Programmatic TV and Streaming Will Grow Together

By Ted McConnell, VP Integrated Media at Rocket Fuel

Current Programmatic TV offerings are receiving tepid response, but Streaming TV has all the right stuff to turn that around.

Over the course of 2016, there has been a lot of conversation around the possibility and progression of programmatic advertising on TV, but the bark, thus far, is bigger than the bite.

Of the roughly 600 million hours of TV viewing in the US, per day (!), only a tiny fraction of the advertising is delivered programmatically. This is because broadcast is intrinsically not capable of one to one targeted delivery. But streaming TV is, and streaming is poised to grab a lot of share.

Evolution is Inevitable

The adoption of streaming technology is on a steep growth curve across the board, from Roku and Hulu to SSPs and streaming assistants. With streaming standing as a digital online experience, it offers immediate opportunities for brands to better communicate with a desired audience. Taking this a step further, there is a push to include streaming platforms inside set-top boxes, meaning that instead of needing a Roku or Chromecast, your cable box will eventually present apps that come with your cable subscription. A recent report from NPD Group notes that 52 percent of all US Internet homes have at least one TV connected to the Internet. Their research shows connected TV household penetration will increase 14 percent year-over-year, supporting the idea that nearly all Internet enabled homes will have a connected TV in the next few years. The content streams of satellite (and other) networks are now available as internet streams too (e.g. Sling TV) … so you don’t give up too much by cutting the cord.

This evolution exemplifies the idea that if something can be digital, it will be. Consumers want choice. Consumers want high-fidelity. They already have the internet. A recent report from GfK notes how the use of multiple streaming services by the same individual will rise over 50 percent in three years. Anyone who has used streaming apps will identify with this. Because viewers demand it, streaming will become a dominant mode of consuming long-form content. Adoption will continue until streaming is the norm. Once this happens, TV will be just another screen in the programmatic ecosystem.

Risk and Reward

However, there are foreseeable risks. Once TVs are on the internet, they will be exposed to hacking. This could bring the specter of fraud to a huge business. When every TV is exposed to the Internet, hackers will have yet another digital playground. So with this shift, we’ll need to see security measures enhanced and new regulations introduced.

Despite the risks, if you look at consumer demand, the industry will find a way to make long-form streaming on the internet a reality. Government regulation will have to catch up to the technology — and it will.

Weighing The Odds

Another factor that plays into the evolution of pTV is bandwidth. The internet today does not have capacity for everyone to run high-definition streaming at the same time. It’s not entirely clear whether bandwidth will become a gate to widespread usage, but sufficient bandwidth at every point is far from a done deal.

There is similar uncertainty regarding whether streaming TV advertising will be offered on open RTB channels. Today, streaming TV publishers offer most inventory in private marketplaces, as direct deals. They are afraid that open markets will drive prices down, but this fear is an irrational hangover from the days of unlimited inventory for display media. Properly managed, publishers could benefit from better fill rates, and better matching of consumer to ad, ultimately driving CPM higher, and creating value for both sides of the marketplace.

Looking back at the progress of technology, the pull of consumer demand has always overcome barriers associated with bandwidth and computing power. Streaming TV is not a case of technology chasing an application. Consumers want choices, and advertisers want to get the right message to the right person. If both advertisers and consumers get what they need, it’s game over and both parties win.

It might be bumpy getting there. Broadcast efficiencies, and traditional TV momentum are powerful forces, but the die is cast.

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