Why programmatic is problematic for TV

Following MediaTel’s Automated Trading Debate, Lindsey Clay, CEO of Thinkbox, cements her views on the idea that TV advertising could, like other media, go programmatic.

I blogged elsewhere recently about the dismaying fact, told to me by a marketing journalist, that it was stories about programmatic buying that tended to get the most traffic on their website. How much is there to know about algorithmic buying, I thought? How many fascinating angles can it be approached from?

And why, I wondered, clutching a cold wet flannel to my forehead, don’t people just want to read large-scale econometric analyses of advertising effectiveness? You know: the ones that show TV creates the most profit and sales and that online display consistently delivers negative payback. Why not just read those and invest accordingly? Why get sidetracked into an infinite loop of programmatic stories?

I still don’t have satisfactory answers. And my flannel is now warm.

But, judging by the number of events, panels, blogs, articles and ‘guides’ about programmatic buying, I guess the appetite for all things programmatic is still unquenched. And, not being one who wants to avoid the zeitgeist, I thought it was time to look at it from TV’s perspective. After all, plenty of prognosticators are predicting the future is programmatic for TV.

A massive caveat

Now, please don’t get me wrong: I am in no way ideologically opposed to TV being programmatically traded. I’m all for efficiency as long as value and effectiveness are not compromised.

Programmatic has a role to play in TV’s future eco-system. There is also good reason to hope that programmatic trading will help TV ads realise their full value as TV is the premium quality environment for advertising and the competition to buy it should be fierce.

However, that said, there are some reasons why it isn’t a simple journey to the verdant programmatic uplands…

TV buying is already heavily automated

If programmatic buying means being data-driven, targeting specific audiences and having automated processes to do so, then TV is already very good at that. TV has always been big on data and very good at using it to meet advertisers’ needs.

Where programmatic TV buying is most appropriate is for the longer tail of non-premium TV ad inventory which may be being undervalued. But the booking algorithms for these spots are already near optimal.

There’s not much programmatic could add to that which is worth the effort and neither advertisers nor broadcasters are clamouring for premium spots to be sold programmatically. The truth is the vast majority of TV is over-demanded and its value fully realised.

Most TV isn’t delivered by the internet

The broadcast infrastructure that delivers the overwhelming majority of our TV does not lend itself to programmatic or real-time bidding. For that you need things delivered by the internet. Some TV already is, but we are a very long way off all of it being.

Also, programmatic works by aggregating billions of individual impressions, which in their own right would have little/no value, into something that agencies can buy for advertisers quite efficiently.

So it makes sense at the bottom end of the market for media that doesn’t merit human intervention. Sky’s Jeff Eales likens it to turning worthless sawdust into useful MDF, but like MDF it’s also a bit crude, naff and inflexible.

In TV there are not thousands of sellers; there are half a dozen who all already do a brilliant job of making the case for their inventories and who give guaranteed trading terms to agencies and advertisers. So who would gain from selling programmatically?

The compliance gap

The current online world is covered by the CAP code but TV is covered by the BCAP code and there is quite a gap between CAP and BCAP compliance. This throws up some issues and hurdles that don’t really lend themselves to the plug and play, instant gratification of programmatic.

What, for example, would be put in place to ensure that ad creative meets the requisite BCAP standard? Clearcast would need to be involved but, once the ad is approved, who then hosts the content? If it is a third party how do we ensure it is not changed after clearance?

Each broadcaster would need to be as confident in the content of these ads as they are with the ads in their linear broadcasts. Equally they need to know they are correctly categorised so they could be pulled at short notice if a problem were to occur.

Transparency and trust

This is the big one. Why would TV, the most enjoyed and effective advertising, embrace the algorithmic practices of online display, which is the least trusted and liked form of advertising around currently?

New research from Rapp and InSkin Media has revealed that more than 60% of their 1,600 panel had removed cookies because of irritating retargeting; 12% – and 19% of 20-29 year olds – had even contacted a brand directly to complain about online ads. Those are frightening stats.

It’s not just the trust of consumers; the World Federation of Advertisers, in its recent guide to programmatic media, has drawn attention to the fact that these middle stakeholders take a large chunk out of the advertiser’s investment: “After all the stakeholders present in the programmatic ecosystem have taken their share of advertisers’ budgets, there remains just 40% received by the publisher, as so called ‘working media'”. You can see why that might be off-putting.

Also in the WFA’s guide they say this: “Because of the lack of visibility offered to advertisers by ATDs [agency trading desks] into the machinations of programmatic trading, and because of the reluctance to divulge information surrounding cost structure and business model, 76% of advertisers tend to view trading desks as being less transparent than the ‘traditional’ way of trading.”

With TV, advertisers know what they are buying. Programmatic would introduce greater distance between the advertiser and the broadcaster.

In summary

So, TV is already automated as much as it needs to be; it won’t be in a position technologically to be programmatically bought any time soon; it is regulated in a way which makes programmatic buying very complicated; and the way it is traded is far more transparent and trustworthy for the people whose money is being spent: the advertisers.

TV will certainly get with the programmatic – see what I did there? – to some extent at some point, but there are plenty of hurdles to clear before then.

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