The U.S. TV landscape continues to change, and the rise of automated, programmatic trading continues unabated in the digital video advertising world (according to eMarketer, programmatic digital video ad spend in the U.S. will rise to nearly $4 billion in 2016). It now promises to disrupt and drive conversion within the traditional TV industry as well, offering broadcasters and operators the opportunity to drive greater efficiencies and revenue than ever before. Programmatic TV can begin to work for your video business today, and continue to expand to deliver new revenues in the future.

What is programmatic TV? Put simply, it’s a more automated, data-driven and audience-based way of transacting TV advertising across screens. It includes linear broadcast, cable, telco and satellite; addressable TV (through connected TVs, other IP-enabled devices, and STBs [set-top boxes] at the household level); VOD (video-ondemand); and digital TV. According to industry reports, programmatic TV is expected to account for 4% of TV ad budgets ($2.5 billion) in the U.S. this year, rising to 17% ($10 billion) by 2019. More significant programmatic integration between digital and linear TV will continue to evolve and grow over the next few years as traditional TV ad transaction systems begin to catch up to programmatic ones by standardizing planning, buying, selling, trafficking and billing system workflow, and the reporting and sharing of data— within the context of the existing TV ad infrastructure.

Today, operators and broadcasters like ESPN are experimenting with strategies to generate incremental revenue through programmatic TV. Ad transactions can be completed via the web, and offers can be received across web and addressable, STB-based inventory. DSPs (demand-side platforms) have begun integrating with providers and SSPs (supplyside platforms) to provide the ability to execute planning and buying for web and STB-based inventory, although it is not yet fully automated; for the most part, manual processes are still in place as the technology evolves. Because of this, at present programmatic TV is primarily being driven by digital and local cable ad insertion; over time, it will move more solidly into local broadcast, and national cable and broadcast spots on linear TV.

“It’s “inevitable” that TV advertising goes programmatic.” – Brian Stempeck, SVP of strategic Business Development for The Trade Desk, as quoted in Multichannel News.

Marketer demand for programmatic TV is increasing, and the pressure is on to leverage programmatic TV and recapture revenue – as ad dollars have been moving away from TV to digital platforms. A recent study reported in eMarketer indicated that buying programmatic TV inventory alongside programmatic digital video inventory was very important to over 33% of U.S. ad buyers and sellers. 2015 so far has been a year of development, early deployment and experimentation in the space, but look for the 2016 presidential campaign to be a prime catalyst that accelerates programmatic TV in the U.S., as the candidates hone in on data to reach and engage voters in local markets.

While the full potential of programmatic TV is still coming into view, here are three ways broadcasters and operators can begin to make the most of it today:

SELL ONE, SPECIFIC AUDIENCE ACROSS SCREENS

In 2014, eMarketer noted that U.S. brands and agencies spent more than 30% of their ad budgets on digital video and TV cross-platform buys. Programmatic TV further enables a holistic, omnichannel sales strategy, with an audience-first approach – wherever and whenever they are watching video – versus a program-ratings or screen-first approach. This strategy is particularly helpful for smaller niche cable broadcasters that may not make it on to ratings-based ad plans, to increase sales. The tools exist today for broadcasters and operators to offer more precise audience targeting and indexing, such as via STB data on DMA, demographics, and psychographics for interestbased segmentation. Providers can simplify video campaign measurement and provide clients with deeper audience data and metrics to deliver more targeted, relevant ads than traditional TV program buying can enable today.

MAINTAIN GREATER CONTROL OVER TRADING PARTNERS AND RATES

Along with programmatic direct deals – which most closely resemble the existing TV ad deal structures, private programmatic marketplaces for premium inventory transactions are becoming a choice programmatic TV model for top broadcasters and operators exploring the space. These marketplaces offer a strong confluence of traditional direct sales controls, auctions with select trading partners, and automated efficiencies across platforms. The use of both models will likely rise further over time because they best complement the traditional TV upfront ad commitment and scatter market structures in place, while offering greater inventory supply and rate controls than open exchanges – as well as safer trading environments. NBCUx, and Cox Media in the U.S., and the Aunia marketplace in Spain are recent examples of ways providers have been looking across their own ad ecosystems or creating combined ecosystems with partners in order to drive scale and revenue, and help advertising clients meet their goals.

IMPROVE TRANSACTIONAL EFFICIENCES AND INCREASE REVENUES

Broadcasters and operators can integrate existing programmatic TV tools and platforms to:

• reduce costs and complexity by automating at scale

• forecast more accurately for better decision-making

• react more quickly to market changes

• optimize pricing and inventory management

• increase sellouts and yield

Programmatic TV data available today can also help determine the most valuable ad partners and premium ad offerings, best performing ad categories and formats, and most relevant ad content to serve audiences across their platforms and grow revenues. Also, partnering with SSP platforms linked with ad serving will enable providers to facilitate transactions and set pricing minimums across screens.

CONCLUSION

Programmatic TV is in its infancy, but broadcasters and operators who begin to embrace its capabilities for greater targeting, insight and efficiencies now will be best positioned for the full traditional and digital TV convergence to come.