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Why Addressable and Programmatic TV Advertising Are Having A Moment

July 8th, 2019   ||    by Alan Wolk

While it’s easy to confuse programmatic and addressable, both seem to be getting the lion’s share of the TV industry’s attention these days. Or at least that part of the TV industry that is focused on advertising, as evidenced by the conversations last week at the Programmatic TV Summit.

Since it’s easy to confuse the two terms, I’ll start with some definitions: “Programmatic” refers to an automated system for buying and selling TV commercials, while “addressable” refers to the practice of selling ads against specific audience segments rather than against specific day parts.

To confuse matters further, there are two different types of addressable for TV: linear and VOD. Linear addressable happens in real time and means that two viewers who are watching the same show, at the same time in different locations, will see different ads based on their demographics, their location or both.

For VOD advertising, addressable means that advertisers are buying specific audiences rather than specific shows, and ads are served up to those audiences when they tune in.

Programmatic comes into play in both instances.

For linear addressable, programmatic platforms are used to sell off any remnant or leftover inventory. So, if the network sells off two slices of the audience, say, men 18-34 and female car buying intenders, then the remaining audience is served up via a programmatic ad platform where advertisers will bid on the remaining audience. It’s a far more efficient system than trying to sell the inventory by hand.

For VOD addressable, the programmatic platforms serve up the ads when someone in the advertisers desired target tunes into a show. The process that allows this is known as “dynamic ad insertion” or DAI, and bidding for the ad placement happens in something close to real time.

For many years, TV executives have been afraid to make use of programmatic ad platforms, fearing that they would turn into a “race to the bottom” with lower and lower CPMs. This fear came about because that’s exactly what happened in digital.

But the TV industry is now realizing that there will be no “race to the bottom” on TV: unlike the internet, where there are an unlimited number of websites (and thus places to run each ad) TV inventory is very limited. This ensures that brands looking to run ads against premium video inventory will not find anything close to unlimited options and thus will need to pay a premium for the inventory they want, as there will be many other brands competing for the same slots.

That realization—that a shift to programmatic buying will benefit everyone in the ecosystem—is why brands and networks are now so hot on the notion of programmatic and addressable and why they’re looking to understand it and make it a part of their future plans.

“When we first launched Videa, the idea of programmatic advertising, especially for local broadcasters, seemed incredibly forward thinking and we needed to spend a lot of time on education,” noted Shereta Williams, President of Videa. “We’re at a point now though, where automated transactions have become mainstream enough that the market is beginning to expand. As a pioneer, it’s always great to see when your vision is a success.”


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