Posted on Jul 18, 2023

Benefits and Challenges of Programmatic TV Advertising

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Have you ever heard of programmatic TV advertising? If not, it’s just about time to shed light on this subject — the advantages it offers and the hurdles you may encounter while dealing with it. 

Whether you’re seeking insights on free ad supported tv ads to understand how this type of TV media buying works or just looking to optimize your programmatic TV ad buying, buckle up — you’ll find out many interesting insights in our content piece today. Tap into the potential of programmatic television advertising and discover how this innovative approach can revolutionize your marketing strategies.

What is Programmatic TV Advertising?

Programmatic TV advertising means that buying and selling of TV ad inventory happens automatically, thanks to AI and ML, and RTB (real-time bidding), which eliminates the need for human intervention. 

It streamlines the process of purchasing TV ad space — audiences are targeted in real time according to the parameters that the advertiser inputs into DSP or ad exchange platform. With this approach, media buyers can buy impressions without getting in touch with publishers, who also sell their ad space pretty quickly.  

CTV advertising is totally different from traditional. Why? By allowing advertisers to target specific audiences in real time and deliver personalized ads. Plus, unlike traditional television, this approach enables campaign measurement.

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How does programmatic TV work?

Programmatic advertising TV ads are data-driven and very precise, thanks to cookies and real-time bidding. 

Real-time bidding takes place in auctions. In those auctions, advertisers bid for available ad inventory that corresponds to their target criteria. With programmatic television advertising, advertisers can deliver targeted ads to specific households or individuals, maximizing the effectiveness of their campaigns. 

Programmatic TV buying integrates technology, data, and automation to deliver impactful experiences on CTV and addressable TV platforms.

So what is the essence of the algorithmic buying approach? 

1. Data-driven Audience Targeting. It utilizes data to target specific audiences based on demographics, location, interests, and other parameters.

2. Automated Buying. Advertisers purchase ad inventory programmatically, leveraging automated platforms and algorithms, which streamline the process of advertising on TV.

3. Dynamic Ad Delivery. This approach enables the instant delivery of personalized and relevant ads to viewers, boosting the effectiveness of ads by reaching the predefined audience in real time.

Such an approach also delivers precise analytics and integration with various channels. 

Key Benefits of Programmatic TV Advertising

With a staggering 82.4% increase in 2021 and a projected 39.2% rise in 2022, programmatic TV ads buying is expected to grow tremendously in the near future. As we see in the eMarketer stats, by 2023, US programmatic video ad spending will hit the bar of $74.88 billion.

US programmatic video spending 2019-2023 by eMarketer

Let`s explore a couple of reasons why algorithmic buying gains relevance.

A chance to work with various segments 

CTV, or Connected TV (addressable TV), has gained tremendous popularity and is outshining traditional linear TV for several reasons. Firstly, CTV allows viewers to access content through Internet-connected devices, such as Smart TVs or streaming devices, providing a more flexible and personalized viewing experience. 

Users don’t have to stay indoors to watch their favorite shows. Plus, they are not bound by a single gadget as content can be streamed via different CTV devices — game consoles, Smart TVs, mobiles, etc. 

This shift in consumer behavior has caught the attention of advertisers who recognize the immense potential of reaching their target audiences with programmatic TV buying. 

Programmatic advertising TV ads deliver targeted experiences

While previously advertising on TV was only possible through linear TV sets, it meant that users could only consume the same ad content. Mass advertising was popular during the last decade only because, technically, there was no chance to tailor every TV ad to every user. 

Because users consumed the same TV shows simultaneously (broadcasted according to the schedule), advertisers also had to line up their ads according to the broadcasting time slots. Now addressable TV lets users stream content everywhere and whenever they want, which means that programmatic TV ads can also be seen on various devices. Users can see different ad messages tailored to their preferences (since programmatic TV ad buying is data-driven). 

Programmatic TV buying provides measurability and transparency 

With programmatic television advertising, marketers can leverage data-driven insights to precisely target their desired audience, ensuring their ad reaches the right viewers at the right time. 

By leveraging programmatic TV media buying, advertisers gain transparency into the ad buys, including real-time reporting and analytics, ensuring they have full visibility into how their budget is allocated and the impact it generates. 

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What Are the Challenges of Programmatic TV Advertising?

TV media buys with programmatic can be very beneficial; however, like everything else, it has certain weak sides one should remember about:

Ad Fraud

Ad fraud involves intentional misrepresentation of TV ad impressions or interactions. In order to get rid of ad fraud on CTV, one needs to work with reputable programmatic platforms.

Brand Safety Concerns

Placing ads near inappropriate content — that’s the most common fear of brands. Brand safety guidelines for programmatic TV buying can eliminate this problem. 

Technical Complexities

Technical complexities in programmatic television advertising include data integration and ad delivery across multiple devices and platforms. Advertisers can overcome this by partnering with experienced programmatic agencies, adopting standardized protocols, and leveraging the expertise of professionals.

Need for Transparency and Accountability

Transparency and accountability are essential for addressing ad fraud on programmatic advertising TV. Advertisers need visibility into ad placements, performance, and campaign effectiveness. This can be achieved through working with transparent programmatic CTV platforms, demanding transparency in the ad supply chain.

Best Practices for Programmatic TV Advertising

1. Define clear campaign objectives

2. Leverage data and analytics

3. Collaborate with reputable programmatic platforms

4. Implement cross-device targeting (TVs, smartphones, tablets, etc.)

5. Optimize creative assets for viewing (aspect ratios, visuals, and messaging)

6. Test and iterate: Continuously test different ad variations and targeting strategies

7. Leverage AI-powered content analysis and brand safety tools

Here’s an example with Coca-Cola: 

Coca-Cola used programmatic TV ads during a major sporting event to increase brand awareness and engage with diverse audiences in different geographic regions.

Coca-Cola dynamically adjusted its ad placements to optimize reach and frequency. They also incorporated interactive elements during the programmatic TV ad buying to encourage viewer engagement. 

The success of media buys was measured by increased brand recognition and positive sentiment among the target audience.

How SmartHub can be your trusted programmatic partner

SmartHub is a white-label solution for ad exchange that makes it possible to create your own marketplace in 7 days (thanks to a prebuilt programmatic core). 

Since such technology already has all necessary integrations in place — ad fraud scanners, RTB bidder, connection types of different kinds, and more — TV ad serving with programmatic will be streamlined and controlled solely by you. As a marketplace owner, you will define what kind of addressable TV partners you integrate into it. 

Most importantly, you can leverage programmatic television traffic with a traffic distribution mechanism to encourage media trading so that all ad buys bring you substantially more profits. 

For example, companies like Take1Ads achieved 585% higher revenues and ROI increase to 571% 4 months after deploying SmartHub. Read more on the case study page.

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What are the advantages of programmatic TV compared to traditional linear advertising?
Programmatic TV advertising allows advertisers to target their audience by leveraging data. This saves costs and ensures the ad is delivered effectively, maximizing its impact. The second biggest advantage is measuring the effectiveness of campaigns (not available on linear TV). 
What are the main challenges or risks associated with programmatic TV?
One of the main challenges is the complexity of programmatic TV buying — navigating multiple platforms and data sources. Additionally, ensuring transparency and brand safety in TV media buying can be risky, as advertisers may have limited control over ad placements.
What should one do to gain full control over programmatic TV buying? 
White-label platforms allow advertisers to bring programmatic TV capabilities in-house, providing greater control over partners, traffic quality, and campaign execution. Using solutions like SmartHub, advertisers can have direct oversight, enabling them to optimize their programmatic TV ad buys according to their specific goals and requirements.
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