Television and the way audiences consume it have evolved significantly over the past two decades. Naturally, TV advertising has undergone significant changes. While it once reached nearly every viewer, that is no longer the case. Thanks to programmatic TV advertising, brands now have hard data about what their target audience watches. As a result, TV ads are now delivered with laser precision and efficiency.
So, what exactly is programmatic TV advertising, and why should you know it? Read on and you’ll understand the concept, how it works, and what benefits and challenges it brings.
The term may seem complex at first, but it is essential to start with a clear definition.
Understanding Programmatic TV Advertising
Programmatic TV advertising leverages technology and data to automate the purchase and delivery of advertisements to targeted audiences. Instead of manually choosing where and when ads will appear, companies use software to target specific viewers based on factors like their interests, age, or location.
For example, a sports footwear production company decides to use TV advertising to promote their new shoes. Without programmatic TV advertising, they might select limited time slots, such as a specific segment during a football match. However, with programmatic TV advertising, the company can define its target audience, such as young people who engage in sports regularly. The platform’s algorithm automatically finds this target audience and displays the advertising content accordingly.
Programmatic Advertising makes TV advertising more efficient and personalized, similar to how online ads work.
Most business owners have likely considered running a television advertisement at some point. They have every right: TV is more popular than ever! As a result, programmatic TV advertising has been created to remove the manual negotiation between advertisers and networks.
Now, algorithms do the heavy lifting. Rather than contacting networks individually to inquire about available ad slots, advertisers can rely on data-driven algorithms to access real-time availability across multiple networks. Then, you (and your competitors) bid on the slots, and whoever wins the bid, runs the ad.
The process is now largely automatic, which helps you avoid the phone line and inbox headaches and make data-driven decisions for your business.
How Programmatic TV Advertising Works
To answer this question, let us divide this section into two separate parts and discuss how it works in detail.
The Technology Behind It
As discussed above, programmatic TV advertising is an extremely precise method of targeting businesses’ potential customers, thanks to machine learning and data gathering.
One cannot ignore the actual impact of modern technologies. combining technological advances and data makes this approach more efficient than traditional TV advertising.
At the heart of programmatic TV advertising is the collection and analysis of data. Viewers’ information, including online behavior, demographics, and viewing habits, is meticulously gathered and provided to advertisers.
The data mentioned must be analyzed and organized to find reasonable patterns. Therefore, this is the next step. Afterward, TV networks offer data about ad inventory and other information that will be helpful for brands.
After gathering the required data and information, real-time bidding begins. Usually, there is a platform similar to typical marketplaces in which advertisers can purchase ad inventory.
When a viewer starts using TV programs, the platform starts receiving their data and offers brands the opportunity to show their ad to that particular viewer. Since several businesses may seek the opportunity, there will be bidding, and algorithms come into play to decide which brand will ultimately win.
In the next stage, the winner’s ad will be shown on the viewer’s screen.
Here, we have to mention another stunning technology, called DCO, short for Dynamic Creative Optimization. Leveraging this technology allows ad servers to adjust the ad’s content according to real-time data, such as the viewer’s location and recent watching history.
Once again, the algorithm initiates analysis. The goal is to determine the viewer’s reaction to the ad shown on their screen.
In essence, these technologies serve the programmatic TV advertising:
- Data Management Platforms (DMPs): Responsible for collecting, analyzing, and organizing various data.
- Demand-Side Platforms (DSPs): These tools help advertisers to manage their campaigns effectively.
- Supply-Side Platforms (SSPs): These are platforms that we discussed earlier and said are similar to typical marketplaces and used for trading ad inventories.
- OpenRTB: Real-time bidding is possible because of this standard protocol.
Besides the technological aspect, the fact that brands can make data-driven decisions is a factor worth examining separately.
Data-Driven Decision Making
All the technologies we have discussed are designed to facilitate data-driven decision-making, a key theme in our exploration of digital advertising.
The primary difference between digital and traditional approaches is that the former allows advertisers to leverage data to make more informed choices. Programmatic TV advertising is no exception.
Until this point, we have explored different aspects of this way of advertising.
