Two fundamental elements define programmatic TV buying: high-scale automation of transactions that follow buyer-seller specifications; and the capacity for data-driven, audience-based buying using third-party data. The marketplace is indicating that targeting is the core driver for programmatic TV activity, much like addressable TV, where data enrichment enables more precise targeting, as explored in a new eMarketer report, “Television Update Q2 2016: Advanced TV’s Progress”
Programmatic TV ad spending in the US is likely to pick up steam over the next couple of years. eMarketer estimates programmatic TV ad outlays will total $710 million in 2016 and skyrocket to $4.43 billion by 2018, accounting for 6.0% of the total US TV ad market.
Targeting is the primary impetus for programmatic TV buying, more important than cost efficiency or automation, according to a March 2016 survey of US marketers conducted by WideOrbit, a firm that provides sell-side inventory management systems for the TV and radio industries. When asked to select the most important benefit of programmatic TV, nearly 58% of respondents chose targeting.
A July 2015 poll of US senior-level agency and marketing professionals conducted by Advertiser Perceptions for Interactive Advertising Bureau (IAB) supports WideOrbit’s findings. More than half (51%) of respondents cited better targeting capabilities as the No. 1 advanced TV benefit.
This focus on targeting is not surprising, given the fixation on making TV advertising more effective through smarter commercial placement.
Targeting’s role as a driver in the programmatic TV space is further underscored by advertisers’ and media agencies’ use of alternative data sources in programmatic buys. Combining third-party consumer information with TV viewing data creates a more powerful means to segment and buy audiences beyond standard age and gender descriptions. This movement toward enriching TV data is also reflected in the WideOrbit study.
For example, 46.1% of respondents indicated they currently use Rentrak/comScore Inc. for programmatic TV transactions, while 26.1% have incorporated first-party data into the process. In the future, a large portion of respondents hope to use additional third-party data providers for their programmatic TV efforts. For instance, at least 40% of the marketers said they would like to use BlueKai, Experian, Acxiom and Datalogix.
Programmatic TV’s automation will make it simpler for TV buyers to sort through the more complex targets created when TV data becomes enriched with consumer behavior. The hope is that the enhanced targeting within a more efficient programmatic TV environment will improve advertising effectiveness.