What is Programmatic TV Advertising?

The $70 billion television advertising business is poised for a change. Following the path of desktop, social and mobile ads, the television industry is beginning to flirt with programmatic technologies. But the television ad ecosystem operates far differently than its digital cousin, so programmatic advertising effectively, and data-driven automation of advertising transactions will take a different shape for the older medium. Here’s what that entails:

Programmatic TV advertising is the data-driven automation of audience-based advertising transactions. It inverts the industry standard, in which marketers rely on show ratings to determine desirable audiences for their ads. Instead, with programmatic tech, marketers use audience data to pipe advertising to optimal places.

Practically, what does that mean?

It means more specificity. Instead of relying on ratings for specific shows or channels, marketers can use programmatic technology to reach a more specific consumer subgroup, such as men with a smart tv device. As long as the audience is watching, they don't care if this ad appears. Most TV viewers targeted today are not that advanced, but that's one reason why programmatic TV is still in the crawl phase.

How does programmatic TV advertising differ from what’s happening on digital platforms?

Real-time bidding and auctions are commonly associated with programmatic advertising. They work well on digital platforms, where supply is bountiful and buyers rule the market. Real-time ad transactions don’t gel as well with the TV marketplace, where supply is limited and sellers are looking to secure future commitments. For now, at least, programmatic TV buys aren’t conducted through the same real-time auctions powering programmatic ad sales online.

Who’s the big winner here?

Brands and agencies stand to benefit from more targeted TV marketing, and undervalued cable networks could bolster their ad revenue, but the biggest winners are likely to be the tech vendors facilitating these transactions: companies like Google. Whoever makes the most widely-used set of programmatic TV ad technologies could capture a substantial slice of a $70 billion market.