Scott Ferber | Vox

Programmatic TV 101: The multi-billion-dollar ad tech that’s transforming television

2019-03-06T05:15:06-05:00

It’s hard to conceive a more exciting advertising opportunity than programmatic television. On one hand, brands are able to command consumers’ full attention with 30 seconds of full-screen sight, sound and motion on the big screen. On the other, they can implement the same data tools they use online to pinpoint the right audiences for their advertising message. With the potential to limit DVR skip-through rates by providing viewers with the most relevant possible advertising, programmatic TV represents the best of the digital and television advertising worlds.

So it should come as no surprise that programmatic TV is expected to be a $17 billion opportunity by 2019.

Given this incredible potential, it’s easy to be frustrated that the programmatic TV market hasn’t developed faster. After all, data-driven advertising is responsible for more than half of all online display spending, but only around 4 percent of television spend. But while a number of roadblocks still stand in the way of television’s programmatic future, the past few years have seen television networks, media buyers and advertising technology companies take several big steps toward bringing increased precision and automation to the market. Just as programmatic became a buying staple in digital media, so too will it likely become widespread in television, albeit with a different set of rules and objectives.

What is programmatic TV?

In considering the prospects of programmatic TV, it’s important to define exactly what it is we’re talking about. In short, programmatic TV represents any TV ad buy that uses data and automation to more precisely target specific consumer audiences, with the end goal of driving better return on media spend.

Programmatic TV represents any TV ad buy that uses data and automation to more precisely target specific consumer audiences, with the end goal of driving better return on media spend.

This definition is in contrast to programmatic advertising on devices like computers and smartphones, where every ad is targeted to an individual user. In television, only a relatively small amount of inventory is what we call “addressable,” meaning that an advertiser can target its message to an individual household. Right now, there are about 42 million addressable households in the U.S. Advertisers can send individual messages to these households by purchasing inventory from cable and satellite companies that can link their set-top boxes to the customers who own them. Unfortunately, these service providers only have access to two minutes of advertising every hour, meaning they are often unable to give buyers the scale they need to carry out large, national campaigns.

On the bright side, advertisers can still greatly improve the effectiveness of their TV campaigns by more precisely targeting audiences with high-indexing programming as opposed to individual households. The way this works is advertisers are able to layer on their own first- or third-party data to find the television shows and networks that a given group of people are most likely to watch. This goes beyond the typical age and demo targeting of, say, men 18-34, and allows them to a purchase ads during shows with an above-average number of men 18-34 who are currently in the market for a new pickup truck. They can also target by geographic location, allowing them to purchase ads in ZIP codes that over-index for, say, female homeowners with a household income above $100,000.

Why programmatic has yet to fully take off

One reason programmatic TV hasn’t exploded is many broadcast and cable networks are hesitant to make their premium inventory available to programmatic buyers. There remains a fear that data-driven advertising will commoditize inventory and decrease prices on premium TV ads. Plus, television networks don’t have as much incentive to change their ways as online publishers because they are still having great success selling most of their inventory, in a scarce marketplace compared to demand, through guaranteed, up-front deals.

On the buy side, since programmatic addressable TV was the first programmatic option to roll out, the limited amount of addressable inventory made it difficult for large brand advertisers to achieve adequate scale. In addition, addressable TV is not cost efficient for every advertiser, especially those with broad targets and mass appeal products. However, the introduction of data-enabled, high-index programmatic TV options addresses both these issues.

Still, programmatic TV continues to grow

This year, as the television upfront season approaches, we are seeing major movement and advances in the programmatic TV market. Just this month, AT&T announced its “Video Inventory Platform,” a private marketplace that will allow buyers to target audiences across 26 million households using automated ad-buying software.

As television and digital video continue to converge, we move a little bit closer to video advertising’s holy grail: The ability to purchase premium inventory aimed at select audiences with a single media plan that covers television, mobile and desktop devices.

Meanwhile, NBC took a major step toward adding the quality and scale buyers crave when it said in February that its entire portfolio of linear inventory would be made available to select buyers programmatically. Fox Networks Group has also jumped on board, announcing a platform in March that lets marketers buy linear TV inventory programmatically with audience characteristics beyond age and gender.

