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How Linear Television Advertising Gave Rise to Programmatic

July 21st, 2015   ||    by Todd Wasserman

It is easy to forget that television was once a brand-new medium with an uncertain monetization scheme, especially as most individuals carry a device capable of streaming videos in their pockets today. When television programming first launched in the late 1940s, the goal was to sell TV sets, not linear television advertising, as Jeff Kisseloff’s oral history of the early days of the medium notes.

Humble Beginnings

Since TV sets were expensive when they first hit the market, some of the earliest adopters were tavern owners. This fueled the early popularity of sports — particularly boxing — on the medium.

After establishing an audience, the television industry applied the same advertising formula that radio utilized, in which sponsors produced and controlled their own programming. This model prompted some of the first hit programs, including “Texaco Star Theater,” “Paul Whiteman’s Goodyear Revue” and “The Colgate Comedy Hour.”

A different model emerged a few years later when the networks began producing their own shows and selling commercial time to advertisers. Among those championing that scheme was Sylvester “Pat” Weaver, creator of the “Today” show.

By the 1960s, the latter model of linear television advertising took hold, but the science of TV advertising was still primitive by today’s standards. Reaching the largest number of viewers possible was the goal; little consideration was given to the capacity of the audience to actually buy the advertised products.

After discovering the value of viewer demographic data and applying it to then-popular shows, the three major U.S. networks executed the so-called “rural purge” of 1969–1972. Popular shows that drew large but less affluent audiences, like “Hee Haw,” “Petticoat Junction” and “Green Acres,” were axed.

Since that time, the broadcast and TV networks have developed programming with a penchant for more urbanized, affluent and younger viewers. Shows like “Seinfeld” and “Friends” in the 1990s hit the sweet spot by drawing that demographic and a large audience overall.

In the early 2000s, DVRs started to gain traction and the number of TV channels multiplied, causing each show to receive fewer viewers on average. In the 1972–1973 TV season — during the height of the three core networks’ popularity — the top-rated show earned an estimated audience of 21.6 million households; by comparison, 7 million to 8 million households tune in for top shows in the 2014–2015 season, according to Deadline. As The Wrap noted, “Seinfeld” made its debut in 1989 as the number 14-rated show that summer with about 8 million viewers, more than every show today except “Monday Night Football.”

Advantages to Programmatic

Today, the television ad industry is applying methods that have flourished in online advertising over the past few years. In particular, programmatic buying has become a viable and growing option for TV advertising in 2015. In programmatic, buying is automated and the targeting method of choice is based on more complex data analytics insights, rather than more straightforward demographics.

Programmatic TV offers several benefits to move the standard linear television advertising model one step further into the future. In particular, automating the buying process saves time for ad buyers and sellers alike, since many of the resource-heavy elements of these transactions can be streamlined. TV advertisements previously were used to reach as many people as possible, now advertisers can seek out consumers using a more granular approach to ensure they view the most appropriate messaging.

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