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Programmatic TV takes premium route

News, 29 March 2016

NEW YORK: Relatively little TV inventory is available for both programmatic and addressable buying but the early indications are that the industry is anxious to avoid what happened in digital display when programmatic was seen as a way to monetise remnant inventory.

"TV has definitely taken the premium approach to programmatic pricing, and it will be interesting to see how this plays out," Pete LaFond, VP/marketing at TruSignal, an audience targeting business, told eMarketer.

To illustrate his point, he cited the example of a client retailer with a focus on direct response: "When they were looking at programmatic CPMs for TV, they were $50 to $100 CPMs – they can't make their ROI [return on investment] or CPAs [cost per actions] work on that."

While much early interest has come from direct response marketers, LaFond added that these were then "connecting us with their brand teams so their brand teams can get smarter about making their branding more effective and efficient".

One consequence of networks and broadcasters charging such rates is that marketers will place much greater emphasis on assessing the effectiveness of programmatic and addressable TV.

"With remnant display, analysis doesn't matter as much when you're looking at 20-cent CPMs," noted LaFond. "So it didn't really force the discipline of figuring out if it was working. This should."

As regards the current situation, he said that only between 5% and 10% of TV inventory was both addressable and available for programmatic, while the number of households that could be reached varied between 15m and 50m depending on which network or cable provider one was connecting with.

But he expected that those numbers would increase as marketers read more case studies and testimonials about using programmatic TV to increase efficiency.

"Because programmatic is really about efficiency," LaFond stated. "How do I be more efficient with my marketing dollars and spend them on the people that matter and less on the people that don't matter?"

Data sourced from eMarketer; additional content by Warc staff