On TV & Video” is a column exploring opportunities and challenges in advanced TV and video. 

Today’s column is by Philip Inghelbrecht, CEO and co-founder of Tatari.

There’s no doubt that CTV is the darling of the advertising world right now – and for good reason. Given the dramatic shift in viewing behaviors over the past few years, brands are right to be earmarking larger pieces of their media budgets for ad-supported streaming networks.

However, this shift in spending suggests that a move to a fully open and automated buying landscape is inevitable. Not so fast. 

Most evolution narratives in the TV space focus on bending traditional media buyers to the realities and systems of a digital marketplace. But in the case of CTV, it’s going to be more about making buyers comfortable with direct buys in a digital context.

CTV isn’t like other digital channels

According to eMarketer, almost 9 in 10 of all digital video dollars will transact programmatically within the coming years. CTV is cited as a force that is fueling this, as it will account for more than 20% of total programmatic video ad spending this year. However, digging deeper into the narrative, the figures are heavily skewed by the fact that eMarketer includes YouTube in its definition of CTV.

Yes, more CTV inventory will roll into programmatic pipes in coming years. But the notion that we will achieve programmatic domination is faulty. CTV inventory is different than digital, in two major ways:

  1. It is limited and scarce, due to its premium nature.
  2. It is concentrated within 20 or so big publishers, not millions of smaller websites.

Just because the media world has gone fully digital doesn’t mean we need to impose early digital models and constraints on every opportunity. As a matter of fact, most publishers themselves will prefer a direct sales channel. Brands will want it, too.

The case for direct sales

The simple fact is many major streaming players right now are moving away from programmatic buying platforms in favor of direct sales teams. Streaming networks want to know who is buying ad space inside their premium content. By doing so, they can preserve the audience viewing experience in a meaningful way.

Furthermore, publishers are scared of a mechanism that brings downward pricing pressure, which is what programmatic marketplaces did within the digital ad space.

Because premium CTV inventory is (and will remain) scarce, brands will often prefer a direct relationship as well. This is the only way for advertisers to buy inventory at scale, as opposed to plucking impressions one by one within an exchange, which limits the amount of inventory available. 

Direct relationships also allow brands and publishers to explore more integrated ad experiences. This is especially true for the larger CTV players.

The future has gray areas

Will certain CTV inventory and spend end up in the open programmatic marketplace? Undoubtedly. 

But it will remain a smaller part of the overall market volume, with the rest traded directly between publishers and advertisers. As such, our industry needs to stop talking about programmatic open exchanges as the future of TV. They’re not.

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