Indeed, as media consumption habits continue to shift seamlessly between linear TV and digital video channels, broadcasters and TV operators are recognizing the need to offer similar capabilities to customers buying their content across both linear television and video channels.

In fact, there’s reason to believe that in the very near future, we will no longer even think of there being a difference between television and digital video. As these two mediums continue to converge, we move a little bit closer to video advertising’s holy grail: The ability to purchase premium inventory aimed at select audiences with a single media plan that covers television, mobile and desktop devices.

Scott Ferber has spent his career utilizing mathematics and data analysis to build profitable businesses and products. With the goal of bringing the accountability of digital media to the expanding video space, he founded Videology in 2007. Its video advertising solutions platform is now used by some of the world’s largest marketers and media agencies to connect brands with their targeted consumers. Reach him @VideologyGroup.

This article originally appeared on Recode.net.

TV Goes Nerdy and Digital Goes Glam

2019-03-06T05:10:07-05:00

It’s that time again. The television upfronts — where broadcast and cable networks received 50 percent to 70 percent of last year’s ad revenue, and the digital NewFronts — the industry’s showcase for digital video. Now long-standing traditions, the upfronts date back more than 50 years to 1962, and the NewFronts are approaching a 10-year anniversary after first rolling out in 2008.

Over the years, we’ve grown to expect certain standards from participants in the “fronts.” The television networks used the upfronts to roll out their biggest stars and must-see programming of the new season. The digital players, while traditionally lacking the big “star power,” dazzled us in their own way — with innovative data, targeting and audience insights.

But one has to ask: In an industry that is undergoing so much change, shouldn’t these events change too?

Yes and no. In terms of relevancy, these events aren’t going anywhere. The concept of upfront buying and the surrounding “pre-sell” is still a crucial element of advertising strategy. Despite the rise in programmatic technologies, TV and premium video is still scarce, and demand is still high. With high scarcity and high demand comes the need for guarantees. Advertisers want to know they’re getting what they need.

But in terms of the events themselves, we are likely to see some significant changes this year in what upfront and NewFront participants bring to the show floor. These changes will be driven by two trends impacting the entire industry, namely the proliferation of data activation across screens and the increase in new content distribution channels. So this year, expect to see the upfront participants try to out-dazzle each other with shiny new applications of data while the NewFront participants flash their content and star power.

A role reversal

Here’s why. Advances in technology and content delivery — from apps to OTT to mobile devices — have made the delineation between TV and video increasingly blurred. As a result, TV is beginning to embrace and gain access to what has traditionally made digital so powerful — the application of precise data segmenting and measurement.

Stated differently, the broadcast and cable networks have gone nerdy. TV buyers can now apply massive data sets to their strategy — understanding much more about a consumer than the traditional “age and gender” demographics.

Conversely, with evolving distribution channels like online platforms and OTT delivery, there’s a whole new world of opportunity for delivering premium original content to consumers. So NewFront players like Hulu and BuzzFeed are now squarely in the video production business, while other digital players like Amazon and Netflix took home a combined 46 nominations for the 2015 Emmys.

Data and distribution

To be clear about the aforementioned “role reversal,” the fact that digital players are putting emphasis on their shiny new content does not mean they’ve lost the ability to provide excellent data, and the fact that networks are embracing more data does not mean they’ve lost the ability to produce excellent content.

These changes simply highlight the much larger trend of video convergence. The lines between tradition TV players and new digital video players is quickly becoming indistinguishable. Apps now allow us to stream “digital” content to the big screen in our living room. TV Everywhere programs let us watch “linear” content on our smartphones, computers and tablets. To consumers, there’s virtually no difference. And increasingly the industry is starting to agree.

Though the upfronts and NewFronts may still be divided, there are myriad efforts to try to tie together the various devices on which consumers are viewing contact. Data providers like TV-ratings powerhouse Nielsen — and now digital-ratings powerhouse comScore — have recognized the need for unified measurement and insights across all screens. Moreover, MVPDs and telcos — with access to the data “pipes” spanning online, TV and mobile — are able to bring new levels of cross-screen audience insight to media planning and buying that were never before available.

Taken to the next level, marrying this cross-screen measurement with offline purchase data from sources like Kantar ShopCom or J.D. Power then allows advertisers to measure the actual value of that advertising to drive real-world results.