Following data collection and analysis, brands are provided with information about viewers, helping them determine which users are more likely to be their potential customers and show interest in their offerings.
This way, data-driven decision-making will become possible, and businesses will have a great opportunity to run more targeted advertising campaigns.
Now, let’s move ahead and discuss another aspect of this method.
Linear or CTV or OTT?
In essence, there are three types of TV advertising, each of which we will examine separately.
Linear TV
Linear TV, the timeless classic of television, has been a part of human culture for decades. Cable and broadcast TV are prime examples of this type, where viewers are passive consumers, with no control over the content or scheduling.
Linear TV advertising, a traditional approach familiar to most audiences, follows a predetermined schedule with limited targeting options. There is a predetermined schedule, with few possibilities to target the right audiences. However, the reach will be high, and many people will consume the ad and see your brand’s name.
This old-fashioned approach still has its benefits, and several brands use it at high costs.
Since brands strive to gain more by paying less, the difficulty of targeting the right users becomes a fundamental issue. That is why many small and big names nowadays prefer programmatic TV advertising.
Connected TV (CTV) & Over-the-Top (OTT)
Modern televisions equipped with internet connectivity enable users to access a wide range of streaming services. In other words, connected TV, AKA CTV, offers online content in addition to traditional or linear TV, which we discussed in the previous section.
CTV advertising is rapidly growing due to a shift in people’s content consumption.
The programmatic TV advertising we are discussing is the type of ad executable on CTV and other similar services.
Therefore, CTV advertising offers a more targeted approach to capturing the right target audience’s attention. Advertisers can also benefit from all the other pros of this kind of advertising campaign.
There are four primary types of CTV advertising:
- Pre-roll: Ads that play before the video content.
- Mid-roll: Ads that play within the video content.
- Post-roll: Ads that play after the video content.
- Companion Ads: Static or interactive ads that are shown alongside video content.
OTT advertising is also very similar to CTV campaigns. OTT services are totally dependent on the Internet and bypass traditional cable networks. Netflix and Amazon Prime are two examples of this type.
An important note is that OTT services are accessible on different devices, and viewers are not limited to TVs.
Brands can also plan to run programmatic TV advertising on OTTs. These platforms use the same technology and offer the chance to make data-driven decisions, so they are similar to CTVs in some ways. The ability to target viewers precisely is the most notable attribute that allows brands to get more with spending less.
Which one should you choose between CTV and OTT advertising? The answer depends on your business goals and objectives.
But how does programmatic advertising surpass traditional linear TVs? Let’s find the answer to this question.
3 Reasons Why Programmatic TV Advertising is Good
A closer look at the benefits of this type of advertising will give us an acceptable answer to the question raised in the last paragraph of the previous section. These three reasons justify the mentioned fact.
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Improved Targeting & Personalization
As this blog has repeatedly stated, targeted advertising is the most noteworthy characteristic of the programmatic approach. Thanks to this ability, brands can personalize ads to increase their chances of success. Data-driven insights and advanced technologies make this achievement accessible.
Naturally, when ads are shown to people who are likely the brand’s potential customers, we can hope that the conversion rate will increase significantly. As a result, businesses can achieve their advertising objectives more efficiently through precise targeting.
Conversely, displaying ads to viewers without considering their preferences can result in wasted resources and diminished returns.
Overall, precise targeting and personalization will give you an excellent opportunity to make advertising campaigns more impactful than ever.
- Real-Time Optimization
Advertisers can monitor and adjust campaigns in real time, ensuring ads perform well. This flexibility allows changes to be made mid-campaign to improve results, something traditional TV ads can’t do.
- Increased Efficiency
The automated buying process saves time and effort compared to traditional methods, which require manual negotiations and bookings. This streamlining allows advertisers to focus on strategy and creativity rather than logistics.
Precise targeting and personalization, alongside real-time optimization and other attributes, allow brands to increase advertising campaign efficiency successfully.
Logically, businesses adore approaches that offer them fantastic chances to run effective campaigns and take the most out of their investment in promoting their goods and services. Programmatic TV advertising does incredible in this regard.
