Could Programmatic TV Buying Fundamentally Change the Traditional TV Buying Model?

The way television ads are traditionally bought and sold has the potential to completely change.

Programmatic buying methods took the online ad buying space by storm, and now there is an attempt to apply programmatic technologies to buy TV spots.

Traditionally, buying television ads used data about TV shows to pick appropriate programs for targeted audiences. However, under a programmatic method, now TV ad buying would focus on using data about audiences to pick relevant shows. There is less emphasis on the actual TV show being bought and more focus on the specific target watching; advertisers don't care whether their ad is shown on The Simpsons or Chopped, as long as their target audience is viewing.

Perhaps dogs will also be included as target markets under programmatic TV buying... 

(That was a joke.)

Source: Mark Stevens

In fact, some say that ratings for television programs may not even be needed in the programmatic model, as advertisers would be focusing less on the show a consumer is watching and more on who that viewer actually is.

Programmatic TV buying envisions a system in which one has a defined audience, the ability to deliver an ad, and the automation system to deliver that ad millions of times in multiple channels. It also can target users more specifically, as programmatic buying does online. Instead of buying an audience of Women 18-34, advertisers can target a subset of that demographic—perhaps Women 18-34 who are avid bicyclists.

Or buyers using programmatic TV methods could target Men 18-24 who like Apple products and Hawaiian Punch....?

Source: Yuwen Memon

I find it intriguing that television, traditionally a reach medium seeking as many relevant eyeballs as possible, would move toward a more strategic approach to finely target consumers. TV would still reach many people, yes, but, using programmatic, it would be more picky about which eyeballs are watching. I think this would be a positive thing for consumers; as I've said previously on this blog, I believe advertising that is relevant to specific consumers is a win-win for potential customers and advertisers. Common sense says that there's a higher probability a person would watch an ad for something in which they might genuinely be interested rather than a mass-marketed commercial.

Yet, there is some backlash to programmatic TV buying, and some say that there are too many drawbacks to the programmatic TV model to ever be effective. I agree that some are concerning.

One drawback that has been mentioned is that auction-like environments might devalue some highly desired ad time (such as events like the Superbowl). As with online programmatic buying, the definition of what programmatic TV buying actually is causes confusion. And proving to broadcasters that this new system is worthwhile is also a challenge. 

Networks own their ad inventory and want to sell it at a premium price or force advertisers to buy it to get more access to sister networks, etc. This type of system isn't an option in the programmatic model.

Neither is the upfront and scatter method. Traditionally used in buying TV, ads are sold at a discounted rate during the upfront (Springtime, before the show airs) to ensure the show doesn't fail. After that, ads are bought using the scatter method (bought closer to the air date of the show and not necessarily aimed at a specific demographic target). Ads are mainly meant to offset the high production costs of shows, and highly efficient programmatic buying doesn't really fit that type of business model.

While a programmatic TV buying model isn't a complete reality yet, it is being experimented with by companies trying to create programmatic TV platforms to networks like NBC.

Is it possible that, if developed, programmatic TV buying could flip traditional TV buying on its head? Or is this hype all just another programmatic fad?

I also used this article and this article as background for the writing of this blog post.