Is Programmatic TV Overblown?
Forget the long tail for CTV - Tatari CEO says it's all about the torso
I spent last week at an ad industry conference with a heavy concentration of TV buyers and sellers, and naturally (besides AI), almost every executive talked about how quickly they were moving their business to programmatic channels.
After all, every major TV company has its own programmatic tech platform (such as NBCU’s OnePlatform or Fox’s AdRise), as well as a self-serve buying platform of sorts (Paramount Ads Manager, Disney Campaign Manager). The hope, as we’ve talked quite a bit about, is that TV ad spending will flow more easily, targeting people more effectively, and grow the ad pie - thanks to all this ad tech.
Philip Inghelbrecht, CEO and Co-Founder of Tatari, is sort of calling BS.
“This concept of programmatic media execution as it relates to TV or CTV doesn’t make a lot of sense,” Inghelbrecht told me on this week’s episode of Next in Media. In fact, for Tatari, which has operated in the data-driven TV space since 2016, what the company defines as true programmatic TV is “very small potatoes. It’s probably less than $70 million a year.”
How does this jibe with what everyone was telling me last week, about how 50, 60, or 70% of their deals are now ‘programmatic?” Well, it sort of comes down to hair-splitting ad tech definitions (as it often does) - or what counts as programmatic or not.
The more you push buyers and sellers, the more you realize that the CTV ad market is far from open and dynamic (like say the display or social worlds). Most TV business is still through direct deals (with many negotiated during - yes - the upfronts). These deals may be booked using ad technology, and may employ tactics such as private marketplaces or programmatic guaranteed - but they are ‘programmatic’ with lots of guardrails. And they are still only available to the high-paying few.
“Unlike other media, say display, the concentration of supply in CTV is phenomenal,” said Inghelbrecht. “90 percent of all of our streaming impressions placed for brands or agencies come from the same top 10 publishers. It is what you and I watch. There is no long tail. It’s a big head with even a very small torso.”
It may explain why connected TV ad growth has been somewhat stagnant, despite all the recent hype.
By Inghelbrecht’s estimation, the CTV market in the US is $30 billion per year (it should be noted, he is not counting YouTube - which is highly debatable). He’s not far off from eMarketer’s latest forecast.
“About half of that today is direct transactions,” he said. “The other half is through programmatic biddable, $15 billion. And probably half of it is fraud or low-quality inventory. It’s really only $7 or $8 billion of premium inventory. This is kind of, again, what we talk about in the press every day…it’s where we see a lot of other companies truly hanging their hat on. But they’re ignoring the other $15 billion.”
Why are there so many ad tech middlemen chasing after whatever percentage is available? Well, that’s because they can’t get access to the top stuff, but they still want the high CPMs and premium associations that TV offers - at least that’s Inghelbrecht’s take.
“Programmatic CTV leverages certain digital principles and technology which are an ill fit for the market,” he said. “It does come with a bunch of well-known issues: fraud, brand safety, DSPs fees, SSPs fees, data fees, Sometimes half of a media budget goes to fees. And so if you can remove all of this with different tech, then we’re already better off, and then of course we bring it back to the automation.”
That’s where Upstream comes in - Tatari’s just-launched platform aimed at marrying the automated aspects of ad tech with direct TV deals. The idea is that more brands will be able to buy premium TV content directly, without all the current manual labor.
Tatari has five launch partners: Disney, Tubi, Paramount, WBD and NBCU (the list will soon shorten to four, when and if the Paramount-WBD deal closes). Inghelbrecht claims that one test partner doubled its CTV ad volume during a six-month test period,
So is Upstream the answer to the TV market’s desire to become truly ‘programmatic’, and bring in all those Instagram and TikTok advertisers? In a word - no.
Inghelbrecht is not a believer in the “TV Will Soon Have 10 million Advertisers Thanks to Ad Tech and AI” theory.
“At Tatari, there’s a fundamental belief that we have that TV media isn’t necessarily the right media for the true SMBs,” he said. “The 20, 30 million or so SMBs that we have in the United States, the corner store, pizza shops, whatever it is, [we don’t see it[.” We do think that for a brand to find success with TV, they have to be of a certain caliber. Think of something like a million dollars per year in general marketing, maybe $10 million in merchandise value. So it’s not for that long, long, tail of businesses. “
Of course, several major CTV players are not part of Upstream, and two of them - YouTube and Amazon - may beg to differ. Both are heavily invested in their own ad tech, and have deep wells of existing advertisers from which to draw from.
That said, there is a much bigger and readily available middle than you might think, argues Inghelbrecht. If five or 10 years ago TV was dominated by a few thousand advertisers, Tatari sees that number ballooning to 10,000 or as many as 50,000.
Won’t that accelerate once more and more of TV becomes available through a multitude of tech vehicles? Inghelbrecht says that is never going to happen.
“In sports, anything that looks and smells like a playoff or a bigger game with some reach, you’re not going to find that on The Trade Desk as an example,” he said “That’s just impossible. And so this is inventory that the publishers very much prefer and will only sell directly. That is something that publishers will hang onto forever.”
That is of course, until they are all replaced by AI agents I suppose.