September 01, 2018

The advent of digital advertising forever changed how media is bought and sold, with advances in programmatic technology leading the way. The appeal of programmatic buying is easy to see, addressing many of the challenges associated with traditional ad sales. To name just a few of the staple ways in which programmatic technology improves advertising transactions, it lets buyers use audience data for targeting; grants access to premium but often challenging-to-buy inventory; and automates complex buying workflows.

The three flavors of programmatic TV advertising and what they mean for your next campaign.

The technology that made programmatic advertising possible in digital media is constantly improving, and now it is extending to other media, like TV campaigns. At the same time, the term programmatic has evolved to become an umbrella concept that actually covers several different styles of transactions.

Today there are three primary "flavors" of programmatic TV advertising: open marketplace, private marketplace, and programmatic direct. Each has distinct benefits to suit the needs of buyers and sellers who want to transact in a rules-based setting.

When it comes to adopting the right programmatic TV solution, though, one size may not fit all goals. Before shifting a significant portion of an ad budget to programmatic TV, marketers may want to spend some time determining what kind of programmatic TV advertising is best for their business.

Open Marketplaces

Imagine a bazaar where buyers stroll through the aisles, browsing inventory from numerous sellers and evaluating what items are best for them. Interested buyers could propose a price for anything that meets their needs. Sellers could then accept or reject the offer based on their assessment of their business situation and the perceived value of their wares.

The Programmatic TV OpportunityThis is a good analogy for a programmatic TV open marketplace where buyers can review and make offers on ad

inventory from many TV stations, all in one platform. Programmatic open marketplaces are great for purchasing multiple ad spots in a single transaction for campaigns that will air across multiple stations, geographies, and dayparts.

For sellers, participating in an open marketplace is advantageous because it exposes their inventory to buyers who may not have previously considered local TV as a viable option for their campaigns. Since sellers have the final say on whether to close a transaction, there is little downside for them to join in.

The only potential downside of open marketplaces for buyers is that offers are not guaranteed to be consummated: Sellers can opt to turn down any offer that doesn't meet their expectations. So while open marketplaces are good for scatter or opportunistic campaigns, they may not meet the needs of buyers whose spots absolutely must run at a certain place and time.

Private Marketplaces

Private marketplaces are great for maintaining relationships between specific media companies and their most favored customers. Think of an exclusive flash sale or pop-up shop that requires membership for access.

In a private marketplace, inventory is limited and made available to buyers specifically selected by the seller. Only those preferred customers who have been invited to review inventory are allowed to come in. Sometimes sellers will limit the inventory on offer to only the most premium ad spots, but that's entirely their option.

Programmatic Direct

Programmatic direct is a mutually agreed direct technology connection that essentially replaces the old-fashioned manual back-and-forth between brands, agencies, and media companies. Since a programmatic direct solution can be configured to respect existing business rules and standards, transactions can happen faster and in fewer steps. An offer that meets the standing business terms of the buyer and seller is automatically approved, effectively creating a guaranteed transaction for both sides (in contrast to the open marketplace model).

A retail analogy is less appropriate for programmatic direct. Imagine instead an old-world industrial inspection line. Transactions that meet contractual expectations automatically move along the line to completion, while offers that don't fit are rejected and thrown off the line. The efficiency and appeal of programmatic direct is that humans don't have to evaluate each offer as it passes down the line.

The programmatic direct model best suits traditional agencies, high-volume buyers, and anyone else in the transaction process who wants to maintain a preferred relationship between buyer and seller, often with business terms already in place. One or both sides can also tap into programmatic advertising's key benefits of using data to assess inventory value and superior transactional efficiency.

 Finding the Option that Works Best

Less than 10 years after its introduction to digital media, programmatic buying is projected to represent somewhere north of 80 percent of transaction volume this year, according to eMarketer. Given programmatic's rate of potential growth as it arrives in other media, marketers who want to keep pace with the latest in ad buying innovation may want to start learning how the technology can be used for television campaigns.

Open marketplaces, private marketplaces, and programmatic direct reflect distinct business models. It may not always be initially clear which of these are supported by a certain solution provider; as marketers make their vendor selection, they should be sure to review which flavor of programmatic TV is right for them.
By Mickey Wilson (@mickey_wilson) is the CMO at WideOrbit.

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