We’ve been able to listen to whatever song we want to, whenever we want to, for years now. Video content is still playing catchup to the music world, but with the rise of Adobe Primetime and Google’s foray into cable television, there’s no doubt that programmatic TV is poised to be the Next Big Thing. With devices like smartphones, smart TVs, and gaming consoles all enabling viewers to get in on the TV Everywhere movement, the days of being tethered to cable connections and satellite subscriptions are a thing of the past. No longer does “watching TV” mean sitting on the sofa in the living room staring at a big screen. Today, television content is delivered via smartphones, tablets, laptops, and traditional cable TV sets. This represents an incredible opportunity for marketers to place their content directly in front of their target audience without wasting ad dollars on viewers who have no use for their product.
A Numbers Game
Before we talk about how to best use programmatic TV, it’s important to understand why it matters so much. According to a recent industry report by Adobe, total online video grew 22 percent year-over-year, which indicates that browser and app-based video viewing are still increasing tremendously. The current video start stats equate to an average of 5.3 video starts per person per quarter—that’s a lot of opportunities to reach highly specific audience segments online through non-traditional broadcast channels! Combine online and traditional television video views, and the opportunities provided by TV-oriented advertising are bigger than ever.
Not only are certain videos more likely to attract certain viewers, but readily accessible user information for most video streaming platforms has also opened up unprecedented opportunities for targeted advertisements that can become ridiculously, tastefully specific. This opportunity should have niche brands and marketers salivating, but it also spells historic leverage for TV inventory sellers. Online and offline video streaming is getting smarter, which makes it more valuable to buyers. Supply-and-demand, man.
If you want to reach the 22–26-year-old male who is a registered voter in the state of Ohio and it’s a month before Election Day, the owner of the broadcast distribution he’s tuning into is going to charge you a princely sum. Cost per thousand impressions (CPMs) will inevitably rise. But don’t despair—with higher specificity comes higher costs, but along with it also comes epic efficiency.
While CPMs may cost more, they’ll also convert more since there’s less potential for waste. Targeted ads are only put in front of their principal audience, and advertisers only pay to run the ads to viewers who have some theoretical interest in them. The value proposition of programmatic advertising is really high at any cost. Don’t be dissuaded by sticker shock; innovators are already ponying up to reach their audiences in new ways—and you should, too.
Some viewing platforms will always justify their lack of advertising space as part of their subscription-based model. These streaming services, such as Netflix, are leading advertisers and studios and becoming more creative in search of revenue and marketing opportunities. I grew up thinking the name of Marlin Perkins’s zany animal safari show was Mutual of Omaha’s Wild Kingdom. My grandmother overheard the name one day and said, “Hell . . . is the show about giraffes or insurance?” She remembered the pre-branded content days, and I didn’t even know what Mutual of Omaha was at the time. Bridging that gap and creating inexorable links between brands and enjoyable shows is one way to beat the age of ad-free TV. Ultra-targeted smart advertising is the other, and some new platforms are making the new age of ads a reality.
The Price Is Right
For marketers, this is an opportunity to take one of the oldest forms of advertising and turn it completely on its head. Instead of television ads being broadcast on shows that have a certain expected reach or audience, brands can now broadcast highly relevant content directly to the devices of the people who need to see it most. Programmatic TV is still in its early stages of development, but you can expect much higher conversion rates as we get better at placing ads in real time. One of the most promising aspects of programmatic TV is the ability to fight back against the time-erasing properties of DVR and streaming services.
The Guardian noted a bittersweet fact about the state of television: “While audiences are watching more television than ever, they’re watching less of it live, causing ad revenue to shrink.”
The bad news? Old-fashioned ad revenue is shrinking.
The good news? Once marketing advertising adapts to TV viewing trends, a larger audience than ever before will be made accessible.
Google is hinting at the future of programmatic advertising with its ongoing tests in Kansas City. KC was one of the first cities to get Google Fiber, and many early adopters now use it as their cable television provider. Google has created targeted advertising that fits into content based on viewing history—which lets advertisers know whether you’re a dedicated sports fan or tuned into one game because your uncle’s stepson’s cousin is playing for the opposing team—all based on real-time data. That means that if you record an episode of a television show on Sunday and don’t watch it until Wednesday, an ad might appear proclaiming a sale happening “TOMORROW!” As the ad plays out, you’ll come to realize that “tomorrow” is Thursday, not Monday. Ads have a much higher chance of being effective if what they’re advertising isn’t in the past.
The Future Is Now
Despite it being a strange, abstract concept, the future really is now. This limited demo phase in Kansas City is just the beginning of a staggering paradigm shift in how viewers consume television and how marketers reach those viewers. As more platforms fully integrate new TV-viewing habits, they’ll be able to sell more effective ad space to more interested advertisers. The only thing worse than having a CSI cliffhanger interrupted by a commercial break is having a football game interrupted by a commercial for CSI even though you’ve never tuned into a real-crime TV show. As ads get smarter, they’ll feel less like ads and more like personalized reminders to watch (or buy) things you’re already interested in. If commercials are here to stay, it’s best that they don’t make you blush, cringe, or hit the mute button.
by John Montesi