TV consumption trends are experiencing a dramatic shift and the TV industry is having to evolve to continue to deliver targeted messaging to its fragmented audience. This year, broadcasters are more focused than ever on embracing programmatic TV. ExchangeWire talks to Greg Carroll (pictured below), country manager UK, StickyADS.tv, about what 2016 will hold for programmatic TV, as the technology moves out of its development phase and into the mainstream.

TV upfront spend is declining as audiences are becoming increasingly fragmented and advertisers look to alternative channels to deliver precisely targeted messaging. While UK programmatic TV is still in its infancy, major broadcasters are already testing and adopting programmatic technology. Recent developments from Sky Media, ITV, and Channel 4, in trading digital inventory programmatically, are tentative steps in the right direction; and further announcements are expected in the coming months. The TV industry as a whole must adapt and evolve, adopting automation to allow the same degree of audience targeting that is possible through digital channels.

Is this the year of programmatic TV?

It is certainly shaping up that way, with programmatic TV ad spend predicted to increase by over 250% in the UK this year, to reach USD$13.8m (£9.4m) and – while much of this will still be focussed on time-shifted viewing or VOD – a significant portion will also be spent on linear TV. Broadcasters will adopt programmatic to automate the linear TV advertising workflow, as well as to benefit from an additional layer of data that allows a more granular view of audiences – increasing the value of their inventory. The industry will need to find the best way to translate the traditional upfront business on linear TV into the programmatic era, making it easy for buyers to find the audience they want to reach.

Programmatic direct: The logical trading choice

There are many conversations centred on why programmatic TV hasn't evolved beyond first gear, given the complexities presented by the conflicting interests of the parties involved, including the TV broadcasters, networks, buyers, and consumers. However, programmatic direct offers the solution to this, for both the broadcasters and the advertisers. TV has been traded in the same way for over 50 years, so we cannot simply fundamentally change how it is bought overnight. Programmatic direct offers an automated trading method, while giving the same sort of control, alignment and relationship as a direct sale. It allows trading to be negotiated directly between the buyer and seller, and can guarantee both price and inventory, even in an upfront manner, if desired. This creates a unified relationship between publisher and advertiser, establishing trust and guaranteeing optimum control and transparency for both parties, which will drive faster adoption of programmatic TV.

While programmatic direct addresses many concerns and will ease the transition to programmatic TV, other auction-based programmatic models – essentially private exchange models – are likely to grow in the coming years, as broadcasters realise they can return higher prices in a market where demand outstrips supply. 

Catch the viewer if you can

It has become clear that the way people consume media in general is continuously evolving, and this is no different for TV. This is a major factor in the move towards programmatic, and the ability to measure and compare audiences across all platforms – including linear TV, digital TV, and VOD – will be vital in establishing programmatic TV. Initiatives, such as Nielsen’s Total Audience Measurement (TAM), will begin to address this. Stringent regulation of TV advertising in the UK will make compliance an additional concern, with pressure on the advertising technology industry to create seamless integrations with ad clearing services, such as CLASH and Clearcast.

For programmatic TV to flourish, the advertising technology industry will need to take responsibility for working together and simplifying the logistics around addressable TV, connected TV, and over-the-top TV (OTT). It is essential that programmatic TV platform providers help broadcasters to upgrade their traditional trading models to the efficiency of programmatic, and to maximise their reach through this new approach to selling TV inventory.

Balancing interests will lead to success

Essentially, there will always be a degree of conflict of interest. Broadcasters want complete control and the highest value per impression, while advertisers want quality environments at a reasonable price, and consumers want a great experience from premium providers. Innovation will be key to achieving that balance and truly unlocking the programmatic power of TV.

While I am sure we may wonder when the 'year of programmatic TV' will truly happen – with the latest findings reporting that worldwide programmatic TV ad spend will reach USD$17.3bn (£12.1bn) by 2019 – we can at least be certain that this year will be very interesting for the TV industry. Consumption trends are shifting dramatically, and technology is finally catching up to meet the broadcasters’ and advertisers’ needs, but there is still a way to go until everyone is working together.