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NAB Show Takeaways: The Future of Programmatic TV

November 22nd, 2016   ||    by Todd Wasserman   ||    No Comments

The NAB show took on a slightly surreal dimension this year simply by dint of its location and timing: The Jacob K. Javits Convention Center in New York, the morning after Election Day. Hillary Clinton and her supporters met at the Javits Center on election night and the location was still humming from that tumultuous evening.

As Archie Gianunzio, Vice President of Sales at Videa, recalls, it was difficult to focus on any other subject, though the talk eventually dovetailed with the business at hand. “There was a lot of talk about the fact that Donald Trump was able to win this election without spending,” he said. “That’s been a huge talking point in general — the remarkably lower political spend than what had been expected.” The conversation couldn’t help but overlap, Gianunzio said. “It maps the uncertainty of where are we as a country, to where are we as an industry. Where do we go from here?”

An Automated Future

The answer is likely programmatic TV or, as Gianunzio prefers to call it, “automated, data-informed sales.” While more than two-thirds of digital display ads are purchased now via programmatic, as eMarketer points out, the figure for TV this year is around 1 percent.

Gianunzio, who spoke on an NAB show panel focused on this topic, said many local TV station execs have understandable hesitations about programmatic. Programmatic is a term that came about to describe a digital phenomenon. In the early days of on-line advertising, most publishers had trouble selling their inventory, especially when they tried to sell it at CPM’s that matched their other offerings – TV, radio, print, etc.

Companies began aggregating inventory from such websites and then allowed advertisers to come in and bid on it. “Because we weren’t selling them anyway, when an advertiser came in and said I’ll pay you 50 cents on the dollar, TV stations and other publishers of online media accepted the rates just to be able to sell some of it,” Gianunzio explains. “The problem is, if you open up a sales channel that allows someone to come in and pay less, everyone’s going to want to use that channel.” That, of course, leads to depressed CPM’s. (costs per thousand)

“Programmatic for digital lowered the effective selling price for digital media,” he said. “So, when people hear ‘programmatic,’ that is largely what they expect programmatic is going to mean.”

People also assume that a programmatic buy includes bidding, which it does not—at least not in Videa’s case. That’s why Gianunzio likes to say “automated” instead of programmatic. Though he believes automation makes broadcasters’ jobs easier, he acknowledged that “automated” is also a loaded term. “It scares people because, in their minds, the other side of automation is robots replacing people,” he said.

Despite such fears, Gianunzio said that everyone he talked to at the NAB show was interested in programmatic. “Once they hear what it is, that it’s not so scary and can benefit them, I can feel a sea change in their understanding,” he said.

For now, the primary benefit of programmatic TV is that it will automate the cumbersome parts of the selling process. Granular targeting via addressable TV is still years away, Gianunzio said. “What we’re going to see in the short term is indexing,” he said. “This will provide some measure of certainty that we can give you an audience that is more or less likely to be some part of your target.”

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