At $74bn, television is still the largest and most powerful advertising market out there. Now, programmatic advertising companies are close to cracking this huge marketplace, meaning ads will be bought automatically with minimal human interaction.

According to the IAB, 28% (c£500m) of the UK digital display market was traded programmatically last year and by 2017 this could rise to between 60% and 75%. The development of new technology as well as the increasing pressure to prove return on investment (ROI) is pushing data-driven insights to the forefront of marketing strategy.

Typically, programmatic has just been used to place ads across display – and more recently mobile, video and social. However, TV is the newest channel the industry is getting excited about. It will reverse the traditional TV model; instead of using data about programming to find desirable placements, marketers will be able to use data about their audiences to find those placements.

But with all the buzz it’s still hard to predict what this means for the TV industry at this stage. Programmatic still has some way to go, so what’s holding up explosive TV growth?

There’s no hiding from the fact that the move to programmatic TV will be complex. Although most of the technology necessary to automate and integrate TV buys has been developed, the industry infrastructure and systems required to enable programmatic transactions are far from ready to go.

The biggest barrier is simply access to inventory: broadcasters need to be willing to open access to their systems and release inventory for a supply-side platform to be put in place before programmatic TV can develop and grow. Marketers must push for more inventory providers to embrace automation tools that enable programmatic linear activation.

This also means that, ultimately, the way TV has been bought for many, many years has to change. The 60-year-old system of selling TV ads up front and in bulk will have to be at least partially reengineered if brands are to advertise against the right content.

With a complete overhaul of the system needed, many broadcasters are resisting change. With the system of up-fronts still in place, major networks secure high prices for their inventory and as a result have little incentive to experiment with new ways of selling. This is starting to change in the US, however, as TV sell-side platforms (SSPs) continue to grow and aggregate inventory from multiple sources at the local, regional and national levels.

For many on the sell-side of the equation, programmatic conjures up images of the downward pressure on pricing that played out in the digital landscape. But the way this space is evolving should alleviate some of those concerns; not only is there a limited supply of television inventory, providing some built-in pricing control, but just as in other premium inventory markets, the SSPs offer publishers the ability to set price minimum floors.

There are additional concerns around sales channel conflict. Automating sales means easier price discovery, making it difficult to add on charges and negotiate prices up. Existing sales teams have successful practices in place that provide some disincentive to automate. But while it’s unlikely that broadcasters will ever shift to a completely auction-based system of selling, we expect thinking to continue to evolve, just as it did in digital. There is additional inventory that often is not sufficiently monetised. Making this more easily identified and discovered helps drive demand, which in turn drives price.

There are also physical infrastructure shifts that will need to take place for programmatic TV to fully reach scale. This extends to everything from the legacy systems in place in the television industry for managing campaigns – largely using Excel, many phone calls and multiple different system languages – to the functionality of physical set-top boxes: essentially “dumb” terminals that render and decode feeds.

However, there are worthwhile rewards to be reaped. Programmatic TV combines the deep audience insights of digital with the reach and creative power of TV so marketers can plan, measure and optimise campaigns across channels. How? By utilising the same insights and targeting capabilities available for digital channels – first- and third-party data, integrated and analysed in a data management platform – marketers will define their target audience segments. Using these segments, marketers can forecast availability and target against inventory from the broadcasters and networks made available through TV sell-side platforms.

For example, we might know that 13-25-year-old women watch the X factor, but we want to reach a subdivision of this group, such as women with an income of £30,000 who own a car. Advertisers can harness data on TV audiences to target a specific segment wherever they are, whatever show they’re watching. As a result, broadcasters get more paying advertisers, advertisers get more real-time insights about consumers, and audiences are served highly relevant ads, rather than content that convinces them to skip through.

Players from across the media landscape – advertisers, data management platforms, sell-side platforms and, slowly, TV broadcasters and networks – are starting to come together to drive innovation toward making programmatic TV a reality. The programmatic boom is tantalisingly close, but it relies on broader adoption and willingness from content owners as well as education and the willingness to adapt. Until these players stop dragging their feet and make the necessary industry-wide changes, programmatic marketers will be pushing them to move forward.

Pierre Naggar is managing director EMEA at Turn

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