The number of OTT users across Netflix, Disney+, HBO Max, Hulu, and other platforms is expected to reach 4.2b by 2027.

Connected TVs (CTV) are seemingly more commonplace than toasters. As of February 2022, there were around 117mm CTV households in the U.S.

This leaves advertisers and media brands asking: Where are programmatic ads headed?

Programmatic advertising is certainly in the cards for brands, both large and small. And programmatic TV advertising continues to make headlines and big promises. 

But one thing is certain: The popularity of ads across streaming services is growing as the industry figures out measurement, inventory and growth.

By 2026, ad revenue is projected to surpass $32b.

How OTT Is Shaping Programmatic Ad Tech 

With the streaming giants’ rapid expansion — fueled by Silicon Valley’s mantra of ‘move fast and break things’ — ad tech had difficulty keeping up with the shift from traditional TV to OTT. 

Programmatic advertising fits individual web properties and Internet-native video platforms. A native ad on a publisher’s site feels natural. So do ads across major social media platforms, including Facebook, Instagram and Snapchat.

But applying the same ad tech to OTT (particularly with live programming) proved difficult. 

“Early adopters are finding that pairing digital data with connected TV and OTT ads isn’t a simple plug-and-play exercise,” wrote eMarketer’s editorial board. “Those hoping to benchmark connected TV and OTT performance against standard digital video advertising metrics are also finding this a complex task.” 

Programmatic advertisers in OTT have faced the unique challenge of translating the metrics of traditional TV and data-driving digital ads. 

According to a 2022 survey, 48% of respondents said measuring incremental reach across streaming platforms and publishers was challenging for CTV advertising. Meanwhile, 43% pointed to managing ad frequency across platforms and publishers as a hurdle.

But the challenges don’t end there.

Another survey found that 85% of respondents said they were “very” or “somewhat concerned” over ad fraud.

Buying digital ad space for OTT and CTV is still difficult, but more laser-focused DSPs have popped up to support the demand. 

“Comcast-owned FreeWheel is introducing a one-stop shop for buying commercials in these emerging forms of TV,” writes Jeanine Poggi at AdAge. “The suite of new ad products will allow buyers to access inventory from FreeWheel’s clients, which include more than 60 of some of the top TV networks and publishers that are being served on platforms like Roku, Amazon Fire, Google Chromecast and Apple TV, among others.”

Similarly, Adobe acquired TubeMogul, a DSP aimed directly at programmatic video. 

The Trade Desk, one of the world’s most popular DSPs, has also invested in CTV advertising.

TTD’s solution not only helps advertisers “maximize reach to increasingly digital audiences, wherever they’re watching,” but the company’s relationships with top networks and content providers give it an edge.

TTD also positions itself as an “all-in-one” DSP, which gives advertisers a more streamlined way to scale their CTV ads across inventory, including video, audio, native, and OOH.

It’s DSPs like these that will allow programmatic video ads built for CTV and OTT to scale in a meaningful way.

Specialized DSPs Are Expanding Opportunities for Programmatic 

But that doesn’t mean it’s suddenly a straightforward affair. 

Tal Mor is the CTO of Tremor Video, a DSP purportedly meeting these new demands. “Just because programmatic video is everywhere doesn’t mean it’s easy,” writes Mor. He says that programmatic video — and especially Connected TV or OTT — requires the right balance of ad tech to prove effective: “It requires access to the right audiences, unique targeting abilities, channel-specific inventory, reporting/optimization abilities, and fraud detection/prevention methods.” To drive this home, Mor writes that the lack of industry standards makes it particularly difficult to navigate the nuanced space. 

That said, movement in OTT services is driving growth in programmatic video ad spend.

Automation and measurement are improving.

For example, DoubleVerify launched a solution that can verify a CTV ad’s viewability, allowing advertisers to determine if an ad was actually seen. The launch marks the first viewability measurement solution to hit the market.

