Skip to main content

Is Programmatic TV Bad News For Advertisers?

There has been a fair amount of buzz about the advent of programmatic TV (PT) recently. Simply speaking, PT will enable advertisers to target TV ads to specific households based on their demographic and geographic profiles. For example, Rolls Royce might only want to serve their ads to very affluent postcodes, while my local takeaway would prefer to serve ads only to people living in Clapham. In theory, everyone in the UK could be watching ads tailored to their specific needs, meaning I may never see another tampon commercial again! The benefits to advertisers and viewers are obvious and, as a precursor to my following comments, I am a big fan of what PT promises marketers. I’m particularly optimistic about its potential to open up the channel to SMEs and local businesses. I also think it's unavoidable, partly because more people, especially the younger demographic, are watching TV online?1, where programmatically traded media is king.

No incentive for traditional broadcasters to go programmatic

PT doesn’t come without its challenges; the methods we’ve used to buy TV over the past 50 years have remained relatively constant. Unlike the internet’s media landscape which is open and fragmented, there are only three big broadcaster/sales houses in the UK (ITV, C4 & Sky). They hold all the power when it comes to how traditional TV is currently sold. This challenge cannot be under-estimated. Digital media made its impact on the market by becoming so measurable. This, in turn, has become a stick to beat the industry with; online advertising is held accountable to measurement standards that other media channels aren’t. Why would TV broadcasters want to make their jobs harder regarding justifying the success of campaigns to advertisers if they don’t have to? Couple this with the awkward fact that their inventory is in such demand they always sell out. If the Mad Men broadcasters always sell out then where is the motivation to go programmatic? This lack of incentive is one of the many hurdles the industry will need to overcome.

Third-party data buys are expensive

In most cases targeted traditional TV buys are limited in the UK. ITV enables regional targeting, and it is only Sky’s AdSmart which facilitates granular targeting to postcode precision. Sky’s platform allows advertisers to reach audiences based on a range of attributes including location and purchase behaviour. However, this type of TV buy is extremely expensive and can, therefore, be less efficient. Online display data buys often suffer from the same economic disadvantage – targeted media isn’t necessarily profitable. Sky’s AdSmart also allows you to use your first party data, meaning you can target your existing customers with specific offers through their TV set. The challenge with this is that we already have much cheaper, effective options to retarget customers, like email. Will advertisers spend lots of money making a TV ad to do the same thing? Spending money on TV to do CRM doesn’t make economic sense to me.

Measurement will become harder

Measuring TV’s impact on sales or awareness is tricky. While there are some great tools out there that attribute online site visits to spot level, this isn’t an exact science. The reason we can measure TV at all right now is because most of it is bought at scale; uplift is much easier to measure when you’re buying at volume. Once advertisers start buying smaller niche audiences, the existing attribution framework breaks down. We will need much more sophisticated attribution technology to correlate success down to an individually served TV spot. There are already challenges doing this online: even though we have more data to work with (i.e. minutes watched, likes, shares), things like multi-device make the accurate attribution of online video ads to sales or awareness near impossible.

TV, unlike the internet, is not a solo sport

Some 70% of people in the UK still watch TV with family or friends2 (as Channel 4’s GoggleBox nicely demonstrates), although this number is declining. I live in a house share of seven; each of us has very different tastes and lifestyles. PT might cater well for geographically targeted messages but will always struggle with demographic targeting. This is because it’s impossible to predict with accuracy who will be watching at the other end, even if you’ve got the name and address of the TV owner. The internet doesn’t suffer this fate, computers and phones are personal items; it’s much easier to target on these devices. This point of difference also highlights one of TV’s many strengths as a mass marketing tool - people sit together and talk about ads. That dynamic exists for no other advertising channel. The data used for targeting will therefore always be opaque until the time comes when most TV is watched alone.

TV is a great mass-marketing tool

There may come a time when awareness building becomes much more challenging for mass market brands. As fewer young people are watching TV3 and more people switch to apps like Netflix, which exclude advertising, or YouTube where ads are easily skipped or blocked, the Mad Men days might be numbered. This poses a challenge for mass-market brands who wish to target a broad range of people, even those who aren’t currently in market for their products. What I think will happen in the medium term is that some TV will still be sold the old way (I can’t see ITV relinquishing control of its prime time inventory any time soon) and some will be traded programmatically (but only where it benefits the broadcasters). This may mean less mass market awareness opportunities for consumer brands over time. This will naturally challenge some brands, particularly those in the fast-moving consumer goods vertical who depend on this type of approach. For these brands, the road ahead is not clear, for many others, programmatic TV promises greater transparency and efficiency in a traditionally opaque and closed marketplace, although we might be waiting a while for its arrival.   1. 2. 3.

We're on a mission to help everyone move their finances forward and gain financial momentum.

TotallyMoney is an independent credit broker, not a lender. Our comparison service works with most leading lenders, covering the majority of the market. Though we may be paid a fee by lenders or brokers this never influences how our products are ranked.

We don't provide financial advice. Product information is obtained from independent sources and rates displayed may vary depending on your personal circumstances. While we make every effort to ensure that information is up to date, you should always confirm the terms of the offer with the product provider.

TotallyMoney is owned and operated by TotallyMoney Limited which is registered in England and Wales (Company Registration Number 06205695). TotallyMoney Limited is an Appointed Representative of TM Connect Limited, which is registered in England and Wales (Company Registration Number 06967012) and authorised and regulated by the Financial Conduct Authority in respect of consumer credit related activities (FCA FRN: 511936). Trading Address and Registered Office: Chapter House, 16 Brunswick Place, London N1 6DZ. Credit is available, subject to status, only to UK residents aged 18 or over.

We use cookies as described in our Cookie Policy. Continue browsing or click to accept.