Understanding programmatic TV advertising

Traditional linear television — where content is distributed via TV antennae, cables, satellites, or over-the-top (OTT) services according to a schedule set by broadcasters — remains an unparalleled medium for many advertisers due to its immense potential to capture the attention of a diverse audience.

Until now, purchasing TV spots in linear ad breaks was a manual and time-consuming process, which was challenging to digitalise. However, advertisers are now accustomed to the efficiency of automated processes in digital advertising. With increasing competition from major US tech providers, traditional broadcasters are under heightened pressure to deliver effective, targeted solutions that cater to advertisers’ needs. These solutions must not only ensure an optimal user experience but also provide brand-safe environments and guarantee data protection and privacy  — all while adhering to the high-quality standards of TV advertising. Many European broadcasters have started reinventing their strategies and revenue streams to adapt to the digital transformation. As part of this shift, they are integrating programmatic ad booking into their TV media planning, enabling an automated and data-driven approach to audience targeting. The next step is the programmatic exchange of ads within linear TV ad breaks, which will change how linear TV ads are bought and sold.

There are two primary approaches to TV advertising: one-to-one and one-to-many. Typically, a broadcaster pre-plans a linear TV ad break and broadcasts it to all households receiving the linear signal (one-to-many). This means that the same ad is seen by all households watching a specific TV program at a given time. Conversely, if the TV device is connected to the internet via a set-top box or smart TV, it enables one-to-one communication with that specific device.

The One-to-One Exchange: Booking Linear TV Spots with Programmatic ATV

Linear TV ad break replacement with Addressable TV (ATV) involves replacing a spot within the ad break with one or more digital spots delivered via an ad server. Every spot within an ad break can potentially be sold in an automated way. Thus, with programmatic ATV, each ad break in linear TV can be tailored to specific TV devices, using established media trading methods.

For broadcasters, it is important to maintain control over certain aspects of the process when making programmatic buying available for their ad inventory. This is particularly crucial when it comes to the data collected, the technical infrastructure, and the content and image quality of their programmes. Certain quality and control measures have to be implemented due to the requirements for using the hybrid broadcast broadband TV (HbbTV) standard — the technical foundation for digital advertising on linear TV in Germany.

ATV spots can be positioned anywhere within or outside a linear ad break, based on the broadcaster’s preference. This flexibility provides numerous opportunities to deliver localised, relevant and interest-based ads to well-defined target groups in a brand-safe manner.

Common formats include the replacement of single or multiple spots within an ad break, exchanging an individual spot, or using a pre-roll-like format that plays immediately after the switch-on or switch-over moment, just before the live TV content begins.

The Advantages of Programmatic Addressable TV

The programmatic buying of ads on linear TV is efficient and measurable, meeting the evolving needs of both advertisers and broadcasters. Advertisers can deliver TV ads via demand-side platforms (DSPs) and apply data-driven targeting and other familiar techniques from digital advertising to fully reach their target audience during the traditional linear TV ad breaks. A major advantage of programmatic ATV over the manual ad buying method is that advertisers can book their campaigns across various TV channels and other media channels simultaneously. Additionally, programmatic ATV makes TV inventory accessible to smaller advertisers — an opportunity that was not possible in the past due to the high minimum media budgets required. Programmatic ATV also provides broadcasters with more revenue streams, not just through new customers, but also through completely new monetisation opportunities. 

The One-to-Many Exchange: Booking Linear TV Spots Digitally with Programmatic Linear TV (non-ATV)

Programmatic linear TV enables the real-time delivery of ads during linear TV ad breaks. Advertisers use DSPs to book these ads, targeting specific audience groups and setting prices based on a cost-per-thousand-impressions (CPM) model.

Using estimates of current viewer reach and audience demographics, an optimisation algorithm selects suitable TV ads in real-time. The ads are then inserted and broadcast during linear TV ad breaks.

The Advantages of Programmatic Linear TV 

Programmatic linear TV provides easy access to the vast audience of linear television. Since the ads are shown to all viewers through the broadcaster’s signal, the additional exposure beyond the advertiser’s target group enhances the overall effectiveness of the ads.

The integration of programmatic solutions into traditional linear television advertising marks a significant shift in the industry, offering advertisers unparalleled efficiency, targeting, and measurement capabilities. Whether through one-to-one ATV exchanges or one-to-many programmatic linear TV bookings, broadcasters and advertisers alike stand to benefit from the convergence of digital sophistication with the enduring power of TV.