The Rise of Programmatic TV Explained

Programmatic TV emerged as a solution for marketers and advertisers to better determine the number of viewers watching a particular television program.

According to eMarketer, advertisers will spend a whopping $62.96 billion on programmatic video ads in 2022, up from $52.17 billion in 2021. 

Last year, people in the US spent an estimated 80 minutes per day watching content through subscription over-the-top (OTT) devices. 

Another eMarketer report forecasts that US ad spending on linear and CTV platforms will exceed $93 billion by 2025. However, linear TV ads won’t drive growth. Connected TV spending will significantly. And of those connected TV ads—seven out of 10 will be fulfilled programmatically

Based on the current trends, programmatic TV has a bright future in advertising. 

What Is Programmatic TV?

Programmatic TV advertising refers to the automated buying and selling of TV ads. In other words, it is a data-driven way to deliver video content to a targeted TV audience. 

This high-tech approach automatically collects data to find a precise target audience for a broadcast. It also helps advertisers to better allocate targeted ads in a TV broadcast.

Programmatic TV gets confused with smart TV devices and advertising tactics, so let’s highlight some key terms and their differences.

Programmatic TV vs. Linear TV

Linear TV is the traditional way to view content on a television set. For instance, you have to tune in at a set time to watch a football game, and you need to go to a specific channel or network to do so. 

Thanks to streaming, not many people tune into television shows as they used to. This is one reason why advertisers are shifting away from linear television ads. 

The difference between programmatic TV and traditional linear TV lies in how advertisers buy media and place ads. With linear TV, ads are placed based on generalized factors such as schedules, viewership numbers, airtimes, and ratings.

Programmatic TV advertising is a method of placing multiple ads on different platforms—linear, connected, and more—at once, using automation.

In addition, it uses real-time viewership data from devices and an algorithm to determine which ads to show to specific audiences. For instance, with programmatic TV, you aren’t basing your audience targeting solely on people that are watching The Bachelorette. Instead, you can target specific audiences like women in their 20s and 30s that have an income over $60,000. 

Advanced TV vs. Programmatic TV 

The term advanced TV refers to the many forms of streaming TV content. In this format of content delivery, broadcasters deliver messages and connect with target audiences in more meaningful ways than traditional TVs. Popular forms of advanced TV include TV Everywhere, addressable TV, connected TV, and video-on-demand.

Addressable TV vs. Programmatic TV

Addressable TV refers to the advertisements inventory available through set-top boxes (cable) providers such as Comcast and Time Warner. Aside from cable, addressable TV can deliver content via satellite, Internet Protocol TV (IPTV), linear TV, or video-on-demand inventory. 

The most notable feature of addressable TV advertising is that it enables advertisers to segment TV audiences. You can serve different ads or groups of ads called ad pods within a program or TV screen. Addressable TV ad buyers target audiences based on their demographic, geographic, behavioral, and even self-selected individual households. 

How Does Programmatic TV Advertising Work?

In simple terms, programmatic TV advertising is the automated buying and selling of ads on TV based on specific audience data. Programmatic advertising solves the problem with traditional TV advertising, which has made advertising unavailable for advertisers with low budgets and those with targeted ad messages.

With traditional TV advertising, the ad buyer and the publisher have to negotiate and collaborate to determine an ad spot that suits them both. These negotiations are typically lengthy and inefficient and often result in the advertiser over-paying for airtime.

Programmatic TV advertising automates the process of selling TV ads. Using a data-driven AI algorithm, advertisers can quickly view which potential ad spots are available to book. They can identify the ideal target audiences, set their budget, and input all the variables they need to bid for advertising spots in real-time. The algorithm will factor in these variables to find the ideal time to display ads to the targeted consumers.

The process of advertising on programmatic TV is simplified and automated. Because fewer humans are involved in the bidding and time spot allocation, there is a reduced risk of overpaying. It also allows advertisers to optimize their ads by adding or removing the ad’s content at any time during the marketing campaign.

How To Buy Programmatic TV Ads

There are three main ways to buy programmatic TV ads:

  1. Real-Time Bidding (RTB) – Also called real-time open auction, this is the most popular way to buy programmatic TV ads. The prices of advertising spots in this online auction vary depending on supply and demand. As a result, it is the most cost-effective way to advertise for both advertisers and publishers.
  2. Programmatic Direct – The publisher sells ad spots at a fixed price per number of impressions.
  3. Private Marketplace (PMP) – This is another real-time auction for advertising spots, but slightly different. The auction is available to a limited number of advertisers. Advertisers must be invited or apply to participate in a private marketplace.

Alternatively, you can work with a programmatic ad agency to create, place, and manage your digital ad campaigns for you.

Benefits of Programmatic TV

Here are the top five benefits of programmatic TV advertising:

Data-driven ad targeting

Unlike traditional TV advertising, programmatic advertising is data-driven. Advertisers have greater control over audience targeting. This flexibility, and automated nature of ad delivery, helps advertisers reach the right viewers.

Automated TV Ad Buys

Programmatic ads use AI solutions that enable advertisers to create a single media plan and use it to target an audience over multiple channels. For instance, an advertiser’s campaign may include various media channels like video and native media advertising. Consequently, this increases the reach of the campaigns and visibility.

Advertising Price Transparency

Programmatic TV advertising enables advertisers to set the budget while bidding on ads. The pricing model is more transparent than traditional television ad buying. It provides an overview of places where ads will run and estimated costs even before the advertiser makes a successful bid.

Real-Time Optimization of Ad Content

Finally, unlike traditional TV advertising, programmatic TV makes it easier for advertisers to optimize their ads and receive real-time performance reports. Publishers, too, can follow the automated bidding process and optimize ads for better placement based on strategy and ad viewability.

Programmatic TV has uncovered new possibilities and advertising potential in ways that traditional TV would never have. The future of television advertising lies in programmatic. 

To discover more about programmatic TV and how you can add it to your marketing, schedule a chat.