IS PROGRAMMATIC RIGHT FOR TV?

Programmatic, or automated buying and selling, has been developed primarily for digital media, where there are innumerable "publishers" looking to sell ads on their websites, many of whom have no national sales representation and may be overlooked by a human buyer. The operating principle, as we understand it, is that each publisher inputs ad rates, with discount structures if possible, as well as relevant "audience" data. The buyer's "trading desk" then scans all of the avails to come up with the best way to reach the specified target group at the most cost efficient rate.It's more complicated than that, of course, and various algorithms are employed to take account of the advertiser's timing needs, demographic or other target weights, content types, etc. But, in the main, programmatic is driven by cost efficiency, at least that's our take.The question is whether this approach can be utilized for buying TV? Will it yield the promised undreamed of targeting efficiencies and do away with TV's outmoded age/sex buying criteria? According to programmatic enthusiasts, the answer to this question is a resounding "Yes."The networks are playing this particular game with the deck stacked against them. To begin with, their average minute currency is based on those sets that were tuned in to a program while commercials were aired. Any time the commercials were zapped—mainly by DVR users—such audiences were deleted. In contrast, digital video ad sellers have been charging CPMs comparable to network prime and much higher than the average for all TV dayparts and network types, even though only 50% of the ads served will appear on the user's screen for only 1-2 seconds, and a much smaller percentage are viewable in their entirety. Hence a 30-second primetime network CPM for adults aged 18-49, which averaged $41 in 2014, gives all of its measured viewers a full opportunity to see the ad. However, an untargeted digital video ad, which may be a 15-second or a 30-second message, comes in at a CPM norm of $52 to start with and this rises to something like $130 or more when those who can't see the ad from start to finish are deleted. For some reason, the networks have been very slow to point out such distinctions to time buyers and advertisers. Why? To support their case, the programmatic side claims that for the first time, the adoption of "big data" TV set top box ratings combined with ascribed sales or product use data from third party sources will enable buyers to buy audiences, not GRPs, though they admit that Nielsen ratings will probably remain the currency for most buys. In effect, big data findings on a show-by-show basis merged with product purchase information will create market value indices that can be melded with the Nielsen ratings to tell the system how valuable the audience is. Toss in costs and the trading desk can sift through all of the avails posted by the sellers and come up with an optimally efficient buy, often including small audience networks or channels and/or programs the buyer may not have been aware of. How does this idea strike you?


8 Comments


Wayne Foss
C&R Ltd
Nov 10, 2015

All you are seeing is some agencies testing the waters regarding possible applications for TV spot buying. At the network level, there is practically zero activity via programmatic. When you hear that network X or cable channel Y is involved with programmatic, they are most likely using it for their digital sales.
Jack Sprat
LCTV
Nov 10, 2015

I am reading all the time how major agencies are switching to programmatic for TV buys and network after network is joining in. How can you people not recognize what is happening?
Alice Greene
Oct 07, 2015

Jack, you are dreaming. Programmatic buying is mainly for non-premium content where both sellers and buyers don't want to be bothered with the work of personal negotiations and post buy analysis. It's not for premium TV.
Wayne Foss
C&R Ltd
Jul 17, 2015

If you follow the reviews of programmatic buying for digital it seems that publishers often hold back their premium content and sell only their less valuable positions via such automated systems. As a result the buys made via programmatic are increasingly CPM focused and, in many cases, have a high degree of ad viewability issues. If you project the "non-premium" scenario to TV then you have to figure that more than 70% of the GRPS---news, sports, prime time, specials, etc. ----are not amenable to this kind of selling.
TQT
Jul 15, 2015

thoroughly agreed with Jack! It's the way of the future
Jack Sprat
Jul 07, 2015

You are both wrong. Programmatic is the way of the future. Not only will it improve advertiser targeting and CPMs but it will create jobs and enrich the TV networks, stations and cable channels. Everyone is afraid of computerized systems, but they are not to be feared. Computers can do things that humans could never do. So wake up, get on the programmatic bandwagon----before it is too late.
Wayne Foss
Jun 24, 2015

I think that programmatic buying for TV is not going to happen as the sellers will never agree to do it in the same manner as their digital counterparts.
Joe Dirk
Jun 24, 2015

The TV sellers will never agree to use fixed rate cards and accept the lowest CPMs in programmatic buys.

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