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AJ Hill Head of UK Commercial Operations Ve Interactive

Why has programmatic TV advertising not taken off yet? Is it something we can expect to see any time soon?

Programmatic TV was expected to have boomed in the last few years, yet it has failed to do so. A major reason for this is the lack of ad inventory - it’s the one area of programmatic buying where RTB isn’t used. Currently, inventory largely consists of local cable companies rather than national or prime time ad slots, mostly because the latter fears that inventory will become commoditised and so drop in price.

Its clear that programmatic TV is still in the early stages of development and that’s why it’s take-up has been slower than expected. As the industry matures and investment increases, publishers and advertisers will become more confident with trading premium ad slots programmatically.

The industry as a whole struggles with attribution – given the huge sums of money individual ads can cost (during the 2016 Superbowl, a 30-second ad reportedly sold for as much as $5 million) transparency will need to be top of the agenda before programmatic TV takes off.

Despite these setbacks, there are a few companies that have tested programmatic TV. Sky introduced its programmatic tool, Sky Ad Smart in January 2014. This allows Sky to target households based on demographic data it collects. By using data from 500,000 homes and 50 million viewing occasions, channel switching during Sky Ad Smart ads was 33% lower than standard ads. That’s some great engagement.

Joining Sky towards the end of 2014, Tube Mogul launched TubeMogul PTV, a TV programmatic software solution can target according to usual demographic info, but getting as granular as number of children and pet ownership.

So what is its potential?

The average person in the US spends a whopping 5.11 hours watching TV every day. However, the buying and selling of TV advertising distinctly lacks the efficiency and data-driven precision of digital – which leaves a perfect niche for programmatic to fill.

Programmatic TV has some considerable benefits;

  • Inventory purchasing becomes more efficient
  • Brands can more effectively target their chosen audiences
  • User responses can be more effectively monitored, for example – does the viewer change channel & how long did it take them to change the channel. Responses can be gauged instantaneously so improvements can also be made instantaneously in real-time optimisation, rather than having to wait days, weeks or even months after the TV ad campaign finishes.

The future of programmatic TV

Despite all these benefits, programmatic TV may have a long way to go. According to International Data Corporation, programmatic TV will reach almost $1 billion in the US by the end of this year alone. This pales into insignificance, though, when you know that this would only make up 1/70th of the total TV advertising market in the US last year.

However, I still believe we’re pretty close to the industry kicking off, when you consider the benefits that it could offer the industry. It’s just a matter of time.

The original version of this article appeared previously on the Ve Interactive blog, written by Kate Rogerson – click here to read.