Defining programmatic TV - the new advertising frontier
Before any form of programmatic TV can progress in the UK, we must understand exactly how it is defined - and what might prevent its uptake amongst advertisers, writes DataXu's Chris Le May
It has been more than half a century since the first television advert was broadcast in the UK, for SR Toothpaste. Since then, the medium has become part of Britain's DNA. Fast-forward to recent years and we can see how the way brands approach the consumer has been completely revolutionised. Over the past decade, video consumption across devices has risen and so has the ad industry surrounding it.
In fact, it is predicted that the amount of time people will spend consuming online video each day will increase by 20% this year, according to a new report by ZenithOptimedia.
Insights by Ofcom confirm that people spent more time online, but, when asked which device they would miss the most, 37% of adults said they would miss their TV more than any other device.
Digital media, especially video, has already been hugely impacted by programmatic technology and many expect that the way TV advertising is bought and sold will fundamentally change over the next two to three years.
Programmatic TV is currently one of the biggest buzzwords in the industry. While still in its infancy in the UK, there has been a lot of movement across the pond. Companies like DISH, which DataXu is working with, has been making an impact after launching a programmatic platform that enables advertisers to buy individual TV impressions via real-time bidding.
Notably, a standard with best practices for the buying of linear TV inventory and cross-device measurement, is being developed. Founding partners are companies such as Hulu, TiVo Research, CBS, Fox, Omnicom Media Group, SpotX, GABBCON and DataXu.
Programmatic TV is already starting to fragment into its own nuances, but broadly speaking can be categorised into three groups:
1) Programmatic Linear TV: linear TV refers to traditional television watching, where consumers tune into content at the appointed hour and channel of the broadcaster. The content is delivered one to many, with all consumers tuning to the same channel, seeing the same TV spot. Programmatic Linear TV advertising is purchased through an automated platform and delivered via set-top boxes. Targeting and reporting is based on traditional TV metrics (daypart, network, GRP).
2) Addressable TV: delivered via set-top boxes to individually selected households through satellite and cable providers such as BT, Sky and Virgin. The content is delivered one to many, but, a portion of consumers tuning into the same channel will see a different TV spot than their next door neighbours. Typically using first or third party data for targeting. Reporting is often based on a mix of traditional metrics, and digital video metrics plus actual online and offline outcomes (site activity, branding, sales).
3) Connected TV: delivered through internet-connected TVs (smart TVs) or over-the-top (OTT) devices such as X-Box, Playstation or Apple TV. Connected TV content is often consumed through apps such as Channel 3's All4 or BBC's iPlayer. Content is delivered one to one, and ad insertion is also specific to each individual household, so that typically every household sees different TV spots. Reporting is based on digital video metrics (impression delivery, frequency, completion rate).
For any form of programmatic TV to start progressing in the UK, it's imperative to understand exactly how it is defined on this side of the pond, and to understand the obstacles that may prevent its uptake amongst advertisers.
Addressable TV has huge potential to scale, as the most common type of television service in the UK is through set-top boxes. The amount of data available through this technology is growing and can enable marketers to reach consumers at a household level.
Connected TV offers more granular impression-level decisioning based on a wider selection of data sets including online behavioural data, demographics, etc. Connected TV is growing, and its potential is significant with more devices coming online daily (game consoles, Smart TVs) and more services becoming available through these devices.
Both Addressable and Connected TV are poised for rapid growth, but the expectation within the UK industry is that connected TV and addressable TV will merge, creating a hybrid where consumers move seamlessly between both universes. Addressable TV broadcasters are making significant inroads into the ability to use richer data acquired from consumer behaviour for advertising targeting.
In order to buy and sell TV programmatically, all pieces of the puzzle need to come together. TV is only one media channel and shouldn't be viewed in isolation - today's marketers are targeting audiences rather than channels. The use of cross-device technology is growing rapidly and is the ultimate solution to help marketers identify individuals and build a complete picture of consumer behaviour across devices (including TV).
Another challenge to overcome is around data collection. Not all UK broadcasters own the infrastructure to enable automated, impression-level targeting via set-top boxes and are therefore limited when collecting data and implementing addressable TV solutions.
Channel 4, for example, does have access to connected data through their apps, so they can target app users with advertising But, this doesn't allow them to push this advertising into people's homes through their television sets. On the other hand, Sky and Virgin have the infrastructure to deliver targeted advertising into the TV set.
Lastly, the industry is facing a lack of common technical standards. Media owners have each been creating their own, making it difficult for all the systems to communicate with one another. To progress, the two industries - ad tech and broadcasting - need to define common ground.
As mentioned above, the announced standards are a step in the right direction, but uptake across borders, to make this a global standard, will be crucial for its success.
To fully understand and leverage this revolution in TV advertising, it's important for marketers to realise that the devil is in the detail. Everyone wants to say they do programmatic TV, but not all programmatic TV is equal.
As we outlined, there are different types of programmatic TV. The terminology currently used is programmatic linear TV, addressable TV and connected TV.
Any type of programmatic TV gives advertisers the ability to show adverts tailored to the viewers' taste. For example, a Mercedes-Benz advert could be served in one person's front room while their next door neighbours, watching the same channel at the same time, might be served a Sainsbury's advert.
Programmatic TV gives us the power to serve more relevant ads to individual set-top boxes or via connected devices and apps, based on a rich data sets gathered and actioned in real time.
There has also been other interesting developments, e.g. automated bulk buying of TV audiences or connecting TV and digital audiences, and while these offer certain advantages to advertisers, publishers and broadcasters, it's important that they aren't labelled as programmatic TV.
Programmatic TV is in its infancy and the key to growth will be education as much as overcoming technical and data challenges.
To move forward together, we should all be clear on what terminology we are using - after all, marketers have enough tech buzz phrases to deal with without adding further confusion. By working together and building meaningful discussions on a lack of infrastructure and technical common standards, we can all benefit as programmatic TV progresses beyond 2016.
Chris Le May is president and managing director for Europe and emerging markets, DataXu