The First Programmatic Upfront Looking Like 2017

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Cover image for  article: The First Programmatic Upfront Looking Like 2017

Jules Haimovitz when he was running Viacom complimented me on the accuracy of my newsletter’s predictions about how the New Electronic Media Revolution was going to roll out.

For example, in 1979 when the three-network share had only dropped a half a share point to 89.5%, I had called the 1990 three-network 60.0% primetime share on the nose

In the prior Media Village post I flogged myself for having predicted in 1999 that 2005 would be the first programmatic Upfront. That and my expectation that addressable TV commercials would roll out by 2000 are my two biggest goofs as a media predictor.

I promised to come back in this post with a better prediction on the programmatic part. Actually it looks now as if the two will arrive together, that is, addressables and programmatic Upfronts. TV ad sellers are already hard at work building infrastructure to be able to automate their businesses before Google, Facebook or somebody else does it for them. Brian Weiser on April 24 pointed out that those two companies and their easy-to-use programmatic platforms now dominate more than 40% of non-search digital advertising … more than $30 billion between them in 2014. This is a demonstration more of the power of programmatic than of great advertising salesmanship or of superior ROI proof.

The networks are concerned. It has never been this threatening for the network business. Jack Myers has kindly permitted this disclosure from the projections he provides to his clients:

Average annual growth for broadcast TV network advertising 2015-2020

Total: 0.1%
Legacy: -5.2%
Digital: +23.7%

In other words, the broadcast networks are predicted to stay flat but only because they will be borne up by the value of their digital inventory. Right now the measurement currency on that broadcast TV network digital inventory is uncertain — Nielsen Digital Ad Ratings, comScore, Nielsen SVOD/OTT, server side data from the sellers themselves, SymphonyAM, Rentrak, TiVo Research, et al, or any inter-combinations could turn out to become the currency of the future for OTT and for everything else.

These stats are persuasive drivers to encourage executives to invest in programmatic systems that can bring Internet-style addressability, targeting and measurement to TV. Networks would be wise to make revshare deals with MVPDs to bring addressability to network inventory. This is the one factor that can strongly reverse the 5% per year present decline rate of broadcast network TV non-digital ad revenues. If broadcast network TV went addressable it would go to double-digit annual growth. That will happen after the first programmatic Upfront, it would appear. But you the reader might be able to bring it about sooner.

Given the decline on one side and the cyclopean growth of programmatic system ad revenues on the other side, the handwriting is finally clearly on the wall. Programmatic and addressable TV will at last scale up.

Why 2017? These things can’t be built overnight. There are a host of details to be worked out that cannot be rushed without leaving some money in someone else’s pocket. The fact that we see them being built is evidence that the change is really happening. Given how long it has taken me to build systems like these (in the 90s, Next Century Media’s Opti*Mark addressable TV optimizer anticipated the programmatic systems of today), 2017 is the logical prediction.

What does it mean to say that 2017 will probably be the first programmatic Upfront? My definition is that at least one leading player will be selling some significant amount of non-digital TV inventory programmatically in a successful way, assuring that all the others will have to soon follow.

PS: In last week’s post I also promised to write more about the measurement of room-leaving during commercials. However, that seems best left for an upcoming post, since it is a big subject all in itself. 

The opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of Media Village management or associated bloggers.

   

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