Now & Next is a feature written by the ExchangeWire Research team. Every three weeks, we review the latest research, provide impartial insight and analysis of current trends and provide predictions for the future of advertising and marketing technology. This feature focuses on TV.

TV inventory is premium and scarce, creating a huge demand among advertisers. Programmers are guarding their assets, keeping control of advertising transactions and making sure they get the most out of their advertising opportunities via private exchanges or preferred deals. Yet, Digital has beaten the way when it comes to maximising yield, as ad spend figures reveal.

TV ad spend still rising

Despite the hailing of Digital as the new advertising gold mine, TV ad spend has continued to grow over the last decade. Starting out with a healthy headstart against Digital in 2006, TV ad spend was £3.44bn while Online lagged way behind, at £1.71bn. TV ad spend remained around the £3.5bn mark for most of the decade, according to eMarketer figures, reaching £3.56bn in 2011 and £3.59bn in 2012. By this time, digital had long overtaken TV ad spend, passing the £5bn mark in 2012. However, growth in TV ad spend accelerated in the early teens of the 2000s, with TV ad spend garnering £3.69bn in 2013 and £3.92bn in 2013. In 2014, TV passed the £4bn mark (£4.04bn) and last year reached an ad spend of £4.18bn. For comparison: Digital ad spend was more than double that of TV ad spend in 2015, claiming £8.13bn.

However, despite being soundly overtaken by Digital, TV ad spend is still growing – which may also be a sign that synergies between Digital and TV are pushing TV ad spend, thanks to ad tech developments and cross-screen technology.

Impact of programmatic

So, starting from the first time a major broadcaster put their VOD player behind a registration wall – Channel 4 in 2012 – what are the pivotal moments in ad tech development for TV? Jon Block, EMEA VP product & platform, Videology, singles out pay TV provider Sky; who first served ads dynamically into linear via Sky AdSmart, and used data and distribution technology to enable targeted sequential TV campaigns across multiple devices (Sky Advance), as well as AT&T who were the first to use addressable advertising technology to plan and buy across linear and digital TV with merged household and digital data.

However, Digital ad spend rising, or not – TV advertising is here to stay. Block believes that TV remains the most powerful advertising medium; but acknowledges the wastage in dynamic addressable advertising in linear TV, as big spenders are eyeing the primetime spots in order to reach millions of households at the same time. “But, for everyone of these advertisers, there will be hundreds of others that would prefer to target their message to a narrower audience. And therein lies an enormous opportunity for advertisers and broadcasters!”

Is real time bidding, the way we know it from display advertising, going to dominate TV advertising? “There is definitely room for programmatic advertising to enhance the TV advertising model; but I don't believe there will ever be room for real-time bidding in linear TV – the inventory is just too high in value, too constrained in supply, and too important in terms of quality and regulatory compliance. And the TV trading models that have evolved to support this incredible medium are too well-established and refined for their purpose”, Block says.

What next

So, what's next in TV advertising? Linear TV remains a strong advertising channel, reaching millions of viewers across all ages, in a matter of seconds. But, digital will leave its mark on TV advertising. “The central theme around the future of TV advertising very much lies in using dynamic ad insertion to target more relevant ads into linear TV at a household level”, believes Block. “This is where there are billions of dollars wasted, or misused, every year. And so there is a strong commercial need to develop solutions; and they will benefit everyone, broadcasters, operators, and advertisers alike.”

While initially TV advertising shaped digital advertising, the tables seem to have turned. The future could see Digital shaping TV. Essentially, linear TV is to be 'content on a large screen', complemented and – most importantly – financed with video ads that appear pre-roll, during, and post-roll. What we have seen occur in digital advertising, will also apply to TV:

– Audience buying will become ever more sophisticated, moving from buying advertising depending on shows, to buying particular target groups right down to individual households, thanks to behavioural, payment, search history, connected screen and cross-device data.

– Connected TV will allow for concerted advertising campaigns that embrace TV and social media.

– TV advertising will pursue more defined purposes. Holistic campaigns will work across screens, devices, and media to turn watchers into users and into buyers.

– TV advertising will be more personalised, thanks to RT bidding and new data.

With users increasingly watching cross-screen, on multiple devices, according to their own schedules and lifestyle choices, TV will become a non-linear, user-controlled experience. Shifts to mobile and on-demand consumption of content allows for a more targeted, more interactive, and more engaging TV experience.