Nerd or not, that’s something to make even the most jaded marketer take notice. While some have said there’s a resurgence of the “Golden Age of Television” from a content perspective — spurred by the diversity of new voices brought about by the proliferation of distribution outlets — it’s also becoming the “Golden Age of Television Advertising.” In the latter case, the new gold is data — bringing a new level of insight into who is seeing an ad and if it’s working.

Full-frontal movement

There is still work to be done before all upfront planning and buying can be carried out holistically across both video and TV in all its manifestations. There are technological limitations to overcome, and business models that must evolve. But it’s happening, and quickly. And it must. The need to reach consumers, regardless of what they’re watching and how they’re watching it, is real.

This upfront season, the role reversals we’ll see are signs of another step in our evolution to “full frontal” advertising, where the distinctions between the upfronts and NewFronts become undistinguishable.

This article originally appeared on Recode.net.

Full-Frontal Advertising: The Slow Reveal

2019-03-06T05:19:14-05:00

Is advertising finally full-frontal? Last year on Re/code, I predicted the convergence of the long-hyped television upfronts and the relatively newer digital content “new fronts,” suggesting that while it may not take place tomorrow, it won’t take forever, either.

I called the convergence “full-frontal” advertising.

One year later, as we approach the upfront season again, the question remains: How much closer are we to seeing full-frontal, and how many layers need to be peeled back before we get there?

Consumers leading the charge

This year, audiences are full-on with full-frontal, as consumers’ TV viewing increasingly shifts to online and on-demand platforms (PCs, mobile, set-top boxes, game consoles). In fact, online TV viewing increased by 388 percent, and video views via over-the-top devices and gaming consoles increased 194 percent in the last year.

To meet that demand, we’ve seen big names introduce OTT packages, with the likes of Dish TV announcing Sling TV to provide cable-free access to live news and sports, and CBS with its $5.99 monthly streaming service that lets viewers watch the majority of its network programming.

On the content front, Amazon won a Golden Globe this year, marking the first time a streaming provider took home the prestigious award for the best TV series. Now that’s convergence: The same company that delivers all of life’s basic necessities is now delivering great entertainment, as well.

Clearly, the definition of TV has changed dramatically. But from an advertising perspective, full-frontal won’t be a dramatic shift, but more of a slow dance. Here’s what we’re seeing and expecting in 2015.

More ad dollars going full-frontal

The current view: TV ad dollars still represent the huge majority of budget spent by brands. To put this in perspective, digital video ad spending is expected to increase 41.9 percent this year to reach $5.96 billion, while TV advertising in the U.S. is expected to grow 3.3 percent to hit $68.54 billion. The percentage growth we’re seeing in spend is being echoed by a shift in advertising attitudes.

In October, media agency holding company Omnicom publicly advised marketers to shift between 10 percent and 25 percent of television ad dollars to online video. And in private conversations, we’ve seen growing interest across the board in tools to determine the optimal reallocation of TV dollars to cross-screen campaigns.

The next reveal: As much as 50 percent of online video budgets comes from reallocated “TV” advertising budgets, and this percentage is expected to grow. But in five to 10 years, we may no longer be talking about reallocation between buckets. In the future, where TV is video, we won’t be talking about the $70 billion TV market, or the $7 billion digital market. We’ll be talking about the converged, nearly $80 billion video market.

Full-frontal measurement continues to evolve

The current view: Measurement is arguably the biggest challenge as we move toward full-frontal advertising. Despite activation of Nielsen’s Online Campaign Ratings, and increased efforts by other players such as comScore and Rentrak to deliver cross-screen viewing metrics, unified cross-device measurement still lags consumers’ new viewing behavior.

Currently, some technologies can provide planning insights and campaign analysis to measure unduplicated reach and frequency across devices, and even determine a cross-screen campaign’s impact on sales. But gaps still exist in the specificity of the available data between digital video and linear television. One of the biggest obstacles preventing TV and digital budgets from becoming one big melting pot of converged ad budgets is the availability of audience data for traditional TV media buyers.

