Video: How Programmatic Ad Buying is Revolutionizing Pay TV

Learn more about dynamic ad insertion at Streaming Media's next event.

Read the complete transcript of this clip:

Warren Schlichting: What a cool time to be in television and to be able to take all the power of digital ad targeting, right? Whether it's psychographic, geographic, behavioral, everything you can do on digital, you can now do on these OTT. I mean, you can do it on Sling. I'm sure the others will be there soon. We are seeing incredible results, right? And it's becoming this invaluable tool for marketers because now you're just getting rid of the waste. It's another form of waste that you're getting rid of. You can reach only the folks you want.

Now, we've been able to do that on online for years. There was the promise of that sort of targeting with online video, but, of course, there was a lot of fraud and viewability issues, and on and on to the point whereas much as 60, 70, 80% of your bio was fraud. CPMs adjusted sort of a crazy back and forth, no need for that here. You've got video ads that are in high production quality of video shows and it's being watched, right? Particularly in a digital household.

So this ability to deliver live TV over the internet has created an immense opportunity. And I'm going to go a little bit further than that. So dynamic ad insertion allows this ability to sort of zing and shoot an arrow through an open bus window as it speeds 90 miles an hour down the highway. That ability has changed the process of buying and selling ads and it's also taking us out of the ratings business very slowly, but it's taking us out of the ratings business.

What has it allowed? Programmatic. Programmatic ad buying. This is a one of those pieces where you say, "Okay, where machines are talking to machines," and that's probably a good thing because the number of variations on the impressions and the people that are watching and the households you want to hit and the advertisers motives, pretty soon you've got sort of 10 factorial and you're not going to be able to handle that sort of buy with people, but you can handle it with computers, right?

You've got this ability to do programmatic buying on true television ad inventory. That has exploded the value and so if you look at this, if you go to the next slide, what happens? Well, if you look on average marketers, television marketers have spent about $70 billion this year, last year, the year before, since 2014. By the way, I used to do these numbers in 2007, 2008. They were 70 billion or 75 billion or thereabouts. The television ad industry has had a hard time even staying or staying even, right? And then in the meantime, we all know what's happening with digital ad revenues, right? It's just easier. It's the targeting is there, right? You see the efficiencies, there's no secret anymore why digital is growing and TV's having a hard time just staying even. Just treading water, right?

Television is a reach medium in the eyes of ad buyers, but with this new capability, right? That OTT and VOD offers, you suddenly have this super-powered product that could take that $70 billion and start to grow it again. It needs to grow. It should grow.

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