Digital ad spend will surpass TV spend in 2016. But, of course, TV itself is not standing still.

Innovations in TV advertising continue, with addressable TV ads of particular note.

Quite how advertisers will take full advantage of the addressable ad opportunity is still up for debate - creative execution of addressable media has arguably been lacking across the advertising industry and is one of the main challenges for advertising as a whole right now.

In this post, I thought I would give a short introduction to addressable TV. How does it work? Who is doing it? What do brands need to know?

1. Advertisers pay for audiences not content

The advertiser defines the audience it wants to target and pays for impressions regardless of what content that audience is watching at the time.

Addressable TV chiefly refers to ads targeted at specific household audiences watching linear television. Currently, the number of addressable households stands at around 50m in the US (essentially those that have a set-top box and for whom census-level data is available).

Census data allows for targeting based on income, ethnicity, children and even car leases.

Of course, there is are addressable media available in TV and video. Video-on-demand (VoD), smart TVs and over-the-top (OTT) services allowing for programmatic ad buying and can offer more specific targeting (particularly on personal devices).

2. Addressable ads make TV accessible for more niche advertisers

Being able to buy fewer but much more targeted impressions helps more niche advertisers.

Though addressable TV is more expensive per 'impression', there is inherently less wastage.

A common example cited is the example of an advertiser targeting home renters - something that would be too wasteful if done with traditional broadcast advertising.

3. Uptake is pretty modest

According to eMarketer, addressable TV spend in 2015 was $400m in the US. In 2016 that will reach $890m, topping $2bn by the end of 2018.

Sounds healthy enough, but for 2016 that's only 1.3% of total TV ad spend in the US.

Some of the main providers offering addressable TV ads include Cablevision, Comcast, DirecTV and Dish.

4. Creative versioning has not yet taken off

Though providers such as Cablevision do offer the technology, advertisers are not yet versioning creative for addressable TV like they do with programmatic display ads.

This isn't entirely suprising, given the nascency of the technology but it will prove an interesting talking point in the next few years.

Will TV ads benefit from one-to-one dynamic content? Can retargeting (of a sort) be done creatively on the family set?

One might suggest such impressive but rather functional targeting has been partly responsible for a malaise in online advertising.

5. Lack of standardisation makes for more work

Different operators use different technologies and so it can be time consuming to run and report on ads across a number of them.

6. Controlling ad frequency becomes possible

Addressable TV means that advertisers can measure and optimise the number of impressions a given person or household is exposed to.

In theory this will allow advertisers to experiment and better understand optimum exposure. Ads can be changed or stopped when the audience hits a particular threshold.

Of course, as online advertising shows, this isn't always the case in practice. TVs are rarely personal devices and we all make a cup of tea now and again.

However, what's clear is that where some are advertisers are still concerned about ad fraud and viewability online, TV (both linear and on-demand) maintains a reputation for quality and transparency that advertisers love.

The question is one of scaling addressable TV and making it work for all.

Ben Davis

Published 11 November, 2016 by Ben Davis @ Econsultancy

Ben Davis is Editor at Econsultancy. He lives in Manchester, England. You can contact him at ben.davis@econsultancy.com, follow at @herrhuld or connect via LinkedIn.

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Nick Lockard, Marketing Strategist at DataLab USA

Another point to consider is market fragmentation. There are currently 50 million addressable households. After you identify your audience you need to see how they fit into each MSO (cable/satellite providers). Identifying your audience across multiple MSOs can be time consuming but companies like DataLab, Experian, and Acxiom act as data safe havens and help expedite this process.

The impression level data you get after a campaign can also help advertisers optimize their linear buys.

Full disclosure: I'm an employee of DataLab.

over 1 year ago

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