Programmatic TV Buying

Over the last few years, the online and digital advertising industry has evolved at breakneck speed, with new innovations popping up almost faster than advertisers and agencies can keep up. Advancements such as real-time bidding, hyper-local targeting, cross-platform ad coordination, and much more – all based on the ability to track user data (both demographic and usage) and deliver ads accordingly – are now commonplace.

The TV advertising market, meanwhile, has remained stagnant for the last 50 years. But in the last few weeks, signs are emerging that those dark ages may be nearing an end. Cox Media’s recent decision to partner with a programmatic ad platform to sell its linear TV ad inventory marks a huge and much-needed step toward changing the TV ad landscape. Also notable is Comcast’s move to buy streaming video ad firm FreeWheel, and Adap.tv’s launch of its much-anticipated programmatic TV buying platform.

Frankly, it’s about time. The TV content delivery landscape has evolved to the point where digital advertising tactics could be applied if there was just the will do to so. Set-top boxes are Internet-connected and are capable of capturing the same type of data that Web-based networks can – think TV guide browsing data, viewing history, DVR settings, on-demand orders, etc. All of this can and is being tracked and stored, but not used for any advertising purposes.

That will soon change, as the Cox deal shows. Content companies are using the data to create better user interfaces that drive customers toward more programming (see Comcast’s new X1 platform, for instance). If this data can be used to create programming recommendations, certainly it can also be used to serve more targeted advertising as well.

Imagine for instance four different households watching the same show – a family with two children, a single twenty-something male, a housewife, and an elderly couple – but each receiving different ads based on their personal demographic and viewing history. It happens every day online and on mobile or tablet devices, but the $70 billion TV advertising industry remains in the dark ages.

These recent moves mentioned above are just the start of the coming sea-change. Other trends that will accelerate this evolution are the consolidation of the multi-system operators (Time Warner/Comcast anyone?) and the increasing competition they face from new media content companies like Netflix, Amazon, Apple, and Hulu. Once Google TV, the much-awaited Apple TV, and the next-generation gaming consoles start taking on a greater hold in the living room (and disrupting further both the ad and content delivery ecosystem), you can bet the behemoth incumbents will get motivated to make some changes.

Of course, a few things need to happen before we get there. First, all this data needs to be aggregated and compartmentalized. It’s true set-top boxes can collect data, but there’s no consolidation of that data yet. Second, we need to determine just how to serve targeted ads via TV. The potential for distributing different ads to different people is there, but the process for doing so has yet to be built. And third, we need a process for noting user behavior across devices and formats. There’s no single or standard login across TV, mobile, online, and tablet across multiple services. Some, like Apple TV, are trying to own that entire ecosystem through one user account, but viewers tend to use multiple services and formats. Bundled service offering is one possible solution, as is the use of third-party social networking accounts, or even profiling types of user behavior instead of the users themselves.

Technology aside, there also needs to be a change in behavior. Advertising agencies need to break down their silos between old-media TV advertising and new-media advertising. They need to operate as one, interoperable, and coordinated unit. And there needs to be some cooperation between the different service providers as well. A while back, the Canoe effort brought six of the biggest cable operators together to create a unified standard for targeting and interactive advertising on TV. That effort failed in part because the competing services didn’t work together.

Ultimately, the goal should be to create one, unified, cross-platform media buy allowing ad campaigns to target users regardless of device used or format of ad delivered. It’s a bold vision and one that will take some work to achieve. But everyone involved – brands, agencies, tech platforms, and of course the viewers themselves – all stand to gain if we can make it happen.

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