Last week’s post explored some trends and thoughts in the ad industry around the relationship between TV and digital. In this piece I discuss where advertisers stand with addressable TV and what it would take to further drive its adoption.
Advertisers want more addressable TV ad options
The spray and pray approach of traditional TV advertising can result in a lot of waste for most advertisers. Consequently, they’re anxious for an effective, widescale offering of addressable TV. The ability to target and measure specifically defined audiences would not only let advertisers spend their dollars more efficiently, but it would also bring a new level of accountability to TV. As appealing as addressable TV is to advertisers, its limited availability and adoption has kept it far from its potential. This means digital and direct mail have dominated the targeted ad space largely unchallenged for years now. So you can guess where advertisers want to take their budgets.
I should clarify that addressable TV has picked up some momentum over the last couple of years. A 2017 forecast by eMarketer predicts that addressable TV budgets in the US will hit $1.26 billion this year. That’s a 65.8 percent jump from 2016. Sounds awesome, right? Well, kind of. That’s only the tip of the advertising iceberg.
According to the same report, that $1.26 billion only represents 1.7 percent of all TV ad spending in 2017. So while the dollar amount might seem impressive, it’s actually pretty small relative to total TV ad spend. Last week’s post discussed the long running competition that digital and TV have had for ad budgets. I hinted in that post that if content owners can provide advertisers more targeted campaign options (i.e., addressable TV), they’ll find that they can claim a bigger chunk of advertisers’ wallets.
If addressable advertising is so efficient, why doesn’t it claim more ad spend?
1. Addressable technology is still young
One reason addressable hasn’t made more of a splash is simply that it’s a new technology–an experiment for many.
“Addressable has been used more for experimentation than a regular line item on media plans,” Media Post contributor John DeFilippis writes in an August 2017 article. He points out that carmakers have embraced addressable more than other advertisers. Though in general, advertisers have only dipped their toes in the great sea of addressable potential.
2. Broadcasters need more data
Another reason addressable hasn’t taken off is data. This includes data needed to target the ads and data for post-campaign reporting.
A study by Advertiser Perceptions asked advertisers what would motivate them to buy addressable TV advertising. Two of the top four items cited point directly to data: better metrics and better understanding of effectiveness.
“Marketers, looking to gain a 360-degree view of their customers, are clamoring for more data so they can connect their audience buys across all screens,” DeFilippis writes in his article. “Ultimately, driving outcomes that build a business is the goal, and knowing what and where to spend requires a holistic planning, execution, measurement, and optimization effort.”
Data technology has come a long way in the last few years. TV data companies can now collect unprecedented primary viewership data, combine it with trusted third-party data like Experian, and deliver highly targeted ads to viewers. Broadcasters willing to make an investment in these new technologies can offer advertisers the addressable options they’re expecting and the data to prove results.
3. The market lacks scale
Yet a third reason keeps addressable from growing: limited scale. In the Advertiser Perceptions study referenced above, the item at the top of the list of things that would motivate more advertisers to buy addressable TV advertising was “better reach against my target.” If content owners want to leverage addressable to attract advertiser dollars, they will have to commit more ad inventory.
National advertisers, with their massive budgets, will jump on addressable TV in a heartbeat, but only if they can have scale. Little pockets of inventory here and there won’t get them to bite. Content owners should look seriously at how much inventory they currently dedicate to addressable and consider where it makes sense to expand that dedicated inventory.
A recipe for success
Couple inventory with detailed data and you’ve got yourself a recipe for getting advertisers bought in to addressable. If broadcasters can get advertisers past the experimentation phase and into full adoption of addressable, they’ll see ad budgets shift to TV.
They want you to succeed
To conclude part two I want to share a final stat from an Advertiser Perceptions report. The survey asked marketing and advertising agency execs what types of ads were most impactful. The list they could choose from included native ads, digital, TV, earned media, radio ads, and magazine ads. The results showed that nearly half of the respondents picked TV ads as being the most effective, while less than a quarter chose digital.
So broadcasters, advertisers are on your side. They want you to succeed. They want to spend their budgets on TV. It’s up to you, though, to stay current on what advertisers want, adapt to changes in the industry, and continue earning their business.