programmatic TV

Ad Tech's One-At-A-Time Architecture Is Missing Its Other Half

Anywhere there is advertising, there is a story that needs to be told to a group of people. The revolution and evolution of digital media since the early days of the internet was driven by a mantra of “One At A Time.” No longer would advertisers be bound to large blocks of audience in take-it-or-leave-it transactions with television broadcasters, cable companies, newspapers, magazines, and radio. This was a true revolution for advertising.

Real-time bidding enabled buyers to individually select and price every pair of eyeballs they buy. To achieve this new vision, an entire infrastructure was put in place that dwarfed technology for transacting traditional media. We have seen multiple unicorn IPOs in digital, while technology for traditional media languished. But for many years, the secret everyone knew was that the money flowing through the traditional systems was much larger than the money flowing through digital systems. But, with nearly a decade where all media spending growth was happening in digital, the divide closed. Today, ad tech is waking up to the green field opportunities in transacting traditional media.

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Unfortunately, the green field of traditional media is on the other side of a vast canyon. Getting to the other side of that canyon requires an ability to transact blocks of impressions, before they show up. This is a key reversal of how these markets and technologies for addressable media work. A one-at-a-time market requires impressions (supply) to exist before the buyer presents their demand. Conversely in traditional media, where blocks of impressions are sold, buyers first present a large block of impression demand which the seller then answers.

For those that have attempted to use the one-at-a-time architecture to sell large blocks of audience, Google TV Ads and Google Radio Ads proved exemplars that no amount of money will let you fit that square peg in that round hole. In a one-at-a-time environment the way demand overlaps inventory is explicit. Impressions actually exist and all the demand (bids) for each are collected in an auction. A one-sided second-price auction. In this type of auction demand only exists if supply is offered.

When large blocks of audience are offered, inventories must be forecast, and the way demand overlaps inventory must be computed. That means sellers must be able to understand how an individual bid is applied to inventory as well as how that inventory is impacted by all other bids. In a one-at-a-time market the auction knows all the bids and the inventory being considered is only a single impression, so we know exactly how the bids overlap, they all do. In a one-at-a-time market there is no chance that there could have been a better deal. Conversely, when large blocks of impressions are sold, the seller must always consider what other deals are being forgone so that this deal can be made. These sellers are always questioning if they took the right deal. They are constantly evaluating inventories, current deals, historical deal activity , and pricing.

The technology to answer these questions and respond to demand is not offered by any company other than us. This is the missing other half of the ad tech stack and the reason that today’s ad tech is still restricted to media that is device addressable.


Understanding Programmatic TV - Part 3: Markets

Agencies, network families, and cable operators generally seek programmatic solutions because they believe programmatic implies competitive markets. The primary role of markets is to bring buyers and sellers together, to determine the price of a transaction. That said, if you survey the current crop of technologies branded as programmatic solutions for linear television, you would find they use automation as a cover while implying a competitive market.

In the first two parts of our series, we explored the process and automation of programmatic linear TV. In the third part of our series we discuss how real markets can be supported with the automation programmatic enables.

The primary obstacle to creating competitive markets for linear TV is that buyers' demand is defined in reach and frequency while sellers' supply is defined in spots. Moreover, the management of 'rate cards',which are predetermined prices, perpetuates the illusion of a market.  If markets bring buyers and sellers together to determine the price of a transaction, but all the deals are already priced, then what is the market doing?


If prices are pre-negotiated before they get to the "market" then anything called programmatic is only performing audience optimization on existing deals. The whole point of using markets is to strike the deal in a competitive environment that is good for both buyers and sellers.

There are currently four types of programmatic TV solutions in the market:

Buy-side optimization: allocates spend across media products offered by seller(s).
Sell-side optimization: calculates least amount of inventory to use for each deal.
Deal communications: platforms for people to send deals to other people.
Exchanges: allows sellers to offer and buyers to bid with automated order matching.

Buyers and sellers want to explore supply and demand in the market. If buyers and sellers can see the other side of their deal, set their prices, search supply, and demand, then you have a market. A black box that stores rate cards from sellers or sends buy orders to individual sellers is not a market.

To enable real markets, sellers need to package inventory, price it, and keep orders in sync with inventory. That functionality is missing in all but one of the four types of programmatic solutions. On our platform, the inventory, catalog, and order management tools are all woven together.

Markets for linear TV already work this way, there is much more time to buy and sell the media. A vast majority of TV impressions are not served or filled in real time. eMarketer estimates that addressable TV will reach 4% of overall spend in 2019.  For linear, buyers and sellers need a different market. If the seller has no bids, they can wait. If a buyer sees no inventory they can leave a bid. This trading only works in two-sided markets.

TV media is a negotiated transaction, there is no negotiation in rate card driven systems. In a negotiated environment, each side has the power to change the price at which they are willing to do the deal and the amount they are willing to buy or sell. In two-sided market transactions prices, are set by both sides. Neither side has to do the deal right now. Negotiation is all about dynamic systems. The solution for programmatic linear TV is a two-sided market. Here's why:

Matches bids and asks, the market doesn't determine a deal's price.
Buy and sell orders stay open until matched or canceled.
Buyers can search for supply and Sellers can search for demand.
Depth of supply and demand liquidity can be measured.
Supply competes for demand and demand competes for supply, in the same market.
Market data is deterministic.

