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.