the accuracy and efficiency of marketing planning in the television segment.
The general concept of how advertising programmatic TV works lie in the built-in automatic processing for ad purchases. To start PTV ad buying, one should consider the following steps:
- Identify ad attribution according to where the created ad content needs to be delivered;
- Participate in real-time bidding on specific platforms where the ad spot can be bought or sold for a demanded price;
- Use a particular ad tech system to estimate the target user and display an ad associated with marketing objectives;
- Evaluate the efficiency of an ad campaign by using appropriate metrics;
- Optimize and adjust an ad campaign in real-time reporting.
This approach uncovers new and more precise decisions for marketers and advertisers to achieve success in the TV industry without going the extra mile. Accordingly, it helps them reach better outcomes in:
- Scaling audience reach;
- Expanding brand recognition;
- Raising the value of their first-party data;
- Developing an accurate marketing strategy;
- Generating significant incomes.
This marketing concept is gradually replacing the cable TV ad model because it is much valued for improving targeting, reaching a target audience, and increasing the conversation rate it provides to enhance an ad campaign. It also offers an opportunity for people who are willing to watch their favorite TV programs at a suitable time and in a comfortable place via a device they want.
What Is Programmatic Advertising?
As mentioned earlier, programmatic TV advertising involves a distinctive approach to TV service scaling as well as to TV ad purchasing and delivering. It provides a quick search for a target audience and successful delivery of a personalized ad.
For marketers and advertisers, PTV allows them to carry out an automated in-depth analysis of end consumers and personalize ad content to build a successful advertising marketing model. Distributors and publishers, in turn, can deliver selected TV program formats in accordance with viewer preferences and their individual parameters like age and gender, which are the main audience measurements in the majority of TV purchases.
Programmatic TV also presents an opportunity to reach a broader audience through platforms supporting automated advertising. Among those platforms are the following:
- Digital Linear TV – a type of ad content displayed across set-top boxes (Comcast, Time Warner);
- Video on Demand (VOD) – TV content viewed on streaming services (Netflix, Amazon Prime, Disney+);
- Connected TV (CTV) – video content streamed online via an internet-connected device (Roku, Amazon Fire TV, Apple TV, and more).
The definition “addressable” or “targetable” is often used for programmatic TV advertising which leads to precise audience targeting and quick automated task processing in marketing planning.
How Does Programmatic TV Work?
When it comes to explaining how advertising programmatic works, it is essential to notice two ways of purchasing and displaying ads: traditional and programmatic.
Traditional advertising involves an interaction between an ad buyer and publisher in person. Collaboration between them often includes costly trading and time-consuming negotiations. It can cause an overpayment for an advertiser and make it difficult to round up the needed data. So, there are bound to be a number of errors due to human factors that will arise.
Programmatic advertising, on the other hand, is the automated buying and selling of online ads. With the help of artificial intelligence, an advertiser can get a quick overview of potential ad spaces which are available for booking. Thus, identifying the perfect target audience, setting a budget, and inputting all the needed information is done for you, and the program will start real-time bidding to find a matching consumer to display ads. The process is simplified and the risk of possible error is reduced as is the risk connected with overpaying. Moreover, an advertiser can optimize and add some modifications to their ad campaign at any time.
Programmatic Buying Models
There are three main types of programmatic ad buying:
Real-Time Bidding (RTB)
RTB is the most common way of buying programmatic TV ads. It is also called a real-time open auction. RTB is freely available to anyone looking to buy programmatic ads. The price is established according to the supply and demand for an ad spot which makes it cost-effective.
Private Marketplace (PMP)
It is also an auction but with a limited number of advertisers. Therefore, to participate in this ad buying model, one should either be invited or apply to receive an invitation.
Unlike other models, programmatic direct doesn’t involve an open auction. Instead, a publisher sells an ad spot at a fixed cost per thousand impressions (CPM).
Why the Future Is in Programmatic TV?
According to an eMarketer report, programmatic connected TV ad spending is growing fast and will increase by 39.2% in 2022, following an 82.4% increase in 2021. Such widespread use of programmatic TV allows us to single out its main benefits:
- Household addressing. This marketing method empowers advertisers to deliver their ad brand to a scaled audience. At the moment, only some targeting TV inventories are addressed to individual households. But according to Mindshare’s prediction, 30% of audiovisual ads will be addressable by 2022.
- Audience reach. Using the capabilities of programmatic TV, advertisers can reach cord-cutters and people who never used linear TV. As Nielsen notes, the number of cord-cutters has increased by 48% in the past ten years and this number continues to run.
- Automated purchasing. AI solutions enable advertisers to develop one media plan and link it with a target audience and a variety of programmatic channels used like native, video, and display. As a result, it increases the performance of ad campaigns and the visibility between channels.
- Cross-channel measurement. When it comes to automated buying, marketers can use the same KPIs across multiple channels. This could lead to the efficiency of an ad campaign being improved as far as the indicators reflect its success multiplied over various channels.
- Data-driven targeting. This programmatic feature reveals an opportunity to specify the target audience’s characteristics to provide automated reach and relevant ad delivery to viewers.
- Price transparency. Addressable TV provides marketers and agencies with an accurate accounting of an ad budget spent, places where ads ran, and possible fees charged on the run.
- Flexible planning. This computational approach enables advertisers to shorten the time taken on marketing planning. Thanks to AI algorithms, time spent on buying ad spots is significantly reduced. For example, an advertiser needs to place 10 TV ads in local markets; with programmatic buying, they can reduce the workload from days to a few hours of work.
- Optimization in “real-time.” Programmatic TV enables marketers to optimize an ad campaign with all its metrics and reports in real-time. Due to special real-time signals (RTSs), publishers can follow the process of automated bidding and choose a better spot for placing ads. Such RTSs signal the rate of ad viewability whether it suits your strategy. So, it enables marketers to change direction and find another spot with the targeted options they need in real-time.
Thus, programmatic TV creates an ecosystem where business counterparts can accomplish their marketing objectives through programmatic data processing and bidding so their ads are delivered automatically and precisely. Also, they can design and optimize personalized ad models in real-time.
The programmatic TV approach uncovers new possibilities to evolve the TV industry in the digital environment. Not all TV inventories are benefiting from it today, but it is expected to grow tremendously. As eMarketer reports, in 2022, more than 90% of digital display ad dollars will be transacted programmatically in the US. Moreover, the dollar volume of the programmatic display will be doubled compared to 2019 — $115 billion and $61 billion, respectively, which suggests an era of new perspectives in this marketing field will soon be upon us.