Complicated relationships between digital advertisers and TV networks, streaming services, and other industry players have given ground for some confusion. Too many misconceptions spoil the TV ecosystem broth all the time. Yet there is one thing that compensates for all the existing issues. It is Addressable TV, and there are clear reasons for that.
Addressable TV, or targeted ads, helps advertisers to distribute personalized ads among individual households. The latest technological advances allow marketers to target TV viewers with incredible precision.
But how exactly does Addressable TV advertising work? Let’s identify how this digital medium works and why it is a crucial element in your future marketing campaign.
What is Addressable TV?
Addressable TV advertising is a technological method to deliver targeted ads or ad pods based on TV audience segmentation. The technology can ensure precise cross-screen segmentation across smartphones, VOD, and cable TV in countless households. Additionally, Addressable TV makes it easy to create household profiles, which allows advertisers to tailor their inventory to fit specific groups.
Individual viewers within the household can be targeted according to their viewing behavior and personal habits. The level of precision allows the right viewers to be catered to just at the right time.
How does Addressable TV advertising work?
Brand representatives usually have an idea of their target audience and can collect information on gender, age, location, and behavioral peculiarities in a given group. An Addressable TV campaign starts with defining the target persona’s basic socio-demographic profile. Brand marketers can also employ external data firms to build a database of potential target audiences. A combination of first- and third-party data serves well to identify the right audiences.
Why is it crucial?
According to the estimates, the number of Addressable TV households is rising gradually:
Statistics gathered by https://www.mediapost.com/
The report also estimates Addressable ad spending to have risen by almost 50% since 2016. Taking into account the ever widening spread of Addressable TV advertising, it definitely offers an opportunity to “reach relevant audiences in scale”, as AdAge puts it. And advertisers don’t want to miss that opportunity. In 2019, they are predicted to spend a staggering $2.54 billion on Addressable TV ads.
Why households win?
While traditional linear TV segments audiences by age and gender and shows the same ads to the same viewers, Addressable advertising dives deeper than that. It gives viewers an opportunity to consume relevant content that appeals to their interests. It shows that TV networks, VOD services, or OTT providers really care about their clients and nurture their needs.
Why advertisers win?
Nothing works better for brands than establishing a close contact with their audience. Addressable TV providers offer a remarkable opportunity to target the ads with the utmost precision. And what’s more, the Addressable channel makes it possible to set measurable goals and assess the performance.
Who else wins?
The existing paradigm of traditional TV lacks the advanced technology to enable Addressable TV in a way CTV and OTT providers do. In an effort to keep up with OTT and CTV that are stealing the show these days, multichannel video programming distributors (MVPDs) are trying to replace traditional TV buys with Addressable TV instruments.
Their efforts however are subject to certain limitations. The STB (set-top box) technology provides MVPDs with several methods such as Geo targeting to enable basic addressability and focus on specific audiences. As the audiences change screens while watching the same programs, the addressable technology is trying to catch on.
The next objective for addressable TV is cross-screen advertising. A combination of mobile and STB data coupled with third-party data is an invaluable asset for precise targeting. Identity graphs can also be helpful to pinpoint proper means for your future advertising campaign.
Addressable TV opens up virtually endless possibilities to understand certain patterns in viewing behavior. The technology allows marketers to follow same users from their TV to mobile phones and target them individually.
Despite the technology’s growing popularity, key industry players are slow to adapt to the new Addressable reality. Many still consider Addressable TV as an additional source of income rather than the major one. Now let's look closer at why this is happening.
What are the challenges?
Many regard Addressable TV advertising as being in its early days because the technology still faces some major challenges:
- New regulations. GDPR introduced new data processing mechanisms that aim at protecting customer information. The new law (which is a year old this month) requires that TV operators choose GDPR-ready targeted advertising solutions. Third-party data firms must obtain users’ permission to process their personal data. Such a move towards better privacy protection makes it more challenging for TV operators to buy audiences within the EU.
- Lack of infrastructure. Relatively few TV providers use even fewer standards for measurement and assessment of Addressable ads. Standard terms and conditions, guarantees, and attribution mechanisms are still under development. However, the situation is currently improving as key media companies are set to unite efforts to deploy new Addressable TV standards.
- Outdated equipment. Addressable TV vendors can’t reach the audiences with cable set-top boxes that don’t support the technology. However, Addressable households are growing in numbers year after year. And cable companies will have to give up on outdated receivers sooner or later and start to support Addressable media buying and selling for real.
- Integration into the existing programmatic paradigm. When it comes to Addressable TV vs Programmatic Linear TV comparison, there is a clear difference to be noted between the two terms. Programmatic Linear TV doesn’t establish a direct channel to enable a one-to-one connection between an individual Advertiser and individual TV Viewer. As opposed to Addressable TV, the Programmatic channel doesn’t allow for buying audiences in real-time or choosing the household-level ads. In such a situation, programmatic ads are likely to reach wrong audiences. Only addressable TV advertising helps to maximize the ROI of each ad dollar spent.
A defining moment for marketers
Addressable TV is instrumental. It aims at exposing your brand on the largest screen in the household, to the right audiences and at the right moment. It is time for every marketer to realize the potential of Addressable and consider this technology seriously in their future undertakings.