“As CTV impressions continue to be sold at a premium, brands need insight into which platforms and environments offer the best viewability rates,” said DoubleVerify CEO Mark Zagorski. “To that end, we’re excited to launch this first-of-its-kind solution and continue to lead in measurement and innovation for CTV buyers.”

Targeting is getting more precise.

Ad formats are innovating.

Case and point: Samsung Ads is tapping into Clinch’s ad tech platform to “deliver personalized and dynamic programmatic campaigns across FAST service Samsung TV Plus.”

Clinch CEO Oz Etzioni said, “Samsung has established an incredible global footprint, fueled in part by their commitment to providing innovative consumer experiences. Through this partnership, we are able to bring a new level of real-time personalization to millions of Samsung connected devices with superior automation and efficiency.”

Metrics and benchmarks are also catching up—and consumer demand only continues to rise, aided by increased mobile consumption.

All of this translates into scalability and a better advertising ROI. 

Mor, the DSP tech leader, writes that video-specialized DSPs have the best hope of capturing this value. Within their specialization, they can focus on ad formats and creative, inventory and execution, and (maybe most importantly) measurement. 

The benefit is clear: Reach a more engaged audience for less than it costs on traditional TV.

“OTT program producers focus on developing video programs for targeted, highly enthusiastic audiences instead of broad-based fare,” writes Barry Levine at Marketing Dive. 

Programmatic video is a natural way to take full advantage of this benefit — and DSPs are starting to meet demand. 

For more insights, sign up for MediaRadar’s blog here.

In June 2022, streaming video surpassed one-third of all video viewing, up from 27.4% the previous year. At the same time, the share of broadcast television was just 22.4%.

And OTT is just a fraction of the programmatic TV pie.

The approach allows better integration across distribution channels for media platforms, reducing ad load and ultimately translating into a better consumer experience.

For media buyers, the benefit is in data-driven and addressable ads, which they’ll continue to put a premium on as Google sunsets third-party cookies and other ecosystems, like Apple, do the same.

With iOS 14.5, Apple brought the long-anticipated “App Tracking Transparency” feature to the table, requiring companies to ask iPhone users for permission to track them across apps and websites.

Apple’s unveil immediately posed seemingly insurmountable challenges for mobile advertisers and social platforms that rely on the technology, like Facebook. For example, Apple’s App Tracking Transparency was expected to cost Facebook $13b in 2022.

But with programmatic TV advertising, media buyers can pinpoint ads based on demographics, keywords, and browsing history—all without third-party cookies. It’s good news as advertisers across industry lines search for alternative identifiers to power their campaigns.

But to take advantage of this promise of programmatic TV advertising, media companies and advertisers must clearly understand the shape programmatic takes in TV and its potential.

This glossary will walk you through the key terms you need to know to make the most of programmatic TV advertising this year.

#1: Programmatic TV Advertising

Programmatic advertising is nothing new — Google has monetized its search engine, and websites have taken advantage of Demand Side Platforms (DSPs) to make reaching advertisers easier since soon after the dot-com bubble burst.

While programmatic ad spending is slowing (largely due to the economic downturn), advertisers are still spending billions. In 2022, more than 90% of all digital display ads were expected to be bought programmatically.

But programmatic TV has allowed the digital exchange to move into television, typically associated with more traditional ad buys.

Like digital DSPs—think Google Marketing Platform and MediaMath—programmatic TV lets advertisers buy planned inventory sold based on how many impressions it will make. As advertisers pay for clicks on Google, they can also buy their inventory based on more than ad length with programmatic TV.

It’s a total win considering traditional TV largely operated behind a curtain, preventing advertisers from gaining visibility into performance and targeting.

Programmatic TV also means marketers can optimize their ads with audience data, focusing ad spend on where it will matter most.

As Digiday put it back in the day, “Programmatic TV advertising is the data-driven automation of audience-based advertising transactions.”

#2: Connected TV (CTV)

Connected TV (CTV) is a device connecting to a TV to support video streaming. Popular CTVs include Smart TVs, Chromecast, Apple TV, FireTV and now Xbox. In 2022, 87% of households in the U.S. own at least one CTV.

