The programmatic TV spigot is opening. Get ready for the flood.

By Derek Mattsson, President, placemedia

derek mattsson headshotThe programmatic TV marketplace will double in 2016 – accounting for at least 1% of the total $70 billion TV ad marketplace – with a similarly healthy growth curve in 2017 and beyond. It may sound like $700 million is small potatoes – but that’s up from zero in the last five years. And if past is prologue, this will double again in a very short time. It’s a bit like Moore’s Law.

If you aren’t already familiar with programmatic TV, let me explain: It’s the process of targeting highly indexed audiences via an automated transactional platform, enabling buyers, efficiently, to find impressions they can’t access with a traditional TV buy.  The technology streamlines and rationalizes the process of buying and selling television inventory.

All the process needs is the key input – or ingredient: the demand.   That ingredient now is clearly surfacing; the prospects for an adoption rate for programmatic TV that meets or even exceeds the current industry projections look brighter than they did just a few months ago.

Demand-side platforms (DSPs) are coming to the auction table with real dollars. The average order size has increased 50-to-75% in recent months versus the comparable period last year – and in just the second quarter, one DSP reaped four times its entire 2015 revenue.

In fact, the automation subset of “programmatic” is rapidly developing on the “front end” – the demand side – of the linear TV ecosystem.

It’s clearly evident that advertisers are feeling more confident in the promise of programmatic TV than ever before. For example, one agency moved a pharmaceutical client from the spot TV market and committed 100% of the client’s advertising budget to programmatic TV. This latest trend follows the pattern of the still-expanding marketplace for programmatic digital video, whose evolution also was driven by a steepening growth curve on the demand side.

As has been the case with programmatic digital video, advertisers and agencies are placing programmatic TV orders through DSPs, and the DSPs in turn are accessing aggregated inventory from supply side platforms (SSPs). This bodes well for the programmatic TV industry. Already, almost half of marketers – 46.2% – responding to a recent survey say they serve digital video advertising programmatically for clients. That’s a rapid adoption rate for a technology that’s still just a few years old. And the rate might be higher still were there not lingering perception impediments such as cost, targeting inefficiencies and transparency concerns.

DSPs bring a lot to the party: They facilitate media mix/cross platform modeling and can apply the same data sets across platforms to “audience target” for clients. Importantly, they allow clients to get as close to an attribution model for linear TV as is possible today.  And they are well positioned for the expansion of addressable technology which will allow for a full attribution model.

For their part, SSPs can enable DSPs to access a linear TV supply, thus allowing for transactions bolstered by the combination of data plus automation.  When adding data and automation to the equation of inventory demand and linear TV inventory supply, you have true programmatic television.

The objective remains constant: to help marketers manage their budgets more efficiently, while helping television companies manage and maximize their inventories more profitably. The industry is moving, albeit gradually – but inexorably – in this direction.

It’s undeniable – broad marketplace demand for programmatic impressions has unhinged the programmatic TV spigot. And soon – very soon, in fact – the television ad sector will begin to resemble the marketing nirvana programmatic once promised: the best of both TV and digital-media worlds. So it’s time to get ready for the flood.

Derek Mattsson is President of placemedia, which now handles more than 30 billion monthly impressions across 210 DMAs.

 

The Cynsiders column is a platform for industry leaders to reach out to colleagues, followers, and the public at large. In their own words and in targeted Q&As, columnists address breaking news, issues of the day, and the larger changes going on in the ever-evolving world of television, video and digital. Cynsiders columns live on Cynopsis’ main page and are promoted across all daily newsletters. We welcome readers’ comments, queries, and column ideas at Lynn@Cynopsis.com.

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