Amid the movement of marketing budgets to online advertising, TV has remained immune. Figures from Thinkbox show TV advertising revenue reached a record-breaking £4 billion last year. Yet enthusiasm for digital is growing; the IAB cites online ad spend at over £7 billion and advertisers are starting to see the potential of combining TV with data-driven automation.
UK broadcasters are also making more of their inventory available to trade in real-time. Channel 4 recently launched an automated ad buying service for its video-on-demand (VOD) platform and Sky’s AdSmart was created to match ads to specific audiences. It seems TV ads cannot escape their digital destiny, but how will this new format take shape and what will it mean for advertisers?
Despite its continued success, traditional TV ad buying has mostly functioned on the basis of ratings, where the most valuable slots are determined by collating audience data from TV shows. For advertisers, this approach has always placed emphasis on market reach but not necessarily with the target audience.
Programmatic TV actually inverts this system. It switches the focus to the audience, rather than the TV show, and gathers data about individual viewer interests, preferences, and location. This detailed insight would enable advertisers to tailor their offering for maximum appeal, instantly matching ads to their desired audience.
In the UK, programmatic has developed from an innovative new technology into the dominant method of buying and selling ads. IAB research found that almost half of ad trading was automated in 2014. In the face of such overwhelming implementation, programmatic’s mark on the advertising landscape is impossible to ignore. But its meteoric rise is not the most compelling reason for advertisers and broadcasters to embrace the emerging format – the real power of programmatic lies in its ability to amplify the impact of TV.
The next frontier
With greater real-time efficiency and targeting capabilities, programmatic offers a more cost-effective and personalised method for TV ads to be bought and sold. But crucially, the sophisticated levels of tailoring also create a deeper connection with the audience that will enhance the influence of TV ads. Having conquered advertising on smartphone and tablet, TV is the next frontier for programmatic and Magna Global predicts that it will draw $10 billion in global spend by 2019.
Programmatic TV brings together the benefits of TV — 37% higher consumer trust in ads, according to Thinkbox — and the tailoring of data-driven automation. With TV’s unrivalled reach, and the ability to target viewers beyond the basic metrics of age and gender, programmatic TV will dramatically enhance ad effectiveness. And these advantages will be open to a more diverse range of buyers than ever before.
Where the current cost of prime ad slots makes TV inaccessible to smaller ad budgets, focussing on smaller, better audiences will help budgets go further. Advertisers will also be able to track every penny using advanced metrics. With brand awareness at the top of the agenda, programmatic TV offers invaluable performance insight. Brands can go further than tracking purchases and measure the impact of ads on metrics such as social media and website traffic, tracing awareness across the web.
As with any emerging format, implementation of programmatic TV will not be without its challenges. While the technology required to automate TV ad trading exists, the corresponding industry infrastructure and systems are not yet ready. A complicated network of closed platforms makes the landscape fragmented and difficult to navigate, making it hard to establish one approach for buyers to follow.
This stumbling block can only be removed if broadcasters open their systems and release access to inventory across a wider marketplace. But there is one further hindrance to the development of programmatic TV — regulation. TV ads in the UK are subject to strict guidelines and broadcasters are held liable for the messaging in the ads they show. For real-time programmatic TV ad trading to become a reality, faster and more efficient approval methods are essential. Questions about what makes an ad appropriate for broadcasting will need to be addressed and unanimously agreed before programmatic TV can fulfil its potential.
As consumer activities continue to tip the balance towards online advertising, TV can no longer ignore the changing preferences of its audience. Though the path to programmatic TV will not be free from challenges, the eventual transition will be worthwhile. With programmatic TV, advertisers can use advanced targeting to create a new age of engaging advertising that will make muted ad breaks a thing of the past.