People are abandoning traditional TV, and it is making waves. Across the market, companies associated with cable or satellite television are reporting 2015 earnings that are below expectations. The message is finally starting to sink in: customers are fed up with Big Cable.
What’s interesting, though, is why people are cutting the cable cord. It has less to do with the programming available or the advertisements that networks are using and much more to do with the price of service from the cable companies themselves. This is driving more people to forego cable or satellite television and instead consume their favorite content on their desktops or mobile devices, which poses a very interesting opportunity for advertisers.
Who’s to Blame for Cord Cutting?
Big cable companies might be quick to point the finger at the customer’s desire to avoid ads completely, arguing that streaming services such as Netflix are preferable because they take out the disruption of commercials. This logic, however, doesn’t add up when you look at the popularity of services like Hulu, which benefits from both ads and premium subscription fees. The company has even begun introducing programmatic advertising to its platform.
The problem that customers have is actually that big cable companies have the ability to charge a huge amount for what many perceive as sub-par services. It’s not the format causing the issues, it’s the delivery.
This is where programmatic can help. Television networks have already started moving their inventory online, with many streaming their shows on their own websites. What programmatic can do is provide networks with the incentive to leave the old formats behind and bring their entire existence into the digital space. The traditional TV ad buying system would be difficult to migrate successfully onto the internet, which is where programmatic can flex its muscle.
The Benefits of Programmatic
Programmatic was born in digital and it’s within the digital sphere that the technology delivers the best results. While it is making its way into other areas, such as out-of-home platforms and even traditional TV, these advances are slow and the implementations cautious.
Programmatic ad revenue is predicted to top nearly $15 billion this year, with this growth being spearheaded by programmatic video. Making the switch will put networks in better standing with customers by treating them the way they actually want to be treated. Furthermore, it will generate more advertising revenue, making it a very practical business decision.
A Format Viewers are Familiar With
From the perspective of the network, the biggest advantage is how programmatic and real-time bidding (RTB) can help keep the format of new age digital television familiar for customers. Unlike platforms that get rid of ads all together (e.g. Netflix), programmatic technology allows networks the resources and freedom to inject ads into the show at two or three given points in its duration—much like traditional television commercial breaks.
For customers, this provides an experience that they are familiar and comfortable with. For networks and advertisers, it can open the door to a new realm of possibilities. After all, one of the biggest draws of programmatic advertising is the ability to reach the right customer with the right ads and adjust campaigns in real-time.
Bringing television online would allow publishers (in this case, the networks) to sell their ad space based on specific customer segments. Brands can then not only get their ads in front of a specific user-group, but also see in real-time how that user group reacts to their ads.
While customers probably won’t interrupt their show-watching experience to look up products shown in commercials, brands and advertisers can use behavioral metrics such as time spent on site before and after the commercial was seen to determine if the ad was effective. This has the potential to make commercials much more efficient.
Additionally, using intent data would greatly ensure that the right ads are getting to the right viewers, minimizing ad waste and maximizing the value of each ad delivered. This would also create a more enjoyable commercial experience for the viewers. They would no longer be getting ads that are meant to broadly appeal to large demographic, but ones that are custom-tailored to their specific experiences and purchasing patterns, making them more useful in promoting brand loyalty.
More Accurate Ratings
Programmatic tools could also be a great help to networks in determining the popularity of their programming. Traditional television uses digital marketing to help promote shows, but it still has to rely on Nielsen ratings to measure the actual reach of the show. With programmatic’s analytical tools, networks can apply the same tactics used to measure digital marketing campaigns to their television inventory, allowing for a much more accurate and in-depth view of who is watching and responding to which television shows.
Many are waiting for programmatic to fully make its way into television, but there is also an exciting opportunity for television to make its way into programmatic. The effectiveness and cost-efficiency of programmatic has the power to convince traditional television networks to migrate more towards digital. This would not only provide great benefits to brands and advertisers, but also increase customer trust by giving them a more relevant commercial experience and letting them cut out the cable companies they’re trying so hard to get away from.