As such, CTV advertising allows advertisers to programmatically purchase ad inventory across these devices and reach a growing addressable audience with immersive ads.

Connected inventory in programmatic TV varies slightly since the metrics it uses can account for how many times the video was watched, how many people skipped the ad, and how many times the video was watched completely.

Understandably, advertisers love it. According to the IAB, CTV ad spending is supposed to grow by more than 14% this year.

#3: Addressable TV Ads

Besides the lower cost (compared to traditional TV advertising, which can cost millions during primetime events like the Super Bowl), addressable ads are the real draw of programmatic TV.

Addressable ads are essentially personalized ads deployed at scale on CTVs. While YouTube ads can be highly targeted based on browsing history and demographics, they are typically limited to one creative (often shown multiple times to the same person), which can lead to ad fatigue, i.e., someone sees an ad so many times that they become bored with it and stop paying attention.

In contrast, addressable TV ads let advertisers present different versions of the same ad (or completely different ads) to viewers of the same program — a live sports game, for example.

The benefits of addressable TV ads are clearly too much to pass up.

According to a recent survey, 81% of advertisers are satisfied with addressable TV ad options, an increase from 72% last year. Of those polled who are currently using addressable TV ads, 37% plan to increase spending this year.

#4: Linear Ads

This term can be confusing since ‘linear’ is used interchangeably for the addressable ads described above and more traditional media delivered through OTT.

Linear ads (or linear inventory) are purchased on a platform, making them part of programmatic TV inventory. But the ads are delivered linearly, targeted based on audience metrics and reported on with traditional viewing metrics.

#5: Programmatic Ad Platforms

This is where media companies can use ad networks to sell ads (demand side platforms) and where media buyers can find the audience reach they need (supply side platforms).

For programmatic TV advertising to work at scale, DSPs, SSPs and programmatic ad networks must work together.

“Say you have a service with a million or so subscribers. That million number isn’t very exciting for a big advertiser,” says Jim Lombard, co-founder of Tetra TV. “So you need to pull together more ad opportunities and more households. That’s the opportunity for us to pool this inventory together so we’re able to monetize it more effectively with reach and frequency. It serves the purpose of pooling inventory and creating scaled value.”

#6: Data Management Platforms (DMP)

Data management platforms (DMP) aren’t directly tied to the ad seller-buyer relationship, but they are critical for brands getting the most out of programmatic TV ads.

A DMP can be used by software and media companies to collect data (first-, second-, and third-party data) on an audience, split the audience into segments, and then offer these segments to engage their target audience. DMPs then offer these anonymized customer profiles to DSPs, SSPs, and other ad platforms.

DMPs are the foundation of ad networks, as media companies, apps, and websites pool data together and allow advertisers to truly understand—and target—the right consumers. Larger brands also use DMPs to identify and target promising prospects.

#7: Programmatic Inventory Metrics

Programmatic TV metrics are made possible through connected TVs or set-top boxes, which allow access to cable, over-the-air and OTT television. The source is accounted for when reporting on programmatic TV ad metrics.

The programmatic inventory’s primary metrics include impressions, targeted market area reached, and cost (i.e., CPM).

While these metrics are already more specific than traditional TV, programmatic metrics will have to catch up for advertisers to get the most out of their programmatic campaigns. Social and search ads have gone granular, and programmatic TV will soon need to do the same.

Making the Most of Programmatic TV Advertising in 2023

Programmatic TV is an up-and-coming addition to the ideal marketing mix for advertisers across industry lines. As consumers ditch traditional TV for streaming and targeting data continues to get a facelift, advertisers will be forced to find alternative outlets for their ad dollars.

Programmatic TV—as well as the entire programmatic advertising landscape—will be one of them.

That said, programmatic TV advertising isn’t just one thing.

Like traditional broadcast advertising, programmatic TV involves a range of interrelated terms.

Understanding them is key to making the most of it in 2023 and beyond.

For more insights, sign up for MediaRadar’s blog here.

Meanwhile, the shares of broadcast television stood at just 22.4%.