Considering the automation in most stages of such campaigns, you can be sure that human resources time will not be wasted on doing repetitive tasks, and they can handle more creative jobs.
Moreover, such advertising can be scaled easily to be suited for more extensive campaigns effortlessly.
Lastly, one cannot forget the cost-efficiency of this method. As discussed above, achieving more with less is a fantastic financial gain, which can be achieved with programmatic TV advertising.
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Enhanced Measurement & Analytics
Making accurate measurements and analysis is one of digital marketing’s best qualities. The same statement is true for programmatic advertising.
Professional advertisers use the data they gather after running the campaign to collect information on strengths and weaknesses.
Since this is a digital approach we are talking about, brands will face an enhanced measurement system that allows them to assess different parameters closely and determine which parts they did well and which areas need improvement for future efforts.
This capability aligns closely with the principles of data-driven decision-making. Simply put, the insight businesses gather will aid them in making better choices in the future and running more efficient campaigns.
Even though programmatic advertising, whether on CTVs or OTTs, offers several benefits, there are also some challenges that you must be aware of.
Challenges in Programmatic TV Advertising
Brands may encounter two main challenges when opting for programmatic advertising.
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Fragmentation of the TV Landscape
Diversity in CTVs and OTTs, as well as variety in online programs, is becoming a major challenge for this type of advertising. This concern also applies to traditional TVs.
More channels and streaming services will mean a much more competitive landscape for advertisers, forcing them to put their best on the line and hope to accomplish predetermined goals.
As a result of this fragmentation, the brand’s target audiences may be scattered widely. And remember that linear TV loses more audiences as days pass.
Since demand rises, there will likely be issues regarding inventory shortage soon. For example, when requests for displaying ads on popular content increase, the final cost of advertising will probably increase.
Even after finding a golden formula to leverage programmatic advertising regardless of fragmentation, measuring results on various platforms will be challenging.
Finally, targeting becomes more complex when target audiences consume content on different channels and services.
In essence, fragmentation will cause some notable challenges and make the ecosystem more complicated. However, proper solutions can ultimately overcome all the challenges.
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Privacy & Data Concerns
In the modern era, data is gold. That is why all tech companies and governments strive to collect users’ data. They plan to leverage this data to gain more control over everything.
We have already discussed that data collection is a primary pillar of programmatic TV advertising. This information makes this approach practical and possible. Therefore, it is not surprising to mention privacy as a concern and challenge in this relatively fresh realm.
Although some robust regulators are trying to mitigate the negative influence of data collection, some significant and reasonable concerns still remain.
Viewers may not be pleased to see their data, such as content consumption habits, offered to third-party advertisers. As a result, in rare cases, brands may see harmful impacts by opting for programmatic advertising.
The most effective strategy is to ensure transparency by clearly explaining the data collection process and its purpose to users.
Additionally, implementing strong security measures and guaranteeing data safety will go a long way toward gaining viewers’ trust.
To be fair, the benefits of programmatic TV advertising outweigh its challenges. More and more brands are considering running an advertising campaign on online streaming services, and maybe you should do the same for your business.
A Quick Look into the Future
Industry trends suggest that linear TV’s popularity may decline significantly in the near future, particularly among younger audiences. In the digital era, programmatic TV advertising will be adopted by the masses since most people globally prefer streaming services over traditional TV networks.
Advancements in technology are expected to enhance targeting systems, enabling more precise identification of potential audiences for a brand’s advertisements. Additionally, measurement tools will be better and able to provide brands with more accurate results about the campaign. The challenges we have examined in the last part of the blog will likely be solved due to the mass adoption of the method.
At Dream Farm Agency, we combine creative storytelling with advanced technology to create ad campaigns that captivate your audience and deliver real results. Our unique approach transforms traditional ads into interactive, engaging experiences that drive higher conversions and brand loyalty.
As a creative powerhouse, Dream Farm Agency specializes in innovative marketing solutions tailored to modern audiences. From gamified storytelling to interactive campaigns, we help brands connect deeply with their target markets and stay ahead of industry trends.
Discover how our Paid Ads Powered by Gamified Storytelling can make your brand unforgettable.
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