September 17, 2015

Is the Future of TV Programmatic?

Josh Chasin
Chief Research Officer

comScore’s first-ever industry summit on the future of audiences and advertising, brought together many of the leading lights from both the digital and the television businesses. So it was not surprising that the panel discussion titled “Is the Future of TV Programmatic?” was a program highlight.

Any time the topic turns to Programmatic, the first order of business is almost always to provide a working definition of the term. The panelists talked about the incorporation of data into the buy/sell process, but what ultimately surfaced was the notion that Programmatic is simply about automation. However, one of the principal implications of this automation is the opportunity to introduce data assets into the transaction process in a more efficient way than ever before. Julian Zilberbrand of Zenith Optimedia observed that Programmatic is about “using technology to create operational efficiency; part of that (efficiency) involves layering in data.”

Julian, the voice of the Buy side on this panel, also suggested that while we tend to think of Programmatic as involving data and efficiency, ideally Programmatic should “provide the client with the opportunity to have a better conversation with the consumer.” This was a refreshing insight; sometimes we get so caught up in platforms and Big Data that the consumer gets lost in the shuffle.

From the Sell side, Tim Castree of Videology said that sellers want Programmatic to make TV more expensive—by injection of data to fully evoke the value of different inventories and audience segments delivered. And no one disagreed. Tim also noted that only about 10% of the value creation in Programmatic derives from operational efficiency; 90% derives from data injection.

When you talk about transactional models and TV, though, inevitably the conversation will come around to the Upfronts—that annual frenzy wherein agencies secure large blocks of network TV inventory for the coming broadcast year. Interestingly, while the panelists were all bullish on Programmatic growth in TV ad transactions, they were also unanimous in their belief that Upfronts will be with us for some time. Jason Lopatecki of Tube Mogul observed that “the efficacy of the Upfronts is driven by inventory constraints”—i.e. scarcity. Tremor’s Kelly Petersen: “Upfronts make sense when you have something that is rare and precious.”

As long as demand for TV inventory exceeds supply—as long as it remains “rare and precious”-- there will be an up-front market. The element of scarcity brings buyers into the market in order to secure access to that inventory. At the same time, expect to see more and more TV inventory—or “video inventory,” as the panelists clarified—transacted programmatically. But these two things are not paradoxical; the convention of a private marketplace will facilitate programmatic transactions on the up-fronts. The scatter market will likely come to resemble the RTB, exchange-based market in the digital space, as programmatic platforms enable scatter deals to get done closer and closer to real time.

In the end, everyone agreed—TV is going programmatic. Programmatic technology will surface inventory value at a more discrete level than ever before—and both buyers and sellers win.

Visit our Industry Summit page for photos and more insights from the conference here.

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