Most other technology providers are really not programmatic markets. As an industry we need to have an honest conversation about technology for linear TV. 



Understanding Programmatic TV - Part 2: Automation

This is the second of a multi-part series of posts to dispel some of the confusion and hopefully have a better common understanding of what is going on in the programmatic TV space. In our first post, we compared the differences between the programmatic TV process and the programmatic digital process. In this post we focus on how the process differences discussed in part one drive  radically different process automation needs. Thus the difference in the use of the term 'programmatic' in linear media (TV) vs. addressable media (video and digital.)

While technology providers in multiple media verticals now use 'programmatic' as a description of automation provided by technology, the business challenges that are solved by this automation are very different for linear and addressable television as compared with digital verticals, such as display and video. The easiest way to describe the difference is that in television, inventory is waiting for buyers, while in digital buyers are waiting for inventory. This difference is the result of selling future media placements or audiences as opposed to real-time impressions.


What ‘programmatic’ means to TV media buyers

In practical terms, televisions buyers are buying promises of placements that meet a set of parameters (a package), as opposed to specific individual insertions or impressions. From a workflow perspective, this means that once a deal is done, sellers provide an initial report of how the media may be delivered (a prelog). Following the actual placement, sellers provide a final report of how the media was delivered, to satisfy the contract (a postlog). Sellers can change the specified units the deliver on a contract without breaking the ‘promise’ they made the buyer. In combination with the fact that some orders are guaranteed to run (non-preemptible) and some are not guaranteed to run (preemptible), managing how or if promises are fulfilled is one of the primary areas where ‘programmatic’ creates value for buyers of television media. This is not a problem in programmatic display and video, as each impression is run through an auction and supply outpaces demand.

Since buyers are buying on a forward basis, answering the following questions at scale is critical:

  1. What is available to buy?
  2. How much inventory is available?
  3. At what price is the inventory available?
  4. Can I present my demand if it is at a different price than the supply?
  5. Are deals automatically pushed into my workflow platform?
  6. Once I have a deal, what can I expect to be delivered?
  7. Once the deal was satisfied, what exact inventory was delivered?

What programmatic means to TV media sellers

For sellers of television media ‘programmatic’ solutions are needed to solve the challenges associated with what inventory promises they can make buyers (sell orders), how those promises would be priced by P&I, and how those promises should be managed given the ever-changing landscape of available inventory. In programmatic display and video, ‘programmatic’ solutions focus on maximizing monetization of individual impressions as a minuscule portion of the inventory is sold on a guaranteed delivery basis.

Since sellers are making promises for inventory, answering the following questions at scale is critical:

  1. What is my unsold inventory?
  2. What inventory promises can I make to buyers?
  3. How do I charge the right price for this inventory given this advertiser and agency?
  4. Which demand in the market can I satisfy?
  5. Are deals automatically pushed into my trafficking system?
  6. Once I have a deal, what am I reporting might be delivered?
  7. Once the deal is satisfied, what exact inventory do I report was delivered?
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Programmatic vs. programmatic

As illustrated in the questions above, the challenges of transacting linear media are very different. While programmatic represents a set of automated functions in video and display, programmatic in linear media represents a whole different set of functions that need automation.

While several technology providers in today's market use the term programmatic about their products, current programmatic solutions only focus on audience optimization of linear buys. Mass Exchange is the only programmatic solution integrated through-and-through from the sell side trafficking system all the way to the buyers’ platform.

The Mass Exchange programmatic solution enables transactions on an audience or unit basis and can support all types of TV media buying on a single platform including national, scatter, direct response, and local. 

Understanding Programmatic TV - Part 1: Process

Recent advancements in the programmatic TV space, and growth of the number of vendors, shows platforms in linear television are finding new ways to add value.  Finding the right terms to describe these new services is tough. So, many have adhered to what they learned over the last few years, which is RTB-speak. While a good starting point, RTB-speak is used to describe non-linear real-time transactions. But, nearly all TV media is linear and non-real-time.

So, there's lots of confusion.

This is the beginning of a new multi-part series of posts to dispel some of the confusion and hopefully have a better common understanding of what is going on in the programmatic TV space. In this first post, we will compare the differences between the programmatic TV process and the programmatic digital process.

Understanding the Term “Programmatic” in TV

Across many professional publications and industry bloggers the term “programmatic” is used to describe technologies that create efficiencies for buyers and sellers of media. The problem is that so many folks have different definitions that a great deal of confusion surrounds this term of art.

The most basic use of the term programmatic is as a kinder and gentler way to say automation. Some don’t like the term automation, because it sounds like replacing people and eliminating jobs. So, many marketing folks in adtech firms use programmatic as a substitute. That is why people in the know call most of the linear TV solutions in the market today “progra-manual.” While some of the process may be facilitated by technology, it is not end-to-end. What’s worse, many programmatic solutions in linear TV simply push the manual work over to the other side of the deal table.

