Imagine this: you’re three episodes deep in a binge, and a perfectly timed ad pops up, tempting you with something you didn’t even know you needed. That’s the dream of programmatic CTV—advertising that is as seamlessly woven into our favorite shows as it is creepily precise. But here’s the thing: programmatic CTV is a lot like the infamous Fyre Festival.
It’s been hyped to the high heavens, but whether it will ever deliver on its promise or leave us stranded in ad-tech chaos remains to be seen.
Why Advertisers Are Hooked on CTV’s Potential
CTV (Connected TV) has burst onto the scene with all the swagger of a big-budget blockbuster. The idea is tantalizing—combine the reach and lean-back ease of traditional TV with the data-rich targeting of digital ads, and you get CTV, a channel that’s both brand-safe and interactive. And with a major chunk of ad budgets predicted to shift to CTV over the next couple of years, it’s clear that advertisers are buying into the promise. They see CTV as a solution for capturing audience attention while integrating seamlessly into omni-channel campaigns, delivering messages wherever viewers may roam.
However, there’s a catch. While CTV may boast the “perfect” blend of real-time benefits and brand safety, the industry isn’t exactly running smoothly. Right now, programmatic CTV is more pipe dream than practical reality, and if the industry doesn’t tackle fundamental issues around transparency, inventory quality, and the dreaded “ad tech tax,” we could see the same frustrating patterns that plagued digital advertising rear their heads again.
The Programmatic CTV Hype: An Illusion of Simplicity?
In its early days, programmatic advertising fundamentally changed digital media by automating the buying and selling of ad space. Initially, ad networks dominated, providing centralized platforms where advertisers could purchase digital real estate across multiple websites. However, this process was clunky, and advertisers often found themselves paying for impressions with no guarantee of reaching their target audience. With the introduction of Real-Time Bidding (RTB) in the mid-2000s, this all changed. RTB allowed advertisers to bid on ad impressions on the fly, dynamically valuing each impression based on the user’s profile and context. This transition from bulk to individual impression buying was groundbreaking, allowing brands to achieve unprecedented precision and efficiency and turning programmatic into a vital part of any digital strategy.
As RTB and programmatic matured, DSPs and SSPs (demand- and supply-side platforms) became essential, bridging the gap between advertisers and publishers. DSPs enabled advertisers to place bids on ad impressions across a network of publishers, while SSPs helped publishers manage and optimize ad sales. Ad exchanges connected the two, allowing advertisers and publishers to buy and sell ad space in a real-time auction environment. This setup brought transparency, scalability, and control over campaign metrics, turning programmatic into a $100 billion industry.
Fast forward to today’s CTV landscape, and programmatic faces a different challenge. Unlike the near-endless inventory of digital display, CTV ad slots are limited and fiercely competitive. The allure of programmatic in CTV stems from its potential to bring the same scalability and targeting precision as digital, but the stakes are higher. Where display ads are served on countless sites, premium CTV real estate is much more scarce, and viewers are more engaged. While display ad spending in programmatic is at 91%, premium video only captures about 21%, largely due to CTV’s intricate ad structure and scarcity of inventory.
This dynamic has led to direct deals and programmatic guaranteed (PG) becoming the main modes of operation in CTV. PG deals and upfronts offer a degree of stability and predictability for publishers and advertisers alike, ensuring premium ad placement but limiting transparency and pricing flexibility. The emerging role of open real-time bidding (ORTB) in CTV, therefore, is to provide more competitive pricing and better fill rates by dynamically valuing impressions as inventory fluctuates. However, challenges remain: transparency is limited, and the biddable CTV ecosystem is still young and, in many ways, struggling with growing pains similar to digital’s early programmatic days.
Playing Second Fiddle: Why Programmatic Still Can’t Beat Direct Deals
The reason programmatic CTV hasn’t fully taken off boils down to an entrenched reliance on direct deals and Programmatic Guaranteed (PG) buys, which dominate due to their predictability and the safety net they offer for both buyers and sellers. PG deals, a form of programmatic direct buy, guarantee a set price and impressions, allowing advertisers to secure quality placements with minimal risk.
