4 Hot Topics in Programmatic and Why They Matter to Broadcasters

Programmatic has proven to be a huge opportunity for digital advertising. A simplified buying process with unlimited targeting opportunities? That’s a marketer’s dream, and it’s why broadcasters have seen more and more advertising dollars diverted from TV to digital.

But now, half of American adults are watching web-based television content through a growing number of streaming platforms, so broadcasters are seeing more detailed audience data coming in than ever before. There’s a huge opportunity to monetize this data—and take dollars back from digital. Programmatic gives broadcasters the chance to do just that.

After our recent media trends webinar (with A+E’s Mike Peretz and iHeartMedia’s Amit Aggarwal) comments regarding programmatic came pouring in.

Here are 4 hot topics that stirred up a lot of conversation.

1. The (dual) meaning of programmatic

Not everyone means the same thing when they say “programmatic.”

So what is it?

For some, programmatic means the automation of ad buys.

For many, TV ads are still bought and sold manually. Buyers plan separate campaigns specific to TV, insertion orders are passed back and forth between agencies and sellers, and performance reports come at the end of a campaign when it’s too late to make any changes.

But with programmatic advertising, buyers can log into a single advertising platform to plan, execute, and measure both digital and television ads themselves—no middle man needed.

To others, programmatic is synonymous with data-driven audience targeting.

Programmatic is the way advertisers can finally go beyond standard age and gender demographic targeting and toward interests and affinities. The opportunity to deliver ads that are more personalized and relevant is a way to truly optimize engagement.

Which is it?

In reality, programmatic is both of these things. It’s an automated, data-driven way to buy and deliver ads against TV content, with the end goal of driving efficiencies and a better return on media spend.

2. The value of programmatic

The difference in how programmatic is defined also means broadcasters and advertisers frequently disagree about how to value it.

The broadcaster’s POV is that programmatic’s promise—data-driven targeting and real-time optimization—will help buyers get more value from TV advertising. With the ability to analyze audience data to find the shows their targets are likely to watch, programmatic can make a considerable difference in the performance of a campaign.

They believe that as advertisers benefit from higher ROI, the prices they’re willing to pay should increase as well.

Advertisers, on the other hand, see programmatic as easier and cheaper for broadcasters to offer because it’s all digital and self-serve with no middle man. So they think it should be discounted.

This disconnect between the sell-side and buy-side over the value of programmatic means it’s tricky when it comes time to turn this new technology into realized revenue.

3. Making the move…or not

Should you go the programmatic route?

Some broadcasters are uncertain about making their premium inventory available to programmatic buyers.

They fear that automatic, self-serve advertising will cannibalize their current customer base and existing revenue because their customers will migrate to the newer, cheaper option.

If broadcasters don’t have a plan and technology in place to prevent this cannibalization, then moving into programmatic may not be a good bet in the near term.

But if programmatic will help get net new customers and revenue while adding more value for existing advertisers, and if broadcasters have the technology to prevent dollars from migrating, then it could be a very smart play.

4. Best practices for pricing

How do you price programmatic?

In our view, programmatic makes dynamic pricing an imperative. To participate, broadcasters require algorithms constantly monitoring and updating rates based on changes in inventory and demand. Why? Because it’s an automated transaction and attribution creates the potential for thousands more price points—data that is simply unmanageable otherwise.

The same supply and demand forces exist and exert pressure, so if the demand is high and the supply is low, you should price high.

Looking Forward

Even though programmatic advertising currently accounts for only 2.5% of all U.S. television ad spend, the next few years will be an exciting time as we watch the technology evolve. If programmatic continues to grow, viewers will see ads that are more relevant to their interests, advertisers will benefit from higher returns, and broadcasters will have the chance to further maximize their inventory.

For more discussion on programmatic and other trends in media, watch our recent webinar.