Making Programmatic Broadcaster-Friendly

In one form or another, programmatic or automated selling is coming to local TV.

Recognizing that inevitability, vendors of first-generation supply-side programmatic platforms are addressing broadcasters’ concerns about commoditizing ad inventory, cannibalizing existing spot revenue and integration with traffic and billing and business management software.

At Imagine Communications, programmatic is not about cheapening inventory, says Sarah Foss, VP, product management, advertising management, at Imagine. “It’s about two key things: No. 1, automating key business processes between buy- and sell-side systems, and, No. 2, leveraging data and analytics in meaningful ways.”

According to vendors, the push for programmatic is coming mostly from the buy side. “Believe it or not, we have had large ad agencies tell us that their goal is to get to 100% programmatic by 2020,” says Shereta Williams, president of Videa, Cox Media Group’s programmatic solution that counts Cox, Tegna, Raycom, Media General and Graham Media among its charter users.

“They are telling broadcasters that if their TV stations aren’t on one of these [programmatic] platforms by a certain point in time, they won’t buy from them. That is how aggressively it is playing out on the buy side.”

While going totally programmatic  — especially by 2020 — may be an aggressive view, a report from Magna Global, the media buying unit of IPG Mediabrands, this spring forecast that programmatic would account for 4%, or $2.5 billion, of TV ad budgets this year and climb to 17%, or $10 billion, by 2019.

According to Williams, buyers see programmatic as a way of reassembling mass audiences. “The fact that consumer viewing and engagement with media has fragmented so much [means] that for advertisers to aggregate audiences back at scale they have to rely on automation and data as part of the buying and selling process.”

Media buyers, who view digital and online video ad inventory on their buy-side programmatic systems and then assess the success or failure of ads or campaigns based on metrics like click-throughs in near real time, expect similar convenience when it comes to television buys, Williams adds.

While Imagine, which introduced its programmatic Landmark xG Open at IBC 2015 earlier this month, sees programmatic in TV as important, it also views it as nascent.

“Imagine Communications sees many of our clients—on both the buy and sell side—approaching programmatic as a highly experimental project,” says Foss.

“For instance, there’s still uncertainty if systems are bringing new advertisers to the ecosystem—or if they are pillaging from existing clients. If it is the ‘pillage for a cheaper rate’ plan that’s happening, we have clients that want to cut that off ASAP.”

Broadcasters can avoid cannibalization by integrating programmatic pricing decisions with their “normal pricing workflow,” says Eric Matthewson, CEO of WideOrbit, which launched its programmatic platform in April and now has stations reaching 59% of U.S. households and 18 of the top 25 DMAs.

“Sellers have complete control of the prices they accept for their inventory,” he says. “In our system… there’s no automatic commitment of a percentage of inventory to a forward sale at a mystery price. If a station doesn’t like the rate offered for a programmatic buy, it can turn it down.”

Videa approaches rate cannibalization from a similar perspective. “A key tenet for us in bringing this to broadcasters was it had to be transparent, clear and engaging with the ability for broadcasters to settle on a price that makes sense for them and that advertiser,” says Williams. “It has to be the same as it is offline today.”

To derive the maximum benefit from a programmatic solution, broadcasters must be able to integrate it into their existing workflows, including traffic and billing, says Matthewson.

“It’s hugely important that stations have their programmatic sales channel tied to traffic because it means they won’t have to alter their workflows or add more people to start pulling in programmatic dollars,” he says, adding that the WideOrbit programmatic platform and its popular traffic system do work together.

Videa tackles the integration of traffic and billing with its programmatic selling platform via broadcasters’ existing business intelligence systems used by their financial departments, says Williams.

“Traffic systems were not built to allow real-time access with third-party systems,” she says. “Our touch point is really the centralized data warehouse that a lot of broadcasters have that pull information out of the traffic system on a daily basis.”

Videa also has “done the heavy lift” to standardize data across disparate systems “so that we can create a unified marketplace,” she adds.

While integrating programmatic and traffic systems offers advantages, it is important that there is “a protective layer” between the buy-sell process and the systems used for scheduling and tracking inventory, says Imagine Communications’ Foss. Imagine owns LandmarkOSI, another popular traffic system.

Integration with customer relationship management, CRM, software also offers advantages, says Videa’s Williams.

While Videa hasn’t yet done such an integration, Williams says it would “be a win if we could” because such systems often serve as a repository for other data, such as information about pending sales, that could offer even more value to a user of a programmatic system, she says.

Brenda Hetrick, VP of sale and marketing at Matrix Solutions, which offers MediaCRM and sales intelligence software, says programmatic and CRM integration offers advantages to users of customer relationship management solutions as well.

“Programmatic information should be a source, or integration point, of data fed to the CRM system– further enabling a 360-degree view of the client, their buying patterns and the opportunities that exist within an entire multimedia enterprise,” she says.

Programmatic selling of spots is in its infancy, but it’s seemingly inevitable as broadcasters seek to improve their sales process and satisfy agencies and advertisers by offering greater access to inventory and relevant audience data.

Williams says that it will take hold gradually.

“As much as advertisers and agencies want to buy this way, you need a large supply of inventory to start carving it up based on audiences, or you just don’t have enough to be meaningful in terms of an individual buy. 

“I tend to think that once you get north of 60% of DMA coverage with one to two stations per market that that is a sizable, meaningful footprint.”