However, this safety comes at a cost: the rigid, pre-negotiated nature of these deals limits transparency, a sticking point for advertisers who often find themselves in the dark about exactly which content their ads run against until after the fact.
While open real-time bidding (ORTB) could address some of these issues by creating a more dynamic and transparent auction environment, its adoption remains niche within the CTV ecosystem. ORTB is widely seen as more transparent and scalable than traditional insertion orders (IOs), but most CTV ad inventory is still locked up in PG and upfront deals. Consequently, ORTB often ends up handling the “scatter” inventory—ads left over after the main slots are filled, which lacks the prestige of prime-time content. This limits the reach and appeal of ORTB, making it less attractive to brands looking for high-quality, predictable placement options.
Compounding the issue, programmatic CTV suffers from structural limitations that go back to the legacy of direct IO models, where publishers controlled ad placements without providing pre-transaction transparency. Today’s PG deals carry similar limitations: although they are highly efficient, they still sidestep the flexibility and transparency ORTB promises. In theory, ORTB should help publishers optimize yield by competing in an open market, but without widespread adoption or support from major CTV publishers, its impact remains limited. Additionally, as live and sports programming on CTV grows, programmatic options like ORTB could better monetize these dynamic events, but they are still overshadowed by the dominant PG deals and upfront commitments.
Overall, while ORTB offers potential for a more scalable, transparent programmatic CTV market, it’s not a complete solution. The current landscape favors fixed, high-return PG agreements over the flexibility and transparency ORTB could provide, highlighting that the dream of seamless programmatic CTV is still far from a reality.
The Reality Check: Inventory Quality and the “Ad Tech Tax”
CTV advertising promised premium, uninterrupted, “lean-back” experiences for users, but programmatic CTV hasn’t always delivered on this. The inventory issue is central to the problem: on paper, CTV inventory appears premium, but in reality, it can include ad placements in apps or contexts not traditionally associated with television—think “fireplace apps” or dating apps projected onto the family’s big screen. This “unintentional” inventory can result in misplacement, diluting the brand’s image and leaving advertisers skeptical of the value behind CTV’s high CPM rates. Recent steps, like the TV by OpenX initiative, aim to clean up these classification issues by excluding non-TV content (like gaming and user-generated material) from CTV inventory pools, which could help increase buyer confidence by ensuring that ad placements align with expected viewer experiences.
Transparency is another point of contention. Unlike digital display ads, where ad space seems infinite, CTV has a capped inventory, which demands high standards for user experience. However, the additional costs of brand safety and viewability checks—referred to as the “ad tech tax”—pile up quickly. For some advertisers, these costs can double what they’d expect from a “transparent” ad buy, prompting questions about programmatic CTV’s promised efficiency. Additionally, the complexities of server-side ad insertion (SSAI) and the use of identifiers like IP addresses or app IDs create tracking challenges, making it difficult to ensure ads reach the intended audience. The IAB’s efforts with guidelines like VAST 4.1 and projects to improve SSAI transparency are aimed at clarifying these aspects and ensuring inventory quality and measurement accuracy across CTV platforms.
In an attempt to improve transparency and quality, companies are also using technologies like Demand Path Optimization (DPO) to shorten the supply chain. DPO helps publishers minimize third-party involvement, ensuring ad slots are filled by vetted buyers, reducing safety risks, and enhancing ROI. Nonetheless, while initiatives like these may address some transparency issues, CTV’s reliance on intermediaries still complicates supply clarity. Consequently, the sector continues to face structural barriers that make seamless, efficient, and premium programmatic CTV inventory feel like a work in progress rather than a reality.
