Programmatic or Problematic?
Author
Rob Silvershein
Date
October 5, 2017

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Is Target’s NCBU Programmatic Ad Buy Truly a Watershed Moment?

NBCUniversal recently announced that it would make national television inventory available for programmatic buying for its launch partner, Target. The retailer will be the first brand to use first-party data and its own digital customer insights to buy targeted ads on NBCU linear TV.

Many pundits and prognosticators have hailed this announcement as a watershed moment in advertising, but is it?

History

In February of 2016, NBCUx announced that it would extend its programmatic ad buying platform to include linear TV. With this expansion, select advertisers and their agencies were able to reach target consumers by developing media plans via a private exchange using a combination of their own data, third-party data, and NBCUniversal’s television inventory. Furthermore, NBCU would offer guarantees for its ad buys no longer based solely on Nielsen ratings. The platform launched in the fall of 2016, largely received with skepticism. Industry pundits calling the platform “limited” and “short on details.”

In July of 2017, GroupM shifted its clients, including NBCU (Maxus) and Target (Group Arrow), to its digital shop, Essence. This shift of resources helped build Essence into a full-service digital and traditional agency capable of supporting multiple brands.

Today

It is not surprising that Target would be the first programmatic ad buyer for NBCU’s linear TV offering. NBCU needed a large national brand with the deep pockets to help scale its new platform. As well, NBCU and Target now have the same ad agency, opening the gateway for a number of interesting cross-promotions.

Beyond that, the September 2017 press release was big on fanfare but short on specifics. The only difference from the February 2016 release is that NBCU had found its first national brand partner to use its platform, though one year later than expected. So is this really a watershed moment? What does this new announcement really mean?
It is easy to be skeptical about the relationship between programmatic ad buying and linear TV. Combining an inherently complex technical undertaking with a medium steeped in the long-held traditions of person-to-person relationships is fraught by difficulties, demonstrating just how difficult it was to get this effort off the ground. The fact that even a single national brand has joined NBCU’s platform is notable. Most other national brands and agencies are sitting on the sideline waiting to see how this all works out.

As to aforementioned skepticism about the NBCU/Target deal:

• Both brands use the same ad agency, which lessens the barriers to getting a deal done, meaning many will perceive this deal as “fixed.”
• The size and value of the programmatic portion of the media buy remains unknown to all but insiders.
• NBCU can easily leverage its other properties to increase the perceived value of this particular ad buy.
• Nobody knows how the programmatic technology will hold up under real-world media scenarios.
• There is yet to be a case study written that overwhelming concludes that programmatic buying, with all of its efficiencies, works better than traditional national linear-TV ad buys.

Analysis

For incumbent linear TV providers, surviving (much less remaining strong) in this ever more competitive environment is proving difficult. Linear TV will have to find ways to lower its cost structure as dollars and audiences move towards digital properties. While it is easy to be cynical of the NBCU/Target deal, the truth is that it got done and it is the first of its kind.

The battle lines are drawn. Ad Agencies, brands, and networks will continue to feel strong pressures exerted by network sales and agency representatives who stand to lose their livelihoods if programmatic works. Their argument is two-fold:

1) Why change something that has worked well for 60+ years?
2) Media buying and negotiation is both an art and a science. The human element is necessary to build the most successful media campaigns at the best prices.

Programmatic proponents are network and ad agency executives who look at the bottom line and see huge efficiencies in automated ad buying. Brands too will benefit by being able to employ internal data and insights into a media buy. On the downside, should programmatic work, entire departments become fully expendable. On the other hand, programmatic ad buys allow profit margins to remain high for both linear TV and ad agencies, as the costs of staffing are reduced. (The Age of Automation continues to rack up human casualties, though profits are solidified if not expanded.)

Conclusion

There are too many unanswered questions to determine if the NBCU/Target programmatic relationship is anything more than a forced, unnatural marriage designed to prop up a very expensive technological undertaking. While the effort should be applauded, and the concept is valid, there are too many powerful forces at work that allow linear TV to be successfully bought and sold programmatically, at least in the short term.

At best, the NBCU/Target announcement represents the “programmatic genie” that got out of the bottle. And while technology and innovation will have its day, we are years away from programmatic ad buys being a significant part of the linear TV landscape.

Stick with TDG and stay ahead of the curve.

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