The Rise of the Private Marketplace in Programmatic TV Sales

The buying and selling of linear TV advertising hasn’t changed in decades – until now.

Unlike the real-time, impression-based transaction that defines digital advertising, the traditional television media buy is impacted by technological limitations and disparity in sales strategies. These impose that decisions be made well in advance on broad-based demographic targets such as age and gender. Ratings are researched and ads scheduled, but the process is labor intensive and doesn’t accurately show available inventory and its audience. The growth of programmatic TV is addressing some of these challenges, giving the parties informative and actionable data sets and varying levels of workflow automation.

As programmatic advertising in TV becomes more mainstream, a trend is emerging across these media owners – the creation of private marketplaces as their core programmatic TV offering. Earlier this year, Discovery announced its first programmatic sales initiative via a private marketplace. Discovery’s thought leadership has created a domino effect across media companies. With a private marketplace, media owners can now leverage these efficiency gains and realize data-driven sales opportunities with programmatic TV while still retaining control over who has access to their inventory and how it is priced. For large media owners a private marketplace is a logical (and comfortable) way to get started with programmatic selling.

Open vs. Private Marketplaces & Fixed Pricing vs. Auctions

Through programmatic efforts, media owners are making inventory available for sale in either an open or private marketplace. In an open marketplace, there are multiple sellers exposing their inventory to multiple buyers. In a private marketplace, there is a single seller (or a small group of sellers that have similar audience targets) that expose their inventory to a single buyer or a select group of buyers.

Media owners also have options with respect to how they sell their inventory programmatically. In a fixed rate model, the inventory is sold at a price defined by the media owner or a rate negotiated directly with a particular media buyer. In an auction environment, the inventory is transacted with multiple buyers at variable rates determined through one of several flavors of biddable transaction models. Of course, there are many other subcategories and price models but these are the core foundations for most marketplaces.

As occurred within the world of digital advertising, the fear of prime TV spots being devalued or the risk of low quality and irrelevant branding messages being delivered have some media owners fearing the open marketplace model. Thankfully, these fears have been assuaged through ad sales toolsets that put controls in the hands of the seller and the fact that, unlike online media, TV is a constrained asset. So, given the economics of supply and demand in the world of TV, the risk is mitigated. Nonetheless,  private marketplaces with fixed and/or auction prices are quickly becoming the programmatic model of choice in TV.

Buyers and sellers still crave the relationships of traditional media sales and negotiation, but the process lacks audience-rich targeting, uniformity, and efficiency. The private marketplace solves this, with no blind sales and more rules and constraints than open marketplaces. Media companies have become comfortable exposing their inventory to their existing agency partners with terms negotiated by their existing sales teams. The programmatic platform automates the execution of the campaign, seamlessly leveraging rich data sets for all steps in the transaction, including planning, transacting and reporting.

The Future of the Private Marketplace for TV

Just as premium online publishers gravitated toward private market opportunities, the large media companies in the TV ecosystem are now realizing the same opportunities through the use of private marketplaces.

Industry adoption has also been accelerated now that sell-side tools for TV are available for the purpose of maximizing revenue and inventory yield management. These sell-side tools optimize audience obligations across all sales channels and enable inventory to be sold in either open or private marketplaces.

In the coming months, expect TV media owners to explore the power of programmatic TV through private marketplaces as a method of attracting new buyers, generating efficiency and driving even greater revenue.

 

Doug Hurd is the co-founder and EVP of Business Development at clypd.

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