The Rocky Reality but Bright Future for Programmatic TV – Ad Strategies Advertisers Should Implement Now

There is movement in the programmatic TV market. Advertisers have become accustomed to better targeting and better user experience, which programmatic advertising offers in the online world. The same advantages are now awaiting brands from the TV world. Many TV channels are moving and working on new data-based advertising concepts since there is no choice – programmatic TV must become a success story if TV advertising wants to stay relevant.


Traditional TV is a safe bet. A predefined programme is broadcasted at a specific time via an established channel. That sounds like reliability and predictability and is the reason why TV has not lost its luster as one of the most important advertising channels for many brands over the decades. However, times are changing: Netflix, YouTube & Co. are laying the foundations to raise the alleged predictability of TV as an advertising medium to a new level. WHO looks at WHAT and WHEN is becoming transparent, both online and in real time. Accordingly, programmatic TV could soon ensure that TV advertising functions more and more like digital advertising and in the end it is nothing else than…digital advertising controlled in real time.


Advertising on TV – Almost Unchanged for 76 Years


Let’s take a look at the US market, where the first TV commercial was broadcast in 1941 during a baseball match. The watch manufacturer Bulova promoted its brand while the Brooklyn Dodgers players had a rest during a timeout. The way in which Bulova positioned their commercial on TV has not changed fundamentally since then. The TV quality has ever increased, the selection of programmes is larger, the commercials are more creative and the advertising formats have become a little more diverse. But the process from the development of the advertising message to the positioning of the finished spot during a TV programme is basically unchanged and remains static.


Compared to digital, programmatically-controlled online display advertising, conventional TV advertising appears not only anachronistic, but can also no longer compete with the efficiency and precision of programmatic advertising. In conventional TV advertising, brands buy their advertising spaces at TV channels via advertising agencies. Targeting is done by geographic location and demographic data such as gender and age of viewers. This has very little in common with real-time targeting as it is common practice in digital advertising today. Conventional TV advertising is all about mass – quality is a secondary factor.


Online Advertising Overtakes TV Advertising for the First Time in 2017


Advertisers have become more and more familiar with programmatic advertising in the last five years or so and enjoy the many advantages such as significantly lower wastage and the context-related targeting of individual users instead of anonymous target groups. The consequences of this creeping learning process are already clearly visible in the US advertising market. TV advertising, which until recently claimed the largest share of the US economy’s advertising budget, will lose its leading position most likely this year. According to eMarketer, while spending on TV advertising is expected to be $72 billion, a turnover of $77 billion is expected in the market for digital advertising.


The reasons are understandable, since programmatically-managed online display advertising allows advertisers to fully concentrate on their target groups and their needs and to better control their campaigns thanks to data-driven models. The times of the watering can principle in advertising have thus finally come to end, yet it is precisely the watering can principle according to which conventional TV advertising continues to operate. Digital transformation in the TV world now leads to the fact that many TV channels are developing their first programmatic approaches. For example, there are first approaches in Pay TV, according to which brands can target their advertising on the basis of the booked TV programme of their target group. This is not really real-time targeting, but at least it is a first step away from static targeting based on Nielsen panels.


TV Channels Are Working on New Programmatic TV Concepts


The TV industry knows that something has to happen. Analysts have already warned the TV industry that TV advertising is continuing to shrink. Contrary to what you might expect, brands are not currently simply transferring their budgets from TV to online advertising, they are cutting budgets altogether since programmatic advertising in the online display industry provides significantly better results at lower budgets. The hands of this clock will not be turned back. TV channels, which want to keep their advertisers in the long term, should urgently concentrate on programmatic TV rather than hold fast to their classic advertising solutions. We would encourage advertisers to be cautiously optimistic about the early opportunities of programmatic TV. If you want to use your advertising budget very selectively then programmatically-managed online advertising certainly provides more bang for the buck.


Summary: 30 seconds undivided attention. Hardly any advertising format is more powerful in image and sound than TV advertising. Programmatic TV promises better targeting with data-driven models and combines the advantages of classic TV advertising with the strengths of programmatic advertising. Nevertheless, the market is not fully taking off yet because TV channels still prefer to sell their best advertising formats offline while offering only their second-class inventory via DSP platforms. Very similar to programmatic online, we recommend you to carefully monitor the performance of programmatic TV campaigns. Set your targets, keep an eye on KPIs and keep track of your campaign’s quality and performance. That will help you to immediately react on any deviations.


Would you like to address your target group more precisely and get more from your advertising budget by enhancing your classic TV efforts with the advantages of the programmatic world? Write to us! We would gladly advise you and help you successfully enter the programmatic world:

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