"On TV And Video" is a column exploring opportunities and challenges in programmatic TV and video.
Today’s column is written by Oscar Rondon, senior director of TV strategy at TubeMogul.
Brand marketers all seem to agree on what the future of TV buying should look like. It should include the automated planning, buying and delivery of ads. Full addressability at a household or even individual level. And eventually, deduplicated audience buying across all devices.
But somewhere on our way to a fully automated and addressable future, we got confused on the difference between the two. Many use the terms “programmatic TV” and “addressable TV” interchangeably.
In some cases, the confusion comes from the understandable desire to avoid the word “programmatic,” given its association with declining prices for display advertising. Other instances seem intentional, such as the marketing tactic to make addressable sound automated or vice versa.
But the result is the same: confusion as to who does what.
So let’s define terms. EMarketer defines programmatic TV as “an automated, technology-driven method of buying and delivering linear TV ads.” Addressable TV is technology that allows advertisers to deliver different TV ads to individual households based on demographic, geography or other factors.
Programmatic TV – as it largely exists today – simply automates the process for planning, buying and delivery of ads. Usually, it allows advertisers to apply data to inform which networks, dayparts and programs to buy, making TV more “addressable,” but not at a household or individual level. It’s more of a smart, automated contextual buy.
True addressability is different and made possible by pay TV distributors, such as a cable or satellite company, which enable advertisers to buy specific households using first-party and credit company data.
Why hasn’t a national solution emerged that is both fully automated and addressable?
Dynamic ad insertion can only occur through pay TV distributors, which control the pipes and have set-top boxes in each home. Most of these companies will only sell addressable ads through traditional sales channels – their own sales teams – at a high premium.
The technology to insert those ads into specific households, which is complex, is also still evolving. These companies’ hesitation to embrace automation is not difficult to understand since addressable advertising is their newest cash cow and they are betting that they can afford – for now – to fend off automation and exert market power on price. For this reason, addressable TV has not experienced the same momentum as programmatic TV.
“Honestly, if we’re spending $100 on programmatic TV, we’re spending $5 or $10 on addressable,” said Chris Williams, president of Interpublic Group's MAGNA media investment arm, earlier this year.
To make the majority of linear TV advertising addressable, several changes need to happen. MVPDs need to choose a technology partner to make addressable a reality in their full footprint, as opposed to just a subset of homes.
National networks, which control around 80% of the TV ad market, would also need to revise or renegotiate carriage deals with distributors, which are often long-term agreements and don’t have terms specific to dynamic ad insertion. And since carriers are distributed across the country, that would mean renegotiating deals with more than a dozen companies. Finer points of the deals might include who gets to control selling addressable ads, what platforms get to plug in, revenue sharing and more.
Add that up and you get a simple market reality for marketers: Most addressable TV today is fragmented and not automated. The good news for advertisers is that programmatic TV exists, providing a big step in the right direction and a proven way to bring automation, data-driven targeting and verification to TV.