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Nearly nine times more than the expected value of the global market in 2017. In a context where linear TV consumption is declining, and where the Internet presents fierce competition in terms of viewing time and its ability to attract ad spend from advertisers, the TV sector is looking to reinvent itself so it can remain attractive and still benefit from bountiful advertising budgets.

With individualisation of audiovisual consumption, the popularity of pay-TV in most Western countries and TV sets now connected to the Internet, it is now technically possible to offer advertisers similar conditions to those they enjoy on the Internet, including:

  • automated transactions
  • bidding for inventory
  • real-time buying
  • targeted advertising

In practice, bidding and real-time buying are still relatively rare.

  • RTB1 is technically difficult to implement and does not guarantee broadcasters that all their ad space will be filled. Broadcasters cannot run the risk of having empty screens on television.
  • Broadcasters are also concerned that bidding for ads, whether done in real time or upfront, could lower the value of their inventory.

Automation of the transaction process does not really pose problems for advertisers or broadcasters because it decreases costs related to human intervention. It will therefore continue to develop. Targeted advertising is the real issue for adoption of programmatic on television. It covers three main types:

  • Linear programmatic TV: A single advertising message is delivered to all viewers of the same TV programme, but advertisers can target programmes with audiences matching their target audience.
  • Addressable TV: Different ad messages tailored to individual households are delivered within the same linear TV broadcast.
  • Connected TV: Different ad messages tailored to individual households are delivered within non-linear audiovisual content (e.g. catch-up TV).

The first of these primarily changes the transaction process and not so much the advertising goal as it is still based on a mass advertising model. The third is strongly linked to the traditional Internet environment. Although this is disrupting traditional TV practices and requirements, it remains within a now familiar ecosystem (the Internet). Addressable TV is a genuine revolution in programmatic TV by enabling different ad spots in a single linear broadcast to be delivered according to consumer profiles.

Programmatic TV is still in its infancy in most countries, especially addressable TV, but is growing rapidly in the United States and to a lesser extent in other English-speaking countries, including the United Kingdom and Australia. It is also developing in Germany. Its growth is being driven by the STBs and platforms implemented by cable, satellite and telecom operators, who are trying to seize the opportunity to gain a foothold in the advertising value chain.

TV broadcasters are being more cautious as they fear seeing a share of the advertising pie captured by third parties, and big international players like Google and Facebook playing a major role in collecting and analysing consumer data.

IDATE DigiWorld has identified a number of factors likely to affect the pace of growth of programmatic TV:

  • The size of the addressable market: the number of households at the national level that could benefit from targeted advertising via television, which depends on the penetration of pay-TV (and therefore STBs) and other devices connecting the TV to the Internet.
  • The ability of stakeholders to agree on technological standards and new measurement tools.
  • Changes in legislation, including allowing targeted advertising on national television, relaxing obligations related to approval of ad spots before airing on terrestrial TV, or changes to laws related to privacy and use of personal data.
  • The ability of players to create new business models tailored to new relationships that will have to form between broadcasters and commercial distributors, and between TV ad space buyers and sellers.
  • Transparency regarding data used: ad buyers will want considerable visibility, while sellers may be unwilling to provide too much transparency to protect their asset.
  • Finally, the question of how much targeted advertising do TV advertisers really want: mass advertising fulfils specific requirements which would be too expensive to fulfil using targeted ads.

 

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