All You Need to Know About Programmatic Television Buying

It’s no secret that advertising is the most important way to promote a product, service, or brand. It’s a way that brands can creatively display products and services to an intended audience. The most common is display advertising, which is seen in all forms of media, especially television. There two different types of display advertising: traditional and programmatic. If you’re looking to build your brand and expand your audience, you should consider programmatic television buying. It’s okay if you don’t know what that is, or have little idea about it, you will soon become an expert in programmatic advertising!

In this article, you will learn the differences between the two forms of display advertising, what programmatic TV advertising is, how to buy it, and the importance of programmatic advertising in the media.

Display Advertising in the Media

To understand the importance of programmatic TV advertising, you should be aware that there are two different forms of display advertising: traditional and programmatic. While there are pros and cons to each, we will explain the differences of each and how programmatic TV advertising will benefit you more in the long run.

Traditional Advertising

Traditional TV advertising is a big business. Typically, TV advertising is bought during upfronts. Whatever TV inventories haven’t been sold is then sold in the scatter market. The buying process for traditional television advertising is time-consuming and costly. Traditional advertising happens between the ad buyer and publisher and involves trading and negotiations. This can cause a huge risk of overpayment on the advertiser’s part. On top of creating a higher cost for the advertiser as a result of the lengthy buying process, this is not ideal. It’s also difficult to gather the data that’s scattered across media sources. This is not efficient and there are many causes for error.

Programmatic Advertising

Programmatic advertising is the process of automating the buying and selling of online advertising. It includes digital TV ads served across the internet, mobile devices, and connected TVs, as well as linear TV ads served across set top boxes. It can be purchased immediately across an extensive number of sources. Real-time bidding, which is mentioned later in this article, also determines the price because it is based on demand for ad space. This eliminates all risk for over-payment. It is data driven.

An algorithm then determines looks at audience data and sees who will see the ad and where it will be placed, making the process simple and easy. Addressable TV takes this to the next level and targets viewers with ads that relevant to them.

Advertisers can optimize and adjust their campaign at any point because of its transparent, real-time reporting. This process is simple and cost effective, making it the best choice for ad placement. This is why you should consider programmatic television buying.

Programmatic TV is a win for audiences, advertisers, and the TV industry. Programmers and distributors will be able to monetize TV ad inventories more regardless of the size of the screen.

Programmatic TV Advertising

As explained above, programmatic advertising is clearly the best choice for ad placement in the media. But what about television? Well, this still applies. Programmatic TV advertising is a TV ad buy that uses data and automation to target consumers more efficiently. Specific audience targeting will help increase the value of advertising for TV networks, cable operators, buyers and vendors. When looking at the advantages and disadvantages of programmatic buying, there’s nothing that should make an advertiser hesitate to adopt this new form of display advertising.

Advantages to Programmatic TV Advertising

Of the different forms of media, television is one of the best ways to target a wide-scale audience. Planning, buying and measuring is also easier because data is automated and found in the same place. TV users can further benefit because their ads will be engaging to their likes or needs. A couple years ago, programmatic TV ad spending was at $1.7 billion. It was expected to reach $4.7 billion by the end of 2020. This shows how there is change in the way buyers and sellers go about purchasing advertising.

Disadvantages of Programmatic TV Advertising

When it comes to the downfalls, there aren’t many in terms of choosing programmatic advertising. Because it’s relatively new, publishers, buyers, and sellers are slow to embrace changes in what already may be familiar to them. Although, like most advancements in technology, they will soon see how this can better their lives.

Connected TV

Connected TV consists of any type of TV that can be connected to the Internet and can stream digital video at a viewer’s convenience. This is TV that doesn’t call for cable or pay-TV services, such as smart TVs, devices like Roku, and even gaming consoles like a PlayStation and or Xbox. Using programmatic TV advertising with connected TV allows advertisers to reach specific audiences. This is incredibly beneficial because an advertiser can be sure that purchasing ad placements will be directed towards the audience it’s intended for. This results in a more effective advertising strategy.

Digital Out-of-Home Advertising (DOOH)

DOOH is another way that advertisers can target TV users with programmatic advertising that isn’t at home. Similar to the way that advertisers use connected TV, they can also target and place inventory (or ads) “out of the home” using programmatic advertising.

When looking at DOOH targeting, there is a variety of information that advertisers look at. This includes proximity, behavior, venue, zip code, screen type, time of day or week, and even weather. It’s amazing how detailed the information advertisers receive using programmatic advertising. They hope that by specifying advertisements towards these things listed above, they will not only receive positive feedback, but viewers will also be engaged with what they are seeing.

After selecting the target audience, advertisers must decide how they are going to display their advertisements: place-based or large format. Place-based inventory placement seeks to engage people at different places where groups tend to gather frequently. Large format is exactly how it sounds. Advertisers will place their ads on screens that can be seen at larger distances, such as in malls, restaurants, airports, and gyms.

Regardless if an advertiser is utilizing connected TV or DOOH advertising, they must be familiar with their options when it comes to buying programmatic TV advertising.

Buying Programmatic TV Advertising

Advertisers ultimately want to purchase advertising that is going to be the most effective. With programmatic ad buying for connected TV and DOOH, it’s easier to get information such as demographics, geographical area, interests and watching history in order to strategically place ads. This will keep your audience engaged and offer you insights into how your ads are performing in terms of satisfaction and accuracy.

Mentioned earlier, the process of buying programmatic TV advertising is fast and simple. It utilizes data insights and algorithms to serve ads to the right user at the right time, and at the right price. Although, to understand the ways to go about programmatic TV buying, you should note there are three different categories it can fall under.

