"Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Sloan Gaon, CEO at PulsePoint.
So far we’ve merely engaged in mild flirtation with this sexy muse, which has already won the hearts and minds of digital advertisers. The industry is expected to edge a bit closer to full-on courtship as TV buyers decide if they are finally ready to dance.
Programmatic ad buying accounted for only 1% of the $70 billion TV ad business last year. The most notable entrants into the fray were ESPN, which has made a tiny sliver of its inventory available for auction; TubeMogul, which unveiled a new programmatic TV platform; and Cox Media, which teamed up with Magna Global and AudienceXpress to launch its first private programmatic TV marketplace.
Programmatic TV ad spending will likely only grow to around 3% to 5% of the total market this year. That relatively small sample size reflects the limited inventory sold programmatically by local and national cable and satellite providers. But to put things in perspective, we’re still talking about $2.1 billion to $3.5 billion. Efficient use of the marketplace could enable early adopters to reach the entire US from a single point of sale.
I believe the recent news that AudienceXpress has hitched its programmatic TV platform to Rentrak’s blend of set-top and shopping data is a bellwether of things to come. Make no mistake: TV ad buyers are becoming more intrigued by the data-enhanced audience targeting and next-day reporting capabilities that programmatic buying has shown in the digital ad industry. And those on the sell side are likely to be wooed by its promise of increased inventory value, inventory yield management and full traffic and reporting automation.
While certain characteristics of programmatic on the digital side will not translate well to TV, such as real-time bidding, data-driven automation nonetheless offers TV buyers the ability to make smarter buying and selling decisions at unprecedented scale, in an age where the rapid growth and relative lower cost of digital advertising increases the pressure on the TV side to make every dollar count.
How long before the major TV networks jump into the programmatic pool?
It will take precisely as long as automated buying shows the kind of results that will make it impossible for them to stay away. In the meantime, the rest of the TV ad industry – buyers and sellers alike – stand to reap the substantial rewards that await those with the foresight and fortitude to get into the game now.