Real programmatic means that inventory availability, pricing, supply offers, demand bids, and transactions are all technology enabled. In other words, inventory is analyzed and priced programmatically, avails presented to buyers are managed programmatically, buyers search the market programmatically, bids are matched to sell offers programmatically, and deals are trafficked into agency workflow systems and TV trafficking systems programmatically.

Linear TV is not the same as digital

The Non-Linear Process

The Non-Linear Process

Let’s start with the digital process. While this may be less familiar to the folks who have done traditional linear media transactions, for those with some familiarity to programmatic digital media, this should look straight forward.

The most important aspect of programmatic digital media, is that the transaction happens after the impression is created.

Once an impression is created, buyers are asked to place a bid on the impression to determine who will show their advertising. When buyers receive the bid request, two key questions must be answered 1. Is the audience someone the ad is targeting? 2. If so, what should I offer the seller to buy the media? If both of those questions are answered, the buyer bids on the seller’s media. The bid enters an auction, along with other bids, and the winning buyer is determined.

With the auction winner chosen, an ad must be served and shown to the individual representing the impression.

Along with starting at the impression, the digital programmatic process also possesses the inherent characteristic of being non-iterative; the process always moves forward in a strict order. This means iterative processes like negotiations cannot be handled.

So, using terms from programmatic digital media like ad server, DSP, and SSP, muddies the waters. While the steps for programmatic digital and programmatic linear TV may seem similar, the way in which the process operates requires a vastly different approach.

The Linear Process

The Linear Process

Changing gears, let’s look at the process for programmatic linear TV. Since individual impressions are not available for evaluation, buyers rely on historical and forecast data to understand where the audience they are targeting will be consuming media. Based on that work, media providers are selected and a “bid” (aka request for proposal, RFP) is sent.

Sellers, linear TV providers, respond to bids with offers of inventory products and pricing. There is no auction and the buyer and seller iteratively negotiate until they reach agreement. It is this call and response process that needs to be accommodated by programmatic solutions for linear TV.

Once agreement is reached and the deal is accepted, buyers and sellers must wait until the media airs for the ads to be served (that’s why that little clock is  there)

While all of this is probably not news to anyone who is on either side of deals in the media industry, what it means is that “programmatic” in linear media is vastly different from “programmatic” in digital media. In reality though, most media buyers and sellers could care less about these differences as long as they are getting good ROI and good revenues.

On the other hand, for those in management roles in charge of selecting vendors and technologies that will impact their ability to generate revenue or buy targeted media efficiently, these differences are critical to understand. Without a full understanding, some folks will choose solutions that sound good, but in actuality will not deliver enough value.

In our next post we will explore some of the ways in which "programmatic" has been used and abused by vendors, to close deals that deliver far less automation than expected.


What we’ve been up to

As you may have noticed it has been quite a while since we last shared a discussion on our blog. On our end, we have been working hard to expand our platform to handle some of the fundamental differences required to facilitate the trading of television inventory.

The fundamental difference is that TV can be transacted in both linear units and addressable units. From a system’s perspective, those are apples and oranges. You could just transact on impressions across both, but doing that in the context of inventory management, yield optimization, and pricing along with the transaction make the impression based approach untenable.  That means systems need to be designed so that the way buyers and sellers transact is abstracted from how the actual inventory management, yield optimization, and pricing happen. For example, in linear TV, yield optimization happens at the insertion level, while in display media it happens at the impression level.

What presents additional complication is that many linear buyers do not buy units one at a time. Buyer price is generally a function of the size of the spend. The more you spend the bigger your unit-rate discount.  That means that packages. No matter how you slice it, by unit or by impression.

In short, there are three fundamental transactional units, instead of one, that all represent the same inventory; the critical difference from digital media.  Buyers are interested in measuring their units of trade in impressions, insertions, or packages. This critical difference is just the starting point.

All three types of transactional units need to live side by side in a centralized platform capable of unified inventory management, yield optimization, and pricing. From day one, our platform was designed in anticipation of this functionality. So, when we expanded to supporting TV clients, our product road map quickly accelerated this development. Also, we have been working on all of those things in the guts of our product that are designed to make our product so “it just works.”

Now, back to our blog…

So, much of the work that inspired our previous blog posts has been overtaken by the unglamerous work of making trains run on time. We are now at a stage where the work we have done yields learning from its application. Our core functionality was based on innovating functionality and creating new ways of solving old problems. Much of our recent unglamerous work has focused on problems of operationalizing our innovation, which is not necessarily innovative in and of itself. For example, QA automation or the automation of scaling instances and spinning up environments.

Moving forward, our topics will be shifting from explaining how media could be transacted more efficiently and the problems with existing technologies. We will be focusing on how media companies and agencies are leveraging our platform to transform their media trading practices, to usher in audience-based and addressable buying, while still having one foot in the linear unit-based and upfront world.