As the global over-the-top (OTT) market continues to enter the living rooms of millions—OTT had a user penetration rate of approximately 42.9% in 2022—significant players like Netflix, Amazon, Apple, HBO Max, and Disney+ have built their media offerings. As a result, advertisers have had to figure programmatic TV out on the fly. 

But what, exactly, is programmatic TV advertising? 

Is it addressable? 

What are its benefits? 

The tech is in its early stages, so we’re naturally confused.

What Is Programmatic TV Advertising? 

Programmatic TV advertising is a technology-driven way to buy ads across the web, mobile devices, and connected TVs. Programmatic TV advertising extends to linear TV ads and OTT technology like Disney+, Netflix, and HBO Max. 

Programmatic Advertising for OTT: Opportunity vs. Capability

OTT distribution channels (or streaming platforms) may have a while before they completely take over traditional television. While user penetration is promising, rising prices could push people back to old-school cable. 

Entertainment analyst Paul Erickson says, “Services really see content as their weapon to ensure people subscribe — and they stay subscribed — in this dog-eat-dog environment.” He said the price increases will end when consumers “start leaving the service or stop subscribing.” 

Still, there’s enough meat on the bone to warrant a “What’s next for advertising?” type of conversation. Revenue in the OTT video segment is enough to warrant it on its own, which is expected to reach $316b in 2023.

So, why are advertisers flocking to OTT? 

Because linear and broadcast TV ads just don’t cut it anymore. 

In fact, 94% of TV ads reached just 55% of linear TV audiences in Q1 2022. While impressions rise at times—linear TV impressions were up by 19% in Q4 2021 in tandem with the football season—they’re worthless if no one sees the ads. 

Reach is a problem, but so is efficiency, which is why advertisers are eager to go programmatic. 

Despite the opportunity, there are several holdups to implementing addressable TV ads. 

To start, it’s a complex undertaking.

When you start mixing direct TV ads, popups on mobile video, banner ads on web platforms and more, figuring out pricing, opportunity and targeting can quickly get confusing. 

Cross-channel advertising has always been challenging; adding OTT to the equation makes it exponentially harder, given the siloed ecosystems in which these platforms live.  

Add to that the intricacy of the marketplace itself, and things may take a while to untangle. 

The Wall Street Journal reported that “Silicon Valley heavyweights” with a direct-to-consumer laser focus and “traditional media companies” looking to figuratively keep up with the Kardashians are competing in at least five distinct categories.

These companies are vying for consumer attention in increasingly complicated combinations, replete with subscription entertainment, TV streaming, ad-supported online video, cable/TV bundling, and sports.

The intricacies are hard to handle, and the platforms need help to meet the demand. 

Said another way, advertisers follow audiences from traditional TV to streaming, but when they get there, they find there aren’t enough ad slots to go around.

Netflix’s ad-supported under-delivery issue has been notable. 

According to an agency executive, “The past few weeks [following the ad-support tier’s launch], it has been okay.” 

According to the Digiday article, “the company [Netflix] could have avoided that initial situation altogether if it had had supplementary inventory to offer advertisers to make up for the viewership shortfalls immediately rather than needing to allow advertisers to take their money back in order to achieve their year-end reach goals.”

Disney is navigating that potential hiccup by unifying its ad tech stack behind Disney+ and Hulu to give it more flexibility in juggling advertiser demand.

For example, if Disney can’t deliver an ad on Disney+, it can move those ads to Hulu or ESPN+.
As one agency executive said, “What they are relying on is their ability, as a portfolio media company, to have their own safety net.” Other OTT platforms need to figure out a backup plan as well.

On the Horizon for Programmatic TV Advertising

The multiplex holds promise for both media platforms and media buyers.

For media platforms, programmatic TV allows for better integration across distribution channels, translating into a better experience for the consumer. 

For media buyers, the benefit is summarized by Google’s Rany Ng and Anish Kattukaran: It is data-driven and addressable. Media buyers can pinpoint ads based on not only demographics but keywords and potentially browsing history as well.

