Insight

A Programmatic Promise

Bryan Noguchi, Senior Vice President, Media Director |
Published at http://www.mediapost.com June 30, 2015

Word has it that ad tech companies have taken over this week at Cannes and that is no surprise because “Programmatic TV Buying” is a resurgent hot topic that has been looking for a new spotlight for months.

Companies have launched new TV automation platforms and programmatic TV marketplaces and even held the industry’s first “Programmatic Upfront.”  It’s still early and less than one percent of TV inventory was sold programmatically in 2014, but experts predict that number will grow to 3-5 percent in 2015. Analysts and industry insiders agree that Programmatic TV buying is still in its infancy, but I would posit that delivery on the promise of programmatic TV buying has been in place for years.  It’s just that its handful of practitioners and adherents didn’t realize that there was a fancy “two-dot-oh” name for it.

So what is the promise of programmatic TV buying? 

Agencies, vendors and clients all benefit differently from the promise of programmatic.  Agencies benefit from the overall gains in efficiency on the process front, as well as from the implied savings of real-time bidding practices and technologies overlaid on a relatively open inventory exchange. Vendors receive the maximum profit and price for inventory enabled by a supply side platform model combined with a reduced reliance on large, costly traditional sales infrastructures. But how about clients? All of the outcomes mentioned should be relatively invisible and only reveal themselves in bottom-line measures by asking the following questions:

  • Was the media priced fairly and aggressively?
  • Did the purchased media meet clients objectives relative to ad spend?

The promise of programmatic TV buying to a client is actually fairly simple: low cost, high return. How you get there within the context of programmatic is only limited by your imagination.

  • Complex behavioral-learning algorithms?
  • Data-driven intelligence?
  • Access to the largest and most effective inventory?
  • Years of pricing history, aggressive negotiating experience and creativity?

From a client outcome perspective, whether all of the above are driven by machines or people is irrelevant.  There’s a corner of our industry that’s been delivering on the programmatic promise for as long as there’s been a scatter market, and here’s how.

Characteristics of Agencies that Deliver on the Programmatic Promise

Traditional advertising agencies may not be able to help brands interested in Programmatic TV Buying. These agencies do not have the structure, focus, capabilities or financial motivation to change. For brands that are ready to jump into the Programmatic TV world and take advantage of the benefits, there are a few key characteristics to look for in a new agency partner.

  1. Take Advantage of TV’s Finite Inventory

The finite nature of the inventory works to provide an advantage.  Where programmatic platforms have been an absolute necessity for the management of infinite digital display inventory, there really isn’t the same need with TV inventory.  Of the three primary stakeholders, vendors have the most to gain and lose here, which is why when digital/automated programmatic finally does roll out, it’ll be a Supply-Side Platform model vs. Demand-Side Platform, and the initial inventory avails will be mostly secondary in nature.  In the meantime, it’s up to agencies to ensure that they’re tapped into as much of the currently available inventory as possible, and this requires a structural solution.

Teams structured to cover the media market are better suited to delivering results.  Brands from the more traditional advertising world are accustomed to using a dedicated team to service their media needs (usually a media supervisor, a planner or two and a couple of assistants.)  This team is built to understand your business and the media that delivers your audience.  Rather than arranging teams around a business and audience, agencies delivering on the programmatic promise focus on a specific market, where individuals are set up as virtual trade desks assigned to specific networks. Their job is to match inventory (space and cost) to targets and objectives from across an entire client portfolio.  Rather than asking, say, 10 teams of 4 people to keep tabs on 400 vendors, these firms might have four teams of 10 minding 10 vendors each. The goal is to create an intimacy with each property, its nuances and fluctuations, but most importantly to assess and connect the dots on its ability to perform.

  1. Optimize on the Fly

It’s important that the agency have access to a large pipeline of primary and secondary inventory and have the ability to enhance the value of the pipe with data overlays such as historic costs by program and day part; and direct response performance down to the program level sortable by audience, product or service type, spot length, creative execution, etc.  Most of the time, this will be proprietary data, often reflecting years of DRTV history – it’s the kind of information that a new ad technology alone might be able to manage, but not be able to replicate or create.  For a handful of existing agencies, results are probably delivered through a dashboard and refreshed as quickly as spots can be detected as having run. Optimizations can then be made within hours rather than days or weeks.  The very notion of optimization using analytics is what aligns the DRTV agency model so closely with digital media and is perhaps why they are the best able to deliver on the promise of programmatic.

  1. Pursue Response and Action

As an industry, and as consumer use of 800 numbers decreased, DRTV agencies were (and are) among the first to bring the power of robust algorithms to bear on the measurement of success.  As things evolve, audience delivery may start to become a subordinate parameter as agencies become laser focused on the pursuit of response and action. Where the gross rating point is the primary currency of brand and traditional advertisers, these are really just some among many contributing factors driving towards what should be the ultimate goal of sales and desired customer actions.  Planning to performance is better than planning to delivery. By optimizing to success, brands can marginalize market inefficiencies (process costs) and democratize the worth of all inventory by assigning hard value parameters to each ad placement based on past performance.

Embracing Programmatic TV

While the market is getting excited about the possibilities of programmatic TV buying, it will take time for traditional agencies and advertisers to embrace the model and integrate the platforms and technology required to capitalize on the promise. It’s important for brands to know that some agencies are already fulfilling the promise:

  • Drive positive ROI on media spends – low costs and high returns
  • Have access to and can evaluate the majority of TV inventory currently available in the US
  • Make decisions based on extensive, granular performance data that is both historic and predictive
  • Optimize spend based on tangible client parameters

I know that my own agency feels like we are the embodiment of the promise of programmatic TV media planning and buying.  We can’t wait for technology to catch up with us.  But it has a lot to learn.