TV Advertising Needs an Operating System

Operating systems (OS) play a crucial role in the world of technology. They serve as the bridge between hardware and software, allowing various applications to run seamlessly on devices such as computers, phones, and TVs. Without an OS, the personal computer revolution would not have taken place. The operating system became the foundation upon which a myriad of applications and software could be built and utilized.

While various platforms exist in the advertising industry to schedule and purchase TV ad space, these platforms do not operate as true operating systems. They cannot create a comprehensive ecosystem that allows different players to operate within their technology. These silos have held back the TV ad ecosystem.

To put this in perspective, imagine a world where each segment of the NYSE or NASDAQ stock markets operated in silos, such that each market segment, and perhaps each company within each segment, were traded based on different standards, and in some cases, completely different points of sales. Want Exxon/Mobile? You have to go to ExxonMobile.com and buy a stock. Want Amazon? You have to buy directly from Amazon. This is essentially what many adtech providers force customers to do, which results in low efficiency and confusion.

All scaled markets operate on standards. Having a siloed media market is counter to this economic axiom. And where media has gotten it right — with search and social — the medium has exploded to drive the vast majority of all media spend in the US. 

If the CTV ad market is to fulfill its potential of growing to the scale of search and social, it needs a consolidated marketplace built on standards. That would include reach and frequency standards, outcome measurement standards, and a one-stop marketplace where marketers can buy across all media properties and data vendors.

We don’t need to start from scratch here. There is a technology that stands out as a well-established operating system in the realm of TV advertising: programmatic.

Programmatic technology powers an extensive ecosystem of applications, including third-party data providers, fraud detection systems, optimization technologies, multiple buying models, and more. Programmatic advertising infrastructure likewise enables vast scale across the economy, rivaling the financial trading operating systems of the stock markets in terms of transaction volume. In these ways, programmatic meets the definition of an operating system for advertising (even if it doesn’t include a consumer interface and therefore lacks the features of more generalizable operating systems). Programmatic is an OS for ad targeting, delivery, verification, measurement, reporting, and payments.

With the rise of Connected TV (CTV), programmatic has expanded its influence from digital advertising to the realm of television. Today, the vast majority of CTV ad revenue is transacted programmatically, and analysts project that the majority of the $72 billion TV advertising market will flow through programmatic technology in the coming years. Additionally, as technologies emerge to enable the buying and measurement of TV advertising in a performance-oriented, measurable manner similar to search and social media, the nearly $200 billion spent on performance advertising in the US will shift toward the TV landscape. Programmatic technology will serve as the conduit for these advertising dollars.

Within the next five years, virtually all TV ad expenditures — CTV and Linear — will be executed using programmatic technologies. The transition to programmatic technology brings with it the advantages of the internet infrastructure, allowing for accurate measurement and attribution on the largest screen in households. As linear TV ad spend converts to CTV, the total market will likely approach $170 billion (from 30B today).

The significance of operating systems becomes apparent when considering the role they play in enabling the smooth functioning of software applications across different devices. In the realm of TV advertising, programmatic technology has emerged as a dominant advertising OS, revolutionizing the way ads are traded and transacted across all device types. With its expansion into the CTV landscape, programmatic is poised to reshape the TV advertising industry, channeling billions of dollars through its comprehensive ecosystem and providing advertisers with powerful tools for targeting, measurement, and optimization. As the world of technology continues to evolve, the importance of ad operating systems like programmatic cannot be overstated.