The next reveal: With the increasing variety of IPTV products and services and the uptick in their adoption, we’re beginning to see more granularity in available information about TV viewers and their viewing habits. As a result, data similar to that being used in online advertising to target specific demographics is now available, allowing capabilities in cross-screen measurement to evolve more rapidly.

While last year’s upfront season focused on education, this year’s will be marked by more action. We’ll see advertisers begin to assess at least portions of their campaigns using one or more of the growing body of cross-screen measurement providers.

Also, with the holy grail of a unified, accurate cross-screen metric still up for grabs, look for all major measurement providers to pour innovation and resources into solving the challenge, and for new collaborations between traditional media, data and technology companies that will reveal new light at the end of the cross-platform tunnel.

Full-frontal plans are getting full-on results

The current view: So why are advertisers so eager to begin to measure and validate cross-screen ROI? Quite simply, those engaging in it are getting tremendous results. Offline sales can be significantly higher for those exposed to both the TV and digital video aspects of a campaign, compared to those exposed to only the digital channel.

The next reveal: By now, many advertisers have tested the ROI of cross-screen campaigns, particularly in retail, CPG and auto, where offline sales data is most readily available. As these results become more ubiquitous, and if ROI continues to show marked improvement when planned holistically, full-frontal advertising will escalate. Beginning this year, look for a progressive shift to full-frontal planning and measurement, and a migration to a common ROI metric tied to actual sales results.

The final hurdle to full-frontal

The current view: Full-frontal planning and buying in the full sense of the phrase means tying together audiences across devices using common data that can be optimized to achieve a given set of results.

Programmatic advertising is at the heart of full-frontal strategies. The technical requirements for bringing programmatic capabilities to the linear feeds used in TV, however, are complex because of the many and varied distribution channels that bring video into the home.

Additionally, some broadcasters and premium content providers have been reluctant to make their content available via programmatic for fear it may commoditize their inventory and distance them from the agency/advertiser demand sources. The top priority to move programmatic TV forward is the systems aggregation needed to drive standardization among distribution participants.

The next reveal: Standardization is incredibly important if we’re going to provide a singular solution for brands, advertisers and media companies alike — and recognize the full potential of cross-device full-frontal advertising. Progress is being made. Early forecasts suggest that programmatic television spending could approach one billion this year, primarily delivered in local inventory, and as much as $3 billion in 2016.

More skin in the game to achieve full-frontal

It’s clear that the transition to full-frontal advertising will be an evolution, not a revolution. We’ll move toward a full-frontal world one reveal at a time, while the television world and the digital world are courting one another. Over the next year, we’ll see real opportunities for advertisers and agencies interested in full-frontal advertising to take advantage of the technology, data and inventory currently available.

Full-on full-frontal may still be a few years away, but the opportunity to put a bit more skin in the game is clearly here.

This article originally appeared on Recode.net.

Full-Frontal Advertising: Upfronts, Newfronts, Allfronts

2019-03-06T05:44:30-05:00

Spring marks the start of the TV “upfronts,” the time when television and cable networks roll out their new year of programming so advertisers can create a plan of attack. Over the past few years, the season has also marked the start of another “front” — the “digital content newfronts.” But do we really need a distinction between the fronts? Is there a reason for conflicting and competing agendas?

I think it’s time that advertisers merge the two fronts and begin to practice full-frontal advertising.

The newfronts have come into their own of late, gaining more battle chops and forcing the upfront players to at least acknowledge another contender for a share of the ad pie. While the industry was once skeptical of the newfront concept, the dramatic growth in online viewing has given it more gravitas.

I would argue, however, that the uptick in digital viewing is actually a major reason that we can no longer consider the newfronts versus the upfronts when we consider content. Now it’s all just video. Some programming shows up on the televisions in our living rooms, and some on our laptops, desktops or smartphones. To consumers, it makes little difference. And for advertisers who want to reach those consumers, it shouldn’t, either.

Full-frontal exposure

For the most part, advertisers have drawn boundaries between the fronts, developing strategies, creating campaigns and bucketing ad dollars for each in isolation. Audiences, however, are engaging in full-frontal viewing. They move seamlessly between devices, changing viewing patterns along with time of day or day of week; they often begin watching a particular program on one device, only to pick it up again on another.

