The rise of programmatic sends ripples through the video ecosystem

While marketers complain about programmatic video, advanced TV advertising is set to boom, and that’ll change how digital video and linear TV compete for ad dollars.

A recent Videology survey, conducting by Advertiser Perceptions, found that data-driven advertising solutions are gaining ground in TV media buying and planning. Advertisers and marketers see large benefits in advanced TV advertising which is better able to target audiences with less waste.

The survey defined “advanced TV” as data-enabled TV advertising that can define and target specific audiences, and included addressable TV advertising, which delivers ads at the household level. All of that loosely falls into the category of “programmatic TV” — which now refers to most any type of linear TV advertising that uses data, in contrast to the more precise definition of programmatic, used in digital advertising, which refers to automated real-time bidding and placement of ads.

Of the marketers and advertisers surveyed already using advanced TV, 57% said they plan to increase advanced TV ad budgets. Three-quarters of respondents said they plan to use advanced TV advertising in the next 12 months. And 65% of respondents predicted programmatic advertising would account for over half of total TV advertising in the next three to five years. That data points to a readiness to embrace data-driven advertising solutions in both the supply and demand sides of the linear TV world.

“Advertisers and agencies are rapidly seeing the benefit of applying data and automation to their linear TV buys because it gives them the best of both worlds: the reach and viewing experience of TV, with the strategic targeting of digital,” Scott Ferber, founder and CEO of Videology.

“We are seeing similar enthusiasm from media companies who see data-enablement as a way of capturing greater value from their audiences, both in TV and across devices,” Ferber said. “With buyers and sellers both recognizing the value in more addressable, audience-based advertising, the marketplace can now truly accelerate.”

The growing interest in data-enabled TV advertising solutions will have ramifications throughout the wider content ecosystem. According to the survey, two-thirds of all TV Upfront deals are now made with audience-based media buying and planning strategies; and a full third of dollars committed at the TV Upfronts are for data-enabled audience inventory, rather than just traditional content buys.

But marketers are also now more likely to approach advertising across the two video ecosystems — digital video and linear TV — as two sides of the same coin, rather than as separate campaigns. About a third of TV and video campaigns are now planned holistically, and 61% of respondents who buy both TV and video media reported doing so with one integrated team that handles linear TV plus digital.

As the lines between TV and digital video continue to erode within the advertising sectors, ramifications will ripple through both the TV Upfronts and the digital NewFronts – two splashy media events that are competing for the same ad dollars.

The NewFronts this year will see some 35 media firms presenting their digital video line-ups, up from 24 presentations last year. But this year’s event has been plagued with a few high profile media firms pulling out: Yahoo, Buzzfeed, Fullscreen, Studio71 and Warner Bros Digital Networks, which now owns Machinima, all passed on this year’s event.

An asterisk to the publisher pull-outs is why those media firms are opting to pass on the event. There’s an interesting intersection emerging between trends in advertising across the two ecosystems of linear TV and digital video. As programmatic video has become a norm in digital advertising, the industry has suffered a few black eyes courtesy of ad blocking, “blind buying” and a lack of verified reporting.

And as automated buying is now how the majority of digital ads are transacted, some of the premium digital content creators are reaching out for more intimate relationships with marketers that eschew algorithm-driven ad placements.

“As social video continues its relentless growth in demand from both consumers and advertisers, brands are moving away from leading with interruptive advertising, to adding value to the story –– and Fullscreen wants to talk about it with them,” said Pete Stein, GM at Fullscreen. “We couldn’t be more excited about the market forces at play and are confident our findings, social audience insights, content experimentation, and award-winning creative will change the way brands go to market in the next few years.”

As TV networks are able to deliver more data-driven advertising solutions to marketers along with TV’s unmatched scale, marketers will likely slide some of those ad dollars back to TV budgets. But the Videology survey also found 20% of marketers who are buying advanced TV, consider those buys to be experimental. And there’s still plenty of evidence of confusion and distrust over data-enabled TV advertising among marketers and agencies, from limited scale to lack of transparency in reporting. And it doesn’t help that each company seems to have its own interpretations of what “advanced TV” and “programmatic TV” actually entails.