Real-Time Bidding (RTB)

Real-time bidding is the first and most common way you can go about purchasing programmatic TV advertising. It is also called open auction. It happens in real-time. RTB is also open to anyone looking to purchase programmatic advertising. The price is often determined based on the supply and demand for ad space. This makes it extremely cost-effective.

Private Marketplace (PMP)

Similar to RTB, private marketplace is an auction, but only selected advertisers may participate in it. To participate in this form of programmatic television buying, you will need to either be invited or apply to receive an invitation.

Programmatic Direct

The final way to purchase programmatic TV advertising is through programmatic direct. This process doesn’t consist of an auction, but a publisher selling ad space at a fixed cost per mille (cost per thousand impressions.) Selling based on impression is often ideal for publishers because it’s an inventory based product.

How Programmatic Advertising Reaches an Audience

When purchasing programmatic advertising, there are two resources that advertisers can find advantageous for programmatic audience reach.

Demand Side Platform (DSP)

DSP is an automated buying platform where the purchase takes place and involves multiple ad exchanges. The platform offers advertisers to buy inventory across many different platforms. The inventory can be ads on mobile devices, video ads, and ads placed on websites. The two largest connected TV platforms- Amazon and Roku- operate their own DSPs.

Supply Side Platform (SSP)

SSP is more of an overarching platform. It allows media owners and advertisers to receive revenue and manage inventory. It gives advertisers more control and includes ad exchanges and DSPs. The ad exchanger is how the SSP puts out inventory that advertisers, agencies, and networks can buy through the DSP. Examples of SSPs include Google and Right Media, an online advertising company that offers media trade.

The Power of Programmatic TV Advertising

It’s clear that programmatic advertising is taking the marketing world by storm. The efficient and effective way to purchase ad space allows advertisers to optimize their marketing strategy and make sure that their ads reach the intended audience. Programmatic advertising buying is also much more cost efficient; artificial intelligence eliminates error and the need for negotiation between the advertiser and the purchaser.

By now, you should know the basics of programmatic advertising and how this method of buying ad space can be incredibly beneficial in your marketing plan. If you are considering purchasing TV advertising, it’s likely that programmatic is the way to go.

All in all, if you are still unsure about purchasing a programmatic ad, SEO Design Chicago has many experts who can help you.

FAQ about Programmatic Television Buying

1. What’s the main difference between traditional TV advertising and programmatic TV advertising?

Traditional TV advertising involves manual negotiations between ad buyers and publishers during upfronts and scatter markets, making it time-consuming, costly, and prone to overpayment. Programmatic TV advertising automates the buying and selling process using data and algorithms to determine optimal ad placement, pricing, and targeting in real-time. This eliminates lengthy negotiations, reduces costs, provides transparent real-time reporting, and allows for campaign optimization at any point, making it more efficient and cost-effective than traditional methods.

2. How much does programmatic TV advertising cost compared to traditional TV ads?

Programmatic TV advertising is generally more cost-effective than traditional TV advertising because real-time bidding determines pricing based on actual demand for ad space, eliminating overpayment risks. The automation reduces administrative costs and negotiation expenses. While specific costs vary by campaign size, targeting parameters, and competition, programmatic advertising typically offers better ROI due to precise targeting that reduces waste and improved measurement capabilities that allow for budget optimization throughout the campaign.

3. What is Connected TV and how does it work with programmatic advertising?

Connected TV (CTV) refers to any television that connects to the internet and streams digital video content, including smart TVs, streaming devices like Roku, and gaming consoles like PlayStation or Xbox. Programmatic advertising on Connected TV allows advertisers to target specific audiences with precision, similar to digital advertising. This combination provides the visual impact of television advertising with the targeting capabilities and measurability of digital advertising, making campaigns more effective and ensuring ads reach intended audiences.

4. What are the three ways to buy programmatic TV advertising?

The three main purchasing methods are: Real-Time Bidding (RTB) – an open auction available to anyone, where pricing is determined by supply and demand in real-time, making it the most cost-effective option. Private Marketplace (PMP) – an invitation-only auction for selected advertisers, offering more premium inventory with controlled access. Programmatic Direct – involves purchasing ad space at a fixed cost per thousand impressions (CPM) directly from publishers without auctions, ideal for guaranteed inventory and predictable pricing.

5. What is Digital Out-of-Home (DOOH) advertising and how does it relate to programmatic TV?

DOOH is programmatic advertising displayed on digital screens outside the home, such as in malls, restaurants, airports, and gyms. It uses the same automated buying principles as programmatic TV but targets audiences in specific locations. DOOH targeting considers factors like proximity, behavior, venue, zip code, screen type, time of day, and even weather conditions. Advertisers can choose between place-based inventory (targeting specific gathering locations) or large format displays (visible from greater distances) to reach audiences when they’re away from home.

6. What are DSP and SSP platforms, and why are they important?

Demand Side Platform (DSP) is an automated buying platform where advertisers purchase inventory across multiple ad exchanges and platforms, including mobile, video, and website ads. Major Connected TV platforms like Amazon and Roku operate their own DSPs. Supply Side Platform (SSP) is used by media owners to manage inventory and generate revenue, connecting with ad exchanges and DSPs. Examples include Google and Right Media. These platforms work together to facilitate the automated buying and selling process that makes programmatic advertising efficient and effective.

7. Is programmatic TV advertising suitable for small businesses, or is it only for large corporations?

Programmatic TV advertising can work for businesses of various sizes, though it’s particularly beneficial for companies with sufficient budgets to make meaningful media buys. The automated, data-driven approach can actually help smaller businesses compete more effectively by eliminating waste and ensuring precise targeting. However, small businesses should consider factors like minimum spend requirements on platforms, the complexity of campaign management, and whether their target audience aligns with Connected TV and DOOH viewing habits. Many businesses find success by working with experienced agencies that can manage programmatic campaigns and provide expertise in optimization and strategy.