The opportunity for addressable TV advertising through OTT tech is hard to ignore. We see multiple media and telecommunication companies making moves toward the capability as a core part of their offerings.

In a time reserved for major broadcast and cable networks, data-driven TV advertising may become central to the conversation.

For more insights, sign up for MediaRadar’s blog here.

Here, we dive into three distinct developments that promise to take programmatic advertising to new heights.

#1: Programmatic Hits OTT Television Advertising

Programmatic TV advertising may still be in its early stages, but the shape of this advertising medium will almost certainly be determined by OTT and streaming services. For example, Hulu recently expanded its programmatic advertising offerings as its inventory grew with its audience.

According to the IAB Singapore Programmatic Committee, online forms of TV capture more than a third of total daily TV time across the globe. In North America specifically, online consumption of TV online is at 29 percent. “As infrastructure and connectivity improves particularly across the region, online TV and consequently PTV will steadily grow in adoption,” the Committee concludes.

Programmatic advertising for OTT and Smart TVs is a necessary step as digital takes over content delivery. The editors at eMarketer write that many traditional advertisers are turning to OTT to recoup an audience lost to digital channels.

But it’s not as easy as other, tried and true digital programmatic advertising efforts. “early adopters are finding that pairing digital data with connected TV and OTT ads isn’t a simple plug-and-play exercise,” write the editors. “Those hoping to benchmark connected TV and OTT performance against standard digital video advertising metrics are also finding this a complex task.”

#2: Social Network Apps Update Programmatic Approach

A couple of years ago, Snapchat gambled with lower revenue in the short-term in return for higher revenue in the long-term as it repositioned itself as a programmatic including a self-serve ad platform.

The move made Snapchat more competitive with other big name social media platforms with self-serve advertising options. “The low inventory prices and data and user-tracking features that have accompanied Snapchat’s programmatic transition are making the company more competitive with Facebook and Instagram,” writes James Hercher at AdExchanger. “Snapchat’s improved measurability come as Facebook’s platform grows opaquer and user data policy changes make it harder for advertisers to run Facebook attribution.”

Snapchat also transformed its ad sales team into “brand consultants” in order to push business solutions to the top of its programmatic platform. The combination, along with the popularity of Snapchat for direct-to-consumer brands, may continue to give the social platform an edge over Facebook and Instagram.

Tinder (more accurately, it’s parent company Match Media Group) is also shaking up the way tech companies can take advantage of programmatic advertising. The dating app now sells programmatic advertising using Google’s ad server to sell programmatic ads.

“For almost any company that isn’t Google or Facebook, you’re going to have impressions that you don’t have demand for,” said Peter Foster, head of global advertising and brand solutions at Match Media Group. “We think about both those platforms as excellent partners that provide ways to reach advertisers that we won’t be able to get on our own because we don’t have that scale.”

Rather than using Google as a source of demand, Tinder will instead be utilizing the giant’s tech and ad server for its own demand generation and direct interactions with advertisers. “It’s an alternative way to transact with us but is similar to how our insertion order business runs today,” said Foster.

#3: Personalization & Retargeting Hone Programmatic

Personalization in programmatic allows for more effective and tailored retargeting campaigns across more channels. And at the crossroads of programmatic and personalized ads is data — which has only recently become available in unimaginable amounts. “Vast amounts of data… mean that advertising creative can dynamically change to be all the more relevant to users, with ads adapting to factors like location, device, weather, time, and demographics,” writes Nikki Gilliland at eConsultancy.

For example, media agency Mindshare developed an “always-on retargeting campaign” for AirAsia. The dynamic campaign allowed the airline to serve thousands of creatively distinct ads tailored to the last destination travelers searched for on the AirAsia website. By automating the creative side and the programmatic side, Mindshare created more than 5,000 ads in three months. According to Gilliland, the campaign generated a higher ROI for the airline.

Programmatic ads powered by data-informed and even AI-curated personalization will almost certainly account for a larger percentage of digital ad spend — and soon.