Wizards of Oz

Programmatic TV, like many shiny new things in marketing, still has its meaning in the eye of the beholder. As many consider whether it refers to automated trading for traditional linear TV, or data-led video, or both at once, Australia is emerging with the capability to unravel this.

As Indy Khabra, national managing director of Amnet in Australia, says: “An obvious barrier, globally, I would argue, is that there remains confusion as to what truly constitutes programmatic TV (PTV).”

It’s hardly a surprise for Australia to lead, however, as the country with the highest digital ad spend per capita. Australia beats both the US and the UK for having the highest digital spend per internet user, with projections of $341.07 per user, compared with $335.22 and $318.05 for the US and UK respectively in 2018, according to eMarketer. This alone helps to show just how much confidence Australian brands have in digital media.

With regards to programmatic TV specifically, Mitch Waters, general manager for Australia and New Zealand at The Trade Desk, explains: “The structure of our TV landscape has allowed relatively smooth programmatic integration, especially compared with some countries in Southeast Asia or Europe. We have a handful of free-to-air providers and one cable service. Due to this, media is not as heavily up-fronted as it is in places such as the US. Buyers in Australia are used to trading media on a campaign basis, which is perfect for programmatic.”

Khabra agrees, adding that the smaller market size is actually what has allowed it to innovate digitally, and that this is now invigorating TV, which had actually become uncompetitive.

“We also have a really interesting market in that a few publishers command a lot of the time spent with media, especially in the TV space. This has contributed to relatively slow innovation for the TV industry over the past two decades. It was good to see that in 2017 programmatic TV, and the concept of transacting TV spots planned against advanced audience segments, began to gain momentum. The indication in the market is that we will see more solutions that will make this possible for buyers in 2018 or early 2019. Renewed competition is a positive for buyers and advertisers because it will allow for more advanced planning against more specific audiences, while still retaining the ability to leverage the biggest, and best, screen in the house,” says Khabra.

The two key offerings gaining the most momentum are connected TVs, which can provide addressable advertising in real time, but, in an issue shared with other markets, although most TVs being sold now are ‘smart’, just 20% to 25% of them are connected to the internet in Australia. The other offering, which sees Australia as one of the few markets globally, is using data, including transaction data, against linear TV to target audiences, courtesy of Foxtel, Multi-Channel Network (MCN) and One by AOL:TV. 

Khabra adds: “The Australian market is leading the programmatic TV space in terms of constructing the technical capabilities to buy audiences across linear TV. Partnerships like this have put PTV on the radar for the traditional broadcasters, further nudging the Australian market to establish where the different ‘types’ of programmatic TV sit within our ecosystem from a planning and activation perspective.”

For MCN, chief sales and marketing officer Mark Frain says the difference in executing against linear TV, versus IP-delivered video, is that the majority of spend and scale already sits in TV, while future opportunity lies with connected TV.

“What is critical in the first instance here is that we’re talking about linear broadcast programmatic TV, not IP-delivered. On that basis, I would argue that MCN, and by default the Australian marketplace, is setting the global agenda for programmatic TV, data-driven TV advertising delivered through an automated workflow and inventory optimization. We are mindful that addressability is the latest buzzword being launched into the marketplace, so our role will be to make sure we showcase how these two are different, while not confusing agencies and clients. Again, it comes down to the importance of definitions and the difference between linear broadcast, where the inventory and revenue volume sits, and IP, where the future opportunity exists, although not at a critical scale yet,” he argues.

For Christopher Blok, country manager for Australia and New Zealand at SpotX, when scale is achieved in Australia there is opportunity in live content, as well as around on-demand behaviours. “Once that scale increases and people start to become more familiar with using it – watching live TV over-the-top (OTT) content – that’s where addressable really comes into it, rather than using the terrestrial signal.”

Amnet has just signed a major deal, alongside The Trade Desk and Sanitarium, an Australian food and health company, for a connected TV campaign. It hopes to capture the 18 to 35-year-old ‘young transitionals’ and 25 to 54-year-old ‘grocery buyers’ audiences. While connected TV may be the future opportunity in data-led video, the younger target audience of the campaign is more likely to be using connected TV already.

For The Trade Desk, finding a solution to frequency capping, another key component of the Sanitarium campaign, will be a key route to increasing brand spend for connected TV. “I think that we are finally flattening the barriers that have been preventing budgets flowing into connected TV. The major one was frequency management. Now that we have a solution for this, I expect dollars to follow the audiences easier,” says Waters.

SpotX’s Blok says an understanding around whether programmatic TV, and particularly connected TV, is a digital or TV buy will become an important debate for the Australian market. “It should be seen as a TV-type buy, rather than digital, which can overlay viewability vendors etc,” he explains. However, Blok did add that viewability measurement would be coming to connected TV further down the line.

While there are inevitable growing pains, brands are taking investment seriously – MCN says that currently 10% of its revenue is traded programmatically. “We have clients who have been on the journey with us since the very early days, who we have worked closely with to educate and inform. Some of these now trade 100% of their subscription television [STV] buys, outside of sponsorships, via this platform. Brands do take it seriously because they are seeing strong business outcomes from trading this way,” says Frain.

Despite this, he believes TV won’t necessarily become totally programmatic. “The threshold will sit around 40% to 50%, in our opinion. Both ourselves and clients still see huge value with in-show integration and sponsorship to help build brand awareness, and we’ll always have some clients who chose to buy based on content and key programming across our portfolio. As a complete revenue composition, we see the future falling into three distinct streams: 50% PTV, 20% premium spot placement, and 30% integrated program sponsorships/channel partnership.”

As for the agency view on future investment, Amnet’s Khabra says: “It can be expected to accelerate in 2018, with additional brands beginning to include PTV as the offering scales in technology, data and inventory. We are forecasting double-digit growth in the PTV space this year.” 

For all the headstart that Australia has afforded itself as a simple TV market with high digital spend, other markets are striving to uncomplicate themselves in order to catch up. All markets will now face the same challenges around categorization, expectations and pushing up quality through better data and viewability. 

Source: The Drum