NEW YORK (TheStreet) -- Media buyers are increasingly using sophisticated digital platforms to place advertising online, and as they become more comfortable using new technologies, they're pushing to apply similar systems to the largest and most expensive part of the industry: broadcast television.
Initially dismissed by much of the advertising industry as impersonal and unable to deliver quality placement, programmatic advertising platforms are designed to cut through the seemingly unlimited expanses of the Internet, matching 'buy' and 'sell' orders for video ads much like stock exchanges act as a matchmaker for equities. Besides being efficient, automated ad campaigns require a quarter of the time and personnel expenses of traditional buying, lowering costs for agencies and brands.
Now, brand marketers would like to bring these improvements to television.
"An [advertising] buyer can log into an automated platform, create all of their campaign specifics, and then launch that campaign through a self-serve digital platform," said Dan Ackerman, a programmatic advertising executive at AOL (AOL) , in a phone interview. "That's not available for television."
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Money spent on online video advertising is still dwarfed by television but its growth rate is a whole lot faster. Digital video ad spending is expected to increase 42% this year, reaching $5.96 billion, while TV advertising in the US will grow 3.3% to hit $68.54 billion, according to eMarketer. Similarly, a survey of advertising buyers conducted by the Interactive Advertising Bureau, found that more than two-thirds of respondents said they plan to spend more on digital video ads in 2014, shifting money out of television.
Even as more advertising money is going into online video, television, led by broadcast TV, continues to occupy the largest slice of the media advertising pie. Spots for professional football and top-rated dramas on broadcast television -- CBS (CBS) , Disney's (DIS) ABC, Comcast's (CMCSA) NBC and 21st Century Fox's (FOXA) Fox continue to command the highest advertising rates in the business, though a handful of serial shows such as AMC Networks' (AMCX) Walking Dead are breaking into that field.
Yet cracks in television's dominance are beginning to show. Ad spending for network TV fell 7.2% in the second quarter, according to data compiled by Kantar Media, a slump in-line with ratings that nosedived over the summer. More concerning for the industry, dollar volume toppled 6.1% to $18.1 billion during the spring "upfronts", the annual period in which networks showcase their fall lineups in hopes of locking in advertisers for the fall and winter.
Weakness at the networks comes as young people are fast abandoning cable-TV packages for Internet-based video platforms such as Netflix (NFLX) and Google's (GOOG) YouTube. To capitalize on the transition to Internet video, companies such as AOL, Rubicon Project (RUBI) and Tremor Video (TRMR) are investing in technologies that allow brand marketers to instantly buy ads on hundreds of websites and video platforms.