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Programmatic buying is characterized by process automation as much as it is by methodology.

What Is Programmatic? A Marriage of Methodology and Automation

January 22nd, 2016   ||    by Monta Monaco Hernon   ||    No Comments

Programmatic TV is on the rise, with Magna Global estimating that the US market will grow to $10 billion by 2019 and the International Data Corporation putting global numbers at $17.3 billion by the same year. The process is being helped through education as more people discover that programmatic is more than a media strategy, but rather a platform that can make the buying and selling of television more efficient.

So, what is programmatic TV? One of the main tenets is the use of a methodology to create more visibility into viewers’ homes. Decision-making about which audiences to target becomes data-driven, and advertising messages can reflect the preferences of whoever is watching.

Automation Ups the Ante

There is a second component to programmatic that is equally as important: automation. By automating the workflow from ordering to service reporting, programmatic platforms offer a simpler, faster approach and more transparency compared to the way linear television transactions have been handled.

Despite this, when the question of “what is programmatic?” is asked, the focus tends to weigh heavier on the side of methodology. This topic arose at a recent BIMA event in which Brad Smith, senior vice president of revenue and operation at Videa, participated on a panel. As the industry works to grow programmatic, it’s important that the educational message fully explains which components are automated.

It’s worth looking at the way television advertising has traditionally worked to gain some context. Buyers submit a budget and request inventory; sellers counter with packages of inventory that list pricing and estimate demographic ratings; and negotiation occurs over ratings estimates and rates. Next, an agreement is reached, the ads are placed, and the reconciliation occurs, whereby the seller compensates the buyer for unmet audience delivery guarantees.

Even though many agencies have a buying platform that houses their data, the purchasing process is “shockingly manual,” according to Media Management. Interactions such as requests for proposals, ad trafficking, and insertion orders are done using combinations of agency platforms, heavily populated Excel spreadsheets, PDF documents, and email. Agencies separately track a variety of data sources, both internal and external, and arbitrate delivery, while comparisons tend to be done manually in Excel.

Automatic Benefits

Programmatic, on the other hand, automates planning, buying, measurement, and reporting via a centralized platform. While this requires system integration on a number of fronts, from suppliers to billing and traffic, the end result is more control and transparency, reduced costs, and decreased transaction time. Data is aggregated from a variety of sources and made actionable, which allows for more accurate measurement and reporting, as well as the ability to automatically analyze campaigns to see whether budgeting is being correctly allocated.

It’s said that one of the reasons programmatic TV has yet to take off at scale is because broadcasters, who control the inventory that would be accessed via programmatic, are uncertain about the implications automation has for them. The notion is there will be a downward pressure on pricing similar to what happened in the digital space, according to The Guardian. However, television space is limited, unlike with digital media, which means there will be a measure of control over prices based on the laws of supply and demand. Additionally, there is the ability to establish minimum prices.

Once broadcasters can better understand the process-automation aspect of programmatic along with the methodology aspect, its efficiency and ability to reach the right audiences will lead to that expected boom in programmatic TV.

For more information on the benefits of automation and how it fits into the programmatic plan, contact Videa.

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