One of the key challenges to linear TV broadcasting is how we can effectively monetize the channel via advertising, and TV advertising has significantly evolved in the past decade along with the evolution of digital marketing.
Until quite recently, TV advertising depended on the TV rating system and other audience measurement methods. Advertising price and content were based on TV ratings for almost half a century. However, with how digital marketing has evolved, linear TV programming has now also evolved to become more versatile and performance-oriented, for both consumers and marketers alike.
This is where the concept of programmatic TV comes in.
What Is Programmatic TV?
Programmatic TV is a TV advertising model that relies on digital marketing methods and tools to determine the best way to produce and use marketing content.
Traditionally, linear TV advertising was based on linear TV schedules: the shows and programs are shown on a set time and date (with a linear schedule). Now with programmatic TV advertising, however, advertisers can show their ads based on the viewers’ actual demographic and behavior data.
For example, the viewers of 13 Reasons Why are mostly female under 34, so products targeting young females can now place their advertisements on any tv channels, streaming services, and OTT live TV broadcasts that show 13 Reasons Why.
With programmatic TV, marketers have more versatility to target a very specific audience to maximize their ROI. At the same time, now advertising from huge products are not exclusive for bigger channels and networks, but anyone, even a very small internet TV channel, can have a chance with the right content.
Audience Targeting With Programmatic TV
One of the key benefits of programmatic TV is the ability to use digital marketing’s hyper-specific targeting capabilities to a linear broadcast format. Even with how the audiences have shifted to digital mediums and VOD services like Netflix, linear TV still has more reach and is very efficient in CPM (cost per 1,000 impressions).
However, the major downside of linear TV advertising is that we show our ads to those who are not really interested in the product. So, even if TV advertising is very low in CPM, the average ROI is also relatively low.
On the other hand, although digital advertising is really good at targeting the most interested audience, it’s much more expensive (based on CPM) and harder to scale.
With programmatic TV advertising, we can get the best of both worlds, and we can get the right balance between budget and reach. Programmatic TV can go beyond the most obvious audience measurements: gender and age data, but now we can use various demographics and psychographic data to determine the most potential target.
Programmatic TV uses the digital activities of viewers to create a more effective targeting. As a result, we can eliminate a lot of false positives, drive down the overall CPM, and maximize ROI.
Pros and Cons of Programmatic TV
Programmatic TV advertising is not yet a perfect advertising method, and below we will discuss the key advantages and disadvantages of programmatic TV advertising over the standard linear TV advertising approach.
Advantages of Programmatic TV Ads
- Laser-focused targeting: as discussed above, the key advantage of programmatic TV is its optimized audience targeting. Marketers can target audiences beyond the schedule-based linear TV approach and beyond standard demographics data like gender and age.
- Better automation: traditional TV ad purchases and selling process used to involve time-consuming back and forth communication. Programmatic ads help make this process more efficient and more automated.
- Driving higher value for each content: for content distributors, TV channels, MVPDs, and broadcasters in general, programmatic ads can help increase the value of each content.
- Performance evaluation: programmatic TV can allow advertisers to monitor the performance of each ad, and can easily adjust the data when necessary
Disadvantages of Programmatic TV Ads
- Price: At the moment, programmatic TV ad is still more expensive in CPM because it is more targeted. So, the initial investment can be higher although the potential ROI is also higher.
- Difficulty: the much detailed level of targeting means programmatic TV will also mean that it’s harder and more time-consuming to execute. Marketers need to manually input the specific target and will require a bit of analytics
- Data accuracy: since programmatic TV is still pretty new, the performance data you get from each programmatic ad campaign might not be accurate, especially regarding conversion.
Programmatic TV allows much more flexibility in targeting compared to traditional, linear TV advertising, and at the same time also allows us to have the amazing reach of linear TV ads.
While the adoption of programmatic TV ads at the moment is still pretty low, we can expect it to grow significantly in the near future along with the rapid evolution of digital marketing.