Let’s be real: the industry’s “truth” about programmatic advertising is a rare commodity. Too many so-called “journalists” are dancing to the tune of ad dollars, skewing facts to paint an idealized picture of the ecosystem. The adtech media landscape is rife with sponsored narratives that hide the gritty reality behind programmatic CTV’s issues—think opacity, ballooning fees, and low-quality inventory. When the biggest names in the industry are bankrolling the stories, it’s no surprise that glowing reviews outshine genuine critiques. If you want the raw, unvarnished truth about CTV and programmatic, you’ll need to dig deeper than industry-approved headlines.
Getting There: Programmatic Needs to Evolve
To make programmatic CTV more than just a buzzword, several critical reforms are essential. First up: inventory categorization. Right now, programmatic CTV allows premium content to sit alongside low-value apps, creating an ad experience that ranges wildly in quality and purpose. Initiatives like TV by OpenX+ are attempting to tackle this by removing non-TV content and making sure “CTV” actually means CTV. Without this, advertisers could end up paying premium prices for placements that are far from the high-quality streams they expect.
Measurement is another can of worms. Advertisers need consistent and independent verification to see exactly where their dollars go, but walled gardens—looking at you, Roku and Samsung—limit transparency by keeping data behind closed doors. This has been a pain point across the industry, with only a handful of platforms starting to adopt open measurement. Standards like IAB’s Open Measurement SDK, which tracks viewability across devices, are part of the solution but need wider adoption for true transparency. As it stands, current measurement systems often show only a partial view of campaign performance, making it tough for advertisers to understand or optimize the impact of their ads on CTV.
Lastly, the viewer experience is vital if CTV hopes to thrive. Viewers have come to expect an immersive, lean-back experience on streaming platforms, but programmatic ads—often repetitive, poorly timed, and irrelevant—undermine this. Quality control is key; ad placements should feel native to the streaming experience, not awkward intrusions from an unrelated platform. Studies show that ad relevance and timing are critical to maintaining engagement, and without these, the whole medium risks a massive viewer drop-off.
For CTV to reach its potential, the industry needs to align on quality and transparency, blending TV’s viewer-friendly setup with digital’s precision—if not, programmatic CTV may continue to struggle.
Scatter Market and the Rise of Biddable CTV
As CTV grows, so does the scatter market, which essentially sells unsold inventory outside the upfronts. It’s a convenient fallback, giving publishers a chance to monetize unused inventory and allowing advertisers to buy leftover slots at market rates. With live events and sports growing in popularity on CTV, expect to see more scatter inventory available through ORTB. But there’s a caveat: scatter inventory can be hit-or-miss, and advertisers must be prepared to do their homework.
Programmatic, particularly biddable CTV, is becoming the “new scatter,” giving buyers dynamic pricing options and the flexibility to respond to live audience shifts. But this approach still has transparency gaps and quality control issues, particularly when dealing with multiple sellers who may share inventory rights. It’s not uncommon for streaming services, TV manufacturers, and distributors to all sell the same ad slot in the same content, leading to high frequency and cluttered experiences for viewers. Buyers want better control and need DSPs and SSPs to work toward a more reliable supply chain.
Will Programmatic CTV Make It?
So, is programmatic CTV the next frontier, or are we kidding ourselves? Right now, it feels more like the Wild West than a well-oiled machine. Yes, programmatic CTV has huge potential, but it’s saddled with legacy issues that make it a far cry from the ideal we’ve been sold. The allure is real, but so are the growing pains. Programmatic CTV is a powerful tool, but until the industry cleans up its act, it’ll remain a flashy but flawed solution, plagued by transparency issues, pricing inefficiencies, and quality control headaches.
The dream of seamlessly targeted CTV ads isn’t dead, but let’s not pop the champagne just yet.
CTV has all the makings of an advertising juggernaut, but for now, it’s a work in progress—an experiment at the mercy of a fragmented and often opaque ad tech landscape. Whether it ever becomes a reality worth celebrating remains to be seen.
For now, advertisers, publishers, and tech providers will have to decide: is programmatic CTV worth the hype, or just another pipe dream we’ve been chasing in the endless pursuit of the “perfect” ad placement?
