NBCUniversal, Target and the future of programmatic ads

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Programmatic advertising technology still has inroads to pave for both national TV and spot local markets. But with the recent announcement that Target has signed on for NBCUniversal’s self-serve marketplace for national ad inventory, programmatic took a big leap forward.

The deal will allow buyers and agencies like Target’s partner Essence to conduct audience buying that drills down into more granular demographic information, the kind that’s usually associated with digital media buying.

“Through programmatic ad buying, NBCUniversal is giving us the opportunity to apply better data to our TV decisions and choose the programming that resonates most strongly with our guests,” said Kristi Argyilan, senior vice president of marketing for Target, in a statement.

Rick Ducey, managing director at BIA/Kelsey, said that in addition to tighter targeting, Target is also seeing benefits in cost and time reductions for media buying workflows. Ducey said that while a traditional workflow could consist of up to 24 steps and could take weeks, when it become self-serve programmatic, it can come down to six steps and take a day or two.

Ducey also said that Target taking up NBCU’s programmatic platform likely has a lot to do with NBC actually offering guarantees on audience buying. NBC is guaranteeing is up to $1 billion for its entire suite of advanced television products.

“That was an interesting first to make those guarantees,” Ducey said.

Media buyers and agencies can get awfully specific about the TV audiences they want to reach, but the agency will pay a premium over CPM for that luxury and typically can’t get a guarantee on those targeted audiences, only on gender and age. But NBC is now backing up its inventory, across upfront and scatter markets, with the guarantee. And part of that confidence in the ability to accurately deliver targeted audiences comes from its partnership with 4C Insights.

Unification through software

4C Insights, a data science company that builds software for agencies and brands, provided the platform for NBC to offer up its national inventory on a programmatic basis. The company said NBC making its linear TV ad inventory self-serve marks a big step forward for audience buying.

“For years we’ve been talking about when TV will be bought and sold more like digital media,” said 4C Chief Marketing Officer Aaron Goldman. “So far, there’s been great progress made in terms of data-driven targeting and automation but it’s been largely confined to local inventory and cable networks. Now, for the first time, we have a national broadcaster making its premium inventory available through a self-serve platform for audience-based buying. This is certainly a tipping point for ‘Advanced TV’ advertising.”

That tipping point is being reached because of a growing desire in TV to apply information about audiences and data to optimize media plans, said Anupam Gupta, chief product officer at 4C Insights.

“As you know TV’s been bought forever based on demographics, and that is the currency. But as everything is becoming more digital-like, it comes down to definition of target audiences and then reaching that audience on different screens regardless of the channels,” Gupta said.

4C combines its data sets—like those available from TV monitoring platform Teletrax, which it acquired in 2015—with networks’ data sources to build deeper audience definitions. For TV, the trick is to make applying those audience definitions easier in terms of TV media planning, accounting for both upfront and scatter.

Gupta said that meant building integrations for upfront inventory that sits in different systems and identifying which networks were offering their scatter avails through a data-driven methodology. By structuring the programmatic process more like a traditional TV media buy, Gupta said it eases the transition.

“We’re not saying that suddenly everything is becoming programmatic. The point is that there are processes in place today to transact linear TV. We keep that process as it is, but remove the friction,” Gupta said.

The friction, Gupta said, comes down to how to define audiences easily without doing tons of spreadsheet work or working with multiple partners. He said that agencies want the same data and they want one process for all the networks, and that’s the goal 4C is working toward.

“What we’re trying to put together is one software system that is built for the buy side,” Gupta said.

Local, national, upfront and scatter

The programmatic market is clearly accelerating, but within the segment local, national, upfront and scatter are moving at different speeds. But as major announcements like NBC and Target are pushing things ahead for national programmatic, Ducey said that programmatic for spot local is also due for a shot in the arm soon.

“We’re expecting things to pick up at the local level in the next few months. There are some interesting announcements coming,” Ducey said.

Robert Malandra, senior vice president of advanced revenue development and analytics for Sinclair Broadcast Group, similarly expects things to ramp up for local programmatic in the next year or two.

“We see a local TV landscape where terrific audiences are not monetized because they are beholden to outdated systems and 40-year-old selling protocols. Our audience levels through the day tend to dwarf audience levels seen on MVPD platforms. It’s just a fact—for example we looked at audience levels at 6 p.m. across our 38% footprint and found our stations outdoing the audience levels of cable nets with 85% national coverage by 400%. MVPDs would kill for that level of audiences—our mission is to unlock that value and bring those audiences and aggregations to market,” Malandra told BIA/Kelsey for an advanced TV study.

In terms of programmatic technology catching up in upfront versus scatter market scenarios, the remaining issues could revolve around pricing. Ducey said that if better targeting continues to create premium prices for scatter inventory, it certainly could result in higher prices during the upfront season as well if scatter prices continue to rise because of better targeting. But he said there could also be some pushback from buyers when they start getting charged more at scatter due to better targeting and mitigated risk for inventory that’s typically dirt cheap during upfront season.

As Gupta pointed out, programmatic is starting in the scatter market but could evolve from there.

“My guess is that as we work toward the 2018 upfront, a lot of experimentation will have happened and at that point, these [programmatic] processes will also apply to the upfront market,” Gupta said.

Gupta said lots of companies other than 4C are also experimenting with audience buying and that many networks have their own versions of audience buying.

Indeed, companies like A&E, AudienceXpress, Discovery, Fox, TubeMogul, Viacom and Videology have been working in spaces like contextual audience networks and programmatic TV. As experimentation gives rise to more confidence in programmatic ad buying and more networks and brands take the plunge, the result could be some dramatic shifts in the television ad market over the next few years.

This article was updated to clarify how much NBC is guaranteeing for its advanced television products.