Since the dawning of human kind, many innovative, life-changing technologies have been created to increase the speed and efficiency of certain processes. In 1793, Eli Whitney invented the cotton gin to streamline the process of separating cotton fibers from seeds, allowing for greater productivity than manual cotton separation. About 100 years later, Alexander Graham Bell was credited as the inventor of the electric telephone, a device that allowed people to instantly communicate with one another instead of waiting days for letters to arrive.
Similar to how these historical inventions streamlined specific tasks, programmatic technologies have made the processes of media buying and data management much smoother. They allow for the automated purchase of ad inventory, using data to increase advertising effectiveness, and assigning value to impressions to ensure ad dollars aren’t wasted on uninterested prospects. Because of its automation and targeting capabilities, programmatic technology has been heralded as the future of advertising by marketers and advertisers, and is predicted to account for approximately 60 percent of the total ad spend for half of [the world’s] existing ad-agencies this year, according to AdExchanger.
Be that as it may, programmatic still has yet to make a splash in TV advertising, a medium that receives more shares of total ad dollars than any other media platform. Although taking the best tools digital has to offer and putting them to use in more lucrative exchanges within the TV advertising space could be extremely beneficial, it has been surprisingly slow to take off, accounting for less than one percent of TV ad inventory sales last year.
2015 could be the year where this changes as many interesting developments have pointed to a possible increased use of programmatic in TV advertising. Some examples include ESPN participating in its first automated transaction, Magna Global obtaining the right to programmatically purchase spots on 15 networks, and Nexstar Broadcasting Group’s purchase of Yashi, a location-focused programmatic ad tech startup.
Nexstar is a leading broadcast and diversified media company that owns or provides services to over 100 network-affiliated television stations across the United States, including big four affiliates ABC, NBC, CBS, and FOX. Last month, it purchased 100 percent of Yashi’s stock for $33 million, and gained full rights to the startup’s location-focused programmatic advertising technology. One of the strategies behind this move was the unique opportunity to combine Yashi’s targeted digital offerings with Nexstar’s expansive portfolio of multi-platform marketing solutions. Now, local and national advertisers, agencies, and digital publishers that advertise on Nexstar’s television stations, and in markets around the country, can benefit from the advanced targeting capabilities made possible by Yashi’s innovative technology.
Moves like this are indicative of what other broadcasters should be doing in order to offer advertisers the most comprehensive set of cutting-edge marketing solutions. Instead of seeing digital and traditional as two separate entities, advertisers should focus on the highly effective results generated by the broadcast-plus-digital combination. As it currently stands, neither one is definitively better than the other. Sure, digital video has a more robust set of targeting tools that advertisers and marketers salivate over, but it doesn’t have the huge viewership reach that broadcast offers, hence why traditional TV still holds the larger percentage of ad spending. Even though both TV and digital video advertising are individually powerful platforms, when combined, they offer an unparalleled marketing solution for the modern age.
It was stated during a panel at an AdWeek event last November that three to five percent of TV inventory will be sold programmatically by the end of 2015. If this prediction holds any truth, we will begin to see more broadcast companies make efforts to provide advertisers with digital marketing tools. By initiating and completing transactions like the one between Nexstar and Yashi, broadcasters will allow advertisers to use data to target massive audiences across networks of television stations. Instead of solely targeting based on ratings and demographic segments (age, gender, income, etc.), broadcasters will open new doors to advertisers, allowing them to hone in on specific TV viewers based on personal data like what type of programming they frequently watch, or where they are watching from.
With so many potential benefits, it’s only natural to wonder why the implementation of programmatic in TV advertising has been such a slow process. It’s a simple as this; not every broadcasting company is as accepting of such technologies. In fact, many TV executives fear that selling their inventory through programmatic transactions will devalue it because it will become so commoditized. Other concerns lie within the technology itself, as many believe that the adoption of programmatic in TV will take more time because current technologies don’t offer the same capabilities provided online.
Either way you choose look at it, the limited programmatic options offered in TV today gives advertisers greater targeting options than the medium has ever provided. Just as most other disruptive technologies, it will take time for the greater majority of TV industry professionals to recognize programmatic as the standard way to buy and sell ad inventory. When that time comes, companies like Nexstar will be way ahead of the curve.
