Programmatic and Addressable TV: Definitions, Projections and Resources

Programmatic technology has revolutionized the way digital media is targeted, transacted and measured. By automating and improving once laborious processes, advertisers experience reduced complexity, lower costs, better data, precise targeting and increased brand lift. Publishers, in turn, can optimize revenue, streamline operations and provide useful data to improve the overall buying process. Until recently these benefits have been limited to desktop and mobile advertising, absent from the biggest screens in the house: TVs.

However, new processes and technologies are emerging, allowing for greater targeting and measurement across television advertising. The two most talked about being programmatic TV and it’s newer subset, “addressable TV.” Below you will find projections, definitions and various resources to help understand what this exciting new technology is all about.

Programmatic TV Projections

What is Programmatic TV?

Like we saw when programmatic advertising was introduced, there is still much confusion around the actual definition of programmatic TV. While it can range from the simple to the complex, the industry seems to be settling on a more generalized definition like the following:

Programmatic TV is the automation of audience-based TV advertising through a software platform.

Programmatic technology improves upon the traditional standard set in the 1950s, in which marketers rely on GRPs to determine desirable audiences for their ads. Instead, marketers use broadcaster’s set-top-box (STB) data to identify a more specific subset of consumers and purchase TV spots against these audiences programmatically. They don’t care if their ad shows up on X Factor or the X Games, as long as the target audience is watching [Digiday].

Programmatic TV Definitions

Let’s take a closer look at some of the definitions that are important to understand when studying the programmatic TV ecosystem:

Linear Television
The traditional broadcast system in which a viewer watches a scheduled TV program at the time it’s broadcasted, and on the channel it’s originally presented on.

Nonlinear Television
A non-traditional means of viewing TV content that enables “time-shifting” (not watching during the scheduled broadcast) using streaming, DVR, video-on-demand, over-the-top (OTT) or mobile TV technology.

Gross-Rating Point (GRP)
The standard measurement (i.e.“ratings”) of traditional TV. GRPs quantify impressions as a percentage of the target population, and allow marketers to forecast which spots they want to purchase based using basic age/gender targeting.

Multichannel Video Program Distributors (MVPDs)
A type of service provider that delivers TV programming services to the consumer, often charging a subscription fee. [cable and satellite TV providers]

Set-Top Box (STB)
A hardware device that allows a digital signal from a broadcaster to be received, decoded and displayed on a television. It also transmits important user data back to the broadcaster.

Over-The-Top (OTT)
The delivery of TV content via Web 2.0. Users are not required to subscribe to a traditional cable or satellite providers to watch TV content. Typically video is delivered in a streaming or video-on-demand (VOD) format.

Video-On-Demand (“VOD” or “SVOD”)
An OTT technology that allows consumers to choose what to watch and when to watch it through streaming. [Netflix, Hulu, Amazon Video]

Advertising Video on Demand (“AVOD”)
Advertising—or Ad-based—VOD is a similar model that is free for the users [YouTube].

Connected TVs
A television set or set-top box technology with Web 2.0 integration that delivers OTT content.  [Smart TVs, Roku, Apple TV, Chromecast, Xbox, PlayStation, etc.]

Addressable TV: [See below]

What is Addressable TV?

While programmatic TV increases the odds of reaching target viewers by using advanced audience data to identify optimal TV spots, there will still be wasted reach. This is because people outside the target audience will still tune into these programs. What is needed is the ability to send ads only to those viewers or households within the target audience. This relatively new practice is known as “addressable TV.”

Addressable TV uses programmatic technology and advanced audience segmentation to deliver specific video ads at a household level in real time.

While addressable TV is technically a form of programmatic TV (they both use automation to serve TV ads), its household-level and real-time targeting are major distinguishing factors. Advertisers can now buy audiences instead of programs—similar to the programmatic display and video buying processes utilized on desktop and mobile devices. Unlike standard programmatic TV advertising, there is no need to preselect availabilities, and no need to predict who will be watching.

Instead, the system determines audience composition in real time and then chooses the most appropriate ads. Each individual advertiser reaches only those households that qualify. Segmentation can occur at geographic, demographic and behavioral levels.

TV Targeting Methods


Let’s explore the three most popular TV targeting methodologies using a real-world example:

Example: An auto manufacturer wants to promote a 30-second minivan spot to the audience most likely to buy their product. 

Traditional TV Ad Buying
Marketers use an age/gender proxy (e.g. women ages 25-34) set by Nielsen GRP data to purchase TV spots in advance through a direct deal with the broadcaster, usually settling for a fairly low percentage of their true target audience.

Programmatic TV
Marketers analyze viewership data by a wider set of attributes as provided by STBs and specialized data providers. They may define their target audience as auto intenders with a minimum income of $75,000 and at least one child in the home. TV spots or programs that have viewers best match this criteria are purchased and served using programmatic technology. However, viewers who tune into this program outside the target audience will still see the video ads.

Addressable TV
Marketers define their target audience using similar data STB data and technology as described above. However, matches are identified on a household level, bid on in real-time and delivered directly to the targeted household. This method reduces wasted impressions because ads are only delivered to viewers within the target audience.

Advantages of Programmatic TV

Optimized Audience Targeting
Programmatic techniques allow marketers to better understand audience composition and target beyond large-scale demographic and geographic swathes.

Efficient Workflow Automation 
Today’s TV ad selling and buying process involves tremendous back-and-forth communication and exporting/importing data from one closed system to another. Programmatic TV helps make this process more efficient.

Driving Higher Value from Inventory
Programmatic solutions will help MVPDs and other broadcasters to increase the yield on underutilized inventory.

Private Exchanges Drive Opportunity
While premium inventory is scarce at this point, programmatic data can allow both sides to more efficiently transact and fulfill each deal and to gather more data on the ads being served as the practice evolves.

Challenges of Programmatic TV

Audience Complexity and Measurment
While the most common way of watching TV programming is still linear, the amount of viewing on smartphones, tablets, OTT, SVOD, VOD and other time-shifted and VOD viewing continues to grow.
Calculating viewership across the numerous viewing streams and devices requires media owners to weave together varied measurement statistics from multiple data providers. This measurement challenge only grows more complex as each new viewing option emerges.

Convergence of video is inevitable, but from an ad sales perspective, cannot occur until the industry has collectively resolved issues related to currency, viewability and transactional transparency.

Creative Execution
Creative needs to catch up to what programmatic can do. For that to happen, agencies and clients need to shake up their traditional thinking and create ads that work in tandem with the advanced audience targeting capabilities programmatic TV delivers.

Programmatic TV Landscape

Programmatic TV landscape

There are roughly five categories of companies that make up the bulk of the programmatic TV landscape:

  1. The TV advertisers and media agencies who plan and book campaigns.
  2. The demand side platforms (DSPs) who act as programmatic buying platforms, mainly fulfilling two functions: 1) marrying data from DMPs with the available inventory and 2) executing the buy programmatically.
  3. The supply side platforms (SSPs) who act as programmatic selling platforms. These platforms integrate into legacy TV systems for each network to make the automated buy possible.
  4. The data management platforms (DMPs) who provide audience data, engagement metrics, purchase data to enable smarter buying decisions.
  5. The broadcast networks who supply and monetize TV inventory.

Programmatic TV: Further Reading

To learn a little more about the technology and state of programmatic TV, we recommend taking a look at the following insightful articles, white papers and projections:

Author: Forrest Whaling

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