Why You Should Look into Addressable TV Advertising

As technology evolves, so does digital advertising. New trends appear now and then, with some experiencing short-lived popularity and others sticking around for longer, triggering genuine transformation and revolutionizing our interactions with familiar processes and technologies. Addressable advertising is one of the noteworthy trends that emerged relatively recently but appears to have already won over all the parties involved in broadcast TV and CTV marketing. 

Research conducted by eMarketer forecasts ad spending to exceed $3.6 billion in 2022. Such growth projection signals the need to take addressable TV advertising seriously if you want to win in this competitive market.  

Therefore, let’s dive deeper into addressable advertising and how it works.

What is Addressable TV Advertising?

It is no secret that targeting is no longer as straightforward as it used to be. Traditional age and gender segmentations are ineffective and nowadays, data is king. Addressable TV takes the tons of data that TV content providers collect and grants advertisers access to much more specific audiences. Demographic, geographic, behavioral and more complex data-matching through satellite, cable and IPTV delivery systems are just some of the ways targeting can be drastically improved. As a result, marketers can deliver specific ads to specific audiences by filtering them according to their needs. 

Let’s use the example of two neighboring households. Even if they have similar backgrounds, their interests may be rather different. In broadcast TV advertising, they would be shown the same ads as they watch a particular program. Addressable TV ad takes into account that one family recently searched for cruises, while another is looking to renovate their house. Considering this information, the mechanism of addressable TV would feed the former a cruise offer, while the latter would be shown a DIY shop ad or a video from a related Youtube channel, for example. Thus, despite watching the same show, each family is shown content that is relevant and helpful to them and thus is more likely to follow through to learn more. 

All in all, addressable TV advertising makes matching the ad with the interested person much easier, taking advantage of the scale of television and targeting precisely the person who had previously expressed interest in a given product or service.

How Does Addressable TV Work

Big data is what has made the whole concept of addressable TV possible. This information about users is collected from a number of sources and devices, and facilitates the discovery of new potential customers while narrowing down the target audience to people who are likely to be genuinely interested in the product or service being advertised. Shows watched, devices used, general online behavior are collected and analyzed, among other things. This household profile is then shared with advertisers, OTT providers and cable operators, who in turn can serve households highly relevant ads.

Nowadays, MVDPs (multichannel video programming distributors) possess both the physical hardware in living rooms and subscriber relationships. This combination of assets makes the deployment of specific commercials in individual households possible. With an extensive inventory at their disposal, they have power over approximately 3% of screen time – or two minutes every hour – to reach millions. 

Marketers armed with accurate audience profiles can reach prospective customers with addressable personalized messages. Each household is then shown unique content based on its preferences.

Addressability in Connected TV

Strictly speaking, all CTV advertising is addressable, whereas that is the case with only a very small proportion of linear TV. Viewers savor the improved experience, which is only getting better with time. There is more and higher quality content to choose from to your liking, and on top of that we have greater control over where and how we can consume this content. While the way TV is watched is changing, a large television screen remains the preferred means. According to Finecast’s Thinking Inside the Box study, 80% of BVOD (Broadcaster VOD) is still watched on a television screen, with only 14% on a mobile device.

As TV viewing transforms, so do the marketing strategies, which creates more opportunities for addressable TV advertising. Television ad breaks no longer need to be filled with any irrelevant information – they can be used to convey relevant brand messages to individual households. More and more addressable solutions are emerging from leading TV manufacturers, broadcasters and OTT device distributors. Below are some key areas that expand addressable advertising on CTV:

• Data-driven targeting

Accurate data can help reach the right audience profiles at the right times, as opposed to the usual advertising on linear TV, which, although seen by millions, may not be of interest to them. Moreover, people are generally willing to share data in exchange for quality content, funded by ads. Addressable technology allows collecting this data at the point of logging in and then adapts the advertising shown during breaks so that each household is shown an appropriate brand message according to their interests and something they are likely to act on.

• Higher ad standards

Improving standards is important for the whole industry. The Interactive Advertising Bureau (IAB) offers a helpful hand in this aspect. IAB’s VAST and RTB standards significantly contribute to the growth of addressable TV advertising. Adherence to those can help prevent brand or industry clash during ad breaks and ensure that the end-user is not subjected to too much advertising.

However, new technologies and innovation should be wary of disrupting what linear TV was loved for by so many global audiences in the first place. Clear standards should help addressable advertising in this respect as well.

• Unleash creativity

Creativity has always been at the center of TV advertising, and addressability should only improve this. Parts of creatives can be easily changed in your addressable TV campaigns to suit the intended audience – personalizing TV ads is no longer something unprecedented. Dynamic ads allow easy editing of creatives to adapt them to the type of household – pensioners would get a different visual from a young family.   

Even local businesses can take advantage of addressable TV advertising – there is no need to waste funds showing your promotions to irrelevant viewers. Location-based targeting will ensure that the ad is shown to households in the area who may be in fact interested in your goods or services.

The Summary of Key Benefits for Advertisers

• Improved targeting. Statista research shows that two-thirds of US marketers commend the targeting features of addressable TV. This feature is widely used: from building brand awareness to serving individual offers to potential customers. It works especially well when entering a new region where the brand is not as recognizable. Once the households become aware of your operations in the area, they can be targeted with various offers.

• Relevant advertising. This is another great benefit of addressable advertising according to this study, which mentions an improved user experience and a generally improved brand image with the consumer. Relevant data takes into account recent search inquiries and bookmarks. This way, users will be exposed to interesting and relevant offers, as opposed to viewing ad breaks as a waste of time.

• Higher ROI. Another finding in the same study is that half of the interviewed American marketers report lower wasted ad spend, as every new impression may bring a new customer. They are more likely to follow up and get to the bottom of the sales funnel with addressable advertising.

   

Takeaways

While addressable advertising is relatively new, it has already shown promising results and marketers from different industries have started experimenting and reaping rewards even at this stage. Tailored messages have an impressive track record in various online advertising channels, and television is proving to be no exception. Addressable TV formats combine traditional TV with new technologies to deliver a stellar product that can help brands all over the world find their coveted audience at a fraction of the cost of standard TV advertising.

Relevant ads to consumers, optimization of ad spend, improved ROI and higher ad quality through competition – addressable advertising is a clear win-win for all.