"What do you mean by programmatic TV?"
That's usually the first question I get when mentioning the new medium. And that's the thing: programmatic TV isn't even about the programmatic part...yet.
At this stage of the game, the appeal of programmatic TV is targeting. With a vast amount of consumer data made available by major networks, we're able to pinpoint the ideal viewers for brands. The targeting depth is next‐level, like something out of 1984.
Pretend there are two families living next door - the Johnsons who rent a duplex and the Millers who own a home - and I have a client who sells HVAC systems. Since the Johnsons rent, we can pretty much guarantee they won't be purchasing an HVAC any time soon.
Here's where programmatic comes in. I would serve ads exclusively to TV viewers who own a home - AKA the Millers - to avoid ad waste. After all, why spend money on the Johnsons when they don't even own a home? More likely than not, my spot will become an opportune time for a bathroom break.
Utilizing in‐depth attributes like age, income level, political affiliation, hobbies, and tons more, I customize who sees my client's ad. And the ad is served directly to an individualized viewer- a term known as Household Addressable - so the ads are saved on your viewer's cable box until he flips on the television to watch his show.
Right now, programmatic has very little to do with automating advertisements as the name implies. In the future, we can anticipate a full automated bidding service similar to Google AdWords. This means marketers could exercise more control over who sees their ads than ever before, and place TV ads in just a few clicks.
But here is what's holding it back:
THE ADVERTISING INDUSTRY IS XENOPHOBIC
It's a fact: the bulk of advertisers fear the unknown. If dollars are going to being thrown anywhere, it's at the tried and true methods that are proven to earn ROI. But not everyone knows that agencies like mine already have stats to brag about, like 215% increased buying efficiency at 46% of the cost of a traditional Spot Market campaign for one notable client.
And that's fine, let followers be followers. I'd rather push the boundaries of what I know, adapting to new mediums and trying to stay ahead of the curve. Digital advertising was a great big unknown just a few years ago, but the businesses that don't utilize PPC and email marketing now might as well be back in the Stone Age.
If advertisers knew how effective this medium is - and could be - programmatic would be booming. But most advertisers opt for the wait and see approach instead of the march and lead approach when it comes to trying something new.
IT'S NOT A ONE‐SHOT SOLUTION
A common misconception is that Programmatic TV is out to replace traditional TV advertising. But that would be like trying to drive a car with one wheel. Programmatic is a complementary advertising medium to your other channels. It's just one component to your larger strategy, and it's one of the more efficient routes you can go.
Programmatic TV is about hyper‐targeting a specific set of viewers that fit within a designated consumer profile. Businesses need traditional TV advertising to broadcast blanket messaging that promotes brand awareness. Programmatic only hits the viewers most likely to make a direct purchase.
COMPANIES DON'T KNOW HOW AND WHERE TO BUY
Most CMO's don't even know how buying Programmatic space works. And that's fair - ask any two people in the industry and you'll probably get two different answers. In this up and coming medium, you have to know someone to get in.
Businesses have to watch out for ad dollars being diluted by rep firms and third‐ party vendors. If you don't know which agencies are directly connected with the suppliers, your ad dollars will pass through too many hands. Most agencies place programmatic ad orders through these rep firms, who sometimes pass the orders through one or more additional third‐party vendors.
In the end, every company gets a cut and your Programmatic TV spend is a fraction of its original sum. Agencies like mine have previously forged connections with the big suppliers, giving us more wiggle room to negotiate better spot placements while reducing ad waste.
Winning in Programmatic is like winning in any other business. Want to maximize your revenue? Cut out the middleman.
VENDOR REPORTING ISN'T AS RELIABLE AS IT CAN BE
No industry starts off picture‐perfect. Since Programmatic relies on highly specific consumer data, businesses expect to see highly accurate data reporting. My clients want to know the exact numbers and figures of their ROI. But for now, the major vendors' reporting capabilities are lacking.
Will it always be this way? Doubtful. As vendors place more spots and the demand for Programmatic grows, improved reporting will follow. The data fueling Programmatic TV is immense, and refined reporting will be necessitated. Business owners want hard numbers and clearer insights, and the vendors will have to deliver.
SMALL SCALE, BIG RESULTS
The scale of Programmatic is inherently smaller than traditional. Since Programmatic TV'S true value is its broadcasting specificity, it means you reach less people. But when you broadcast your message to a select number of people who meet your business' unique customer profile, you're going to yield greater results. That's Programmatic.