Why Programmatic TV Ads Haven’t Taken Off Yet—and What’s in Store for the Future
The name alone—programmatic TV—sounds exciting. Some estimates put programmatic TV as a $17 billion advertising opportunity by 2019, but not everyone is as excited or as optimistic about the technology’s development or implementation. While programmatic ads represent half of all online ad transactions, they’re still only four percent of all TV ad transactions.
So if programmatic TV is the future of TV advertising, why hasn’t it developed more, and what needs to happen next for this technology to continue growing?
What Is Programmatic TV, Exactly?
Programmatic TV advertising is a new way to look at television advertising, using advanced analytics and programmatic display options to select ads for optimal audience-based placement.
Think of it this way: Traditional TV ads cost a fixed amount and had a certain desirability based almost exclusively on the ratings of a given TV show. For example, the Super Bowl always attracts some of the biggest ads and biggest budgets because of its immense draw. Programmatic TV, on the other hand, would price, select, and serve ads based on knowledge of the type of audience watching—so it might select a specific TV show or time of day to display an ad instead of raw audience volume data.
How Programmatic TV Differs From Real-Time Bidding (RTB)
On the surface, you might see programmatic TV as a television-based variant of RTB programmatic ads that are already in active circulation around the web. The comparison is fair, and for the most part, accurate, but there are a few differences that make programmatic TV different. For starters, supply on TV is limited because there are only so many hours in the day. Suppliers want to secure stable, solid, long-term commitments, and don’t want bidding wars and clever tactics to interfere with their bottom lines.
Generally, vendors and suppliers see programmatic TV as less mutually beneficial as web-based RTB; suppliers argue that such technology will commoditize their inventory, and vendors are concerned that the infancy of the technology will make bidding and ROI unpredictable.
Why Programmatic TV Hasn’t Exploded
In theory, programmatic TV should be a way for suppliers to sell more ads, and vendors to earn more visibility, engagement, and value for every dollar they spend. Yet, the Wall Street Journal describes programmatic TV as still “stuck in first gear.” Despite a flurry of announcements and developments in this niche even just a year ago, forward momentum has slowed significantly.
So what’s the holdup?
Possibilities for the Future
So does that mean programmatic TV isn’t going to take off? Not necessarily. NBC and other major networks already have plans to implement programmatic solutions for their ads in the near future (though they’re taking their time). It’s just going to take a few years for suppliers to get used to the idea of programmatic selling, and bridge the gap between online programmatic advertising technology and available TV ads. One major breakthrough in demand-side platforms, supply-side platforms, or even in consumer demand could be the catalyst necessary to help programmatic TV take the next step forward.
If you’re in the advertising market and you’re looking for more options, be sure to contact Verta Media to learn how we can help!
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