Planning ad campaigns in silos obviously does not correspond to the way consumers actually view an advertiser’s messages. Siloed advertising tells a disjointed story, disregarding the ebbs and flows of consumers’ viewing habits. In ad terms, these shifts include factors like how many times a consumer has seen your ad, which creative they’ve been exposed to, in what sequence, and where. Holistic planning allows you to control for these factors across multiple platforms, ensuring that a consumer is seeing and hearing the most compelling story to influence their attitude about a brand and their decision to buy it.

Full-frontal planning also ensures that an adequate number of people are exposed to an ad. Shifting viewing patterns are creating fragmented audiences. Yes, television reach is still strong. But even the most strategically planned television campaigns have a “reach cap” — in many instances, especially in certain key demographic groups, that cap is decreasing. The knee-jerk reaction is to throw more money at the problem. In some cases, that might work. But often advertisers don’t need to spend more to achieve better results; a holistic approach can make their dollars work harder.

Planning holistically across screens allows an advertiser to use online video to fill this reach void by targeting those not exposed or minimally exposed to their television campaign. This is made possible by using data that allows an advertiser to match television viewing patterns to online video viewing.

Full-frontal measurement

In the past, one factor contributing to the divide between upfronts and newfronts has been measurement. Advertisers need a common metric to build a unified plan. Nielsen is the primary planning and buying currency for television. And now, with the rollout and subsequent activation of Nielsen Online Campaign Ratings (OCR), advertisers have a common currency they can employ for both online and TV buying and planning.

Measurement and other tools can be used to increase reach and optimize allocations in many ways. Say that a major brand finds that its TV plan is strong, but its campaign reach still doesn’t achieve sufficient levels of penetration. Rather than spending more on TV — which may only increase exposure among consumers who had already seen the ad — a cross-channel plan can reach desired consumers in both TV and online video. Measures such as Nielsen XCR studies can be conducted during the campaign to analyze optimal reach and frequency across channels. This analysis not only helps the brand determine how to best balance TV and video ads, but ultimately increases its return on ad dollar investments.

Full-frontal foresight

So why should advertisers buy upfront at all? Why not just buy as they go? It’s really quite simple. The upfronts and newfronts are all about predictability: When a spot is purchased now at a given price, it will be available to an advertiser when it’s needed. And advertisers want predictability across both television and online video.

Premium content inventory scarcity is real in both television and online video. This trend is amplified by advertisers’ tendency to battle for the same type of inventory in both traditional television and online. In fact, approximately 80 percent of digital video dollars go to television-centric programming providers such as Hulu. This urgent scramble for scarce ad inventory during the fronts — and other factors — underscores the need for advertisers to tackle the process as a single holistic “allfront.”

The pressure to purchase inventory in advance at the upfronts and newfronts assumes that media buyers and sellers can intuit how the market, programming and their audiences will perform over the course of a year. Television, with its long history — both in offerings and behaviors — has some predictability. Now digital is getting there, as well, giving advertisers the means to look further into the programming future. With that knowledge, advertisers running a holistic campaign can strategically place ads between TV and digital, be more strategic with campaign planning and buying, and increase return on ad buys.

A full-frontal strategy

A holistic approach to purchasing ad content, and the growing ability to activate data across screens, reduces waste and maximizes reach and ROI. Unified buying can also maximize impact and boost engagement by combining television and digital placements around high-profile television programming that’s often accompanied by second-screen views and device shifts. For instance, live events like the Super Bowl and the Academy Awards are great opportunities for marketers, but they can be made even stronger by an accompanying second-screen video strategy.

Full-frontal advertising gives you the best of both worlds: The reach of TV and the targeting capabilities of digital. In time, as video viewership continues to grow, and as greater data and targeting capabilities are available on television via set-top boxes and other means, the capabilities of each medium will continue to meld. In fact, the ability to address a specific television ad to a specific household, i.e., what is often referred to as “addressable advertising,” is already a reality.

Convergence of the ad “fronts” may not come tomorrow, but it won’t take forever, either. A recent Forrester Research study found that 70 percent of advertisers and agencies believe video campaigns will be planned holistically within three years.

It’s time for the industry to take a united front, and consider TV and digital with a holistic, long-term view. Then they can maximize results and ROI to achieve their full-frontal impact.

This article originally appeared on Recode.net.