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Programmatic TV, Explained

Programmatic TV, Explained

Written by enCOMPASS Agency

TV advertising is nothing new; for generations, advertisers have spent top dollar in order to promote their products to viewers at home. And yet, the nature of TV advertising has changed considerably. One of the most significant innovations of the past decade is programmatic TV, which makes it easier for advertisers to purchase TV inventory based on the audience they want to reach…and to calibrate their spending accordingly.

To say that programmatic TV is a big deal in the advertising world would be an understatement. Just look at the stats. According to eMarketer, advertisers are expected to spend close to $63 billion in programmatic advertising this year, a major uptick just since 2021.

What is Programmatic TV?

But when we talk about programmatic TV, exactly what are we talking about? To put it most simply, programmatic TV is all about the automated buying and selling of TV ads. It presents advertisers with a data-driven way to deliver their content to a carefully targeted audience.

Programmatic TV uses a high-tech approach to automatically gather data, finding a precise audience for a given broadcast. In doing so, it also enables advertisers to make smarter, more deliberate choices about how they spend their TV ad dollars.

Clarifying Terms

Programmatic TV is sometimes conflated with other innovations in digital advertising, which means there is some merit to carefully defining terms. For example:

  • Programmatic TV vs. Linear TV. Linear TV refers to the more traditional way of watching television; that is, tuning in to a specific channel at a specific time to watch a show or a sporting event. Linear TV advertising is based on things like schedule, airtime, and ratings, making it a bit less precise than programmatic TV advertising. Of course, with the rise of streaming, linear TV viewership is in a marked decline.
  • Programmatic TV vs. Advanced TV. The term advanced TV is used simply to denote the many forms of streaming TV content, including connected TV, TV on demand, etc.
  • Programmatic TV vs. Addressable TV. The term addressable TV references the ad inventory available through cable providers like Comcast and Time Warner. Addressable TV advertisements may also be delivered through satellite, linear TV, or TV on demand. Addressable TV is notable for allowing advertisers to segment their audiences, serving ads or ad groups to different segments of viewership. This allows for a bit more precision and flexibility than linear TV advertising offers, though not as much custom-targeting as programmatic.

How Programmatic Works

Programmatic TV was developed to solve some of the problems common to traditional, linear TV advertising. Traditional ads were historically inaccessible to advertisers with smaller budgets, or to advertisers with highly targeted messaging. What’s more, the traditional method usually involved the ad buyer and the publisher negotiating to determine an ad spot that suited them both, a process that tended to be expensive. Often, this approach resulted in advertisers overspending on airtime.

Programmatic removes this hassle, automating the process completely. Using an AI algorithm, advertisers can quickly view the TV ad spots that are currently available to purchase. They can also determine their ideal audience, set their budget, and input any other variables that they need to account for. The algorithm does the heavy lifting, finding the ideal time and venue to display targeted ads to the appropriate viewers.

Not only is this process more streamlined than the traditional TV ad negotiation, but, since there are fewer humans involved in the process, the risk of overpaying is lessened. Additionally, advertisers can optimize their campaigns by adding or removing content from their ads at any point during the campaign.

The Benefits of Programmatic TV

We’ve already noted some of the major reasons why advertisers have flocked to the programmatic model, leading to its ascent and linear TV advertising’s decline. To summarize, some of the main benefits of programmatic TV advertising include:

  • Data-driven. Unlike traditional TV advertising, programmatic is based on real data, allowing advertisers greater control over who sees their ads.
  • Automated. Because it uses AI algorithms to automate the process, programmatic allows advertisers to create a single media plan, using it to target users across multiple channels.
  • Price transparency. With programmatic, advertisers can set a budget when bidding on ads. The pricing model is very transparent, offering details on where ads will run as well as estimated costs.
  • Real-time optimization. Unlike linear TV advertisement, programmatic allows advertisers to tweak and adjust their ad content on the fly, based on real-time performance data.

Questions About Programmatic?

Programmatic makes TV advertising more accessible and cost-effective than ever before. If you’re interested in adding programmatic TV to your media mix, we’d love to chat with you further, and to answer any additional questions that you may have. Reach out to the team at enCOMPASS Advertising Agency any time you’d like to talk.