For all the talk of linear television’s decline, Americans still watch an average of four hours of TV programming a day and advertisers are spending $71 billion a year to reach them – no small amount. Yet a good portion of that spend is inevitably wasted, since advertisers can’t tell whether they’re reaching the right viewers.
Editor's Note: With this column we welcome AOL to MediaBizBloggers.
Programmatic advertising brings the promise of more intelligent buying and better ROI, but its adoption has been slow when it comes to television. That’s changing -- and is about to hit a tipping point this year. The ability to target audiences and make individual ad messages “addressable” is about to become a necessity, driven by three main forces that come to a head this year: The U.S. Presidential election, a mature infrastructure and agency capabilities, and the consolidation of the media industry.
The Presidential Election is Driving Addressability
The 2012 Obama reelection campaign’s successful reliance on data-driven audience targeting spawned an entire new industry of political ad targeting firms. Today, thanks to the maturation of a TV data infrastructure at digital agencies, that targeting can expand to addressable TV.
Political consultants who do this kind of work say they can make a campaign’s dollar stretch 30 percent farther, which appeals to candidates who can spend less to reach the more precisely targeted individuals who might actually make a difference in election outcomes. New Jersey Governor Chris Christie, for example, used data analytics to figure out that viewers of a Spanish-language telenovela would be more receptive to his message than viewers of a popular Spanish-language romantic comedy.
For political campaigns, the beauty of addressable TV is irresistible. It combines the two things they want most: Fine level targeting capabilities and the power of the old fashioned TV commercial. The high stakes of this year’s nationwide election, combined with the existing infrastructure of political ad targeting firms, are driving addressability more than ever.
A Mature Infrastructure and Increased Capabilities are Driving Addressability
Just as the political ad targeting industry has had time to grow a mature infrastructure, so has the rest of the TV advertising ecosystem. The rapid growth of data-driven and programmatic advertising has motivated data, marketing-tech and ad tech companies, advertisers, agencies and media companies to develop advanced data and targeting, measurement and attribution capabilities for TV that finally parallel those available for online advertising. Such capabilities are changing the way brand marketers think about TV.
A recent IAB study found addressable advertising to be the most popular form of advanced TV among brand and agency decision-makers. Addressability topped other highly touted technologies as second-screen ads and interactive tags. The respondents cited better targeting capabilities and the ability to deliver personalized, localized messages as benefits.
These pieces -- once missing from the equation -- are finally in place, making it the right time for addressability to take off.
Industry Consolidation is Driving Addressability
Adding to the need for precise political targeting and increased acceptance by brand advertisers, the industry as a whole is consolidating, making it a more streamlined, simplified delivery process, bringing scale to addressable TV.
Both Verizon’s acquisition of AOL and AT&T’s purchase of DirecTV bring sophisticated ad tech systems to what had previously been complicated and difficult processes. Both deals give advertisers the ability to target consumers and track ads more effectively across a variety of platforms and devices.
Scale, however, doesn’t necessarily mean lower costs. But buyers -- whether for political or brand advertising -- understand the value of delivering the right ad to the right person and are willing to pay for it. Advertisers can finally move beyond the old age and gender demographics and increase ROI whether for politics or for products.
The Tipping Point Is Here
Some obstacles remain in the way of massive adoption of addressable TV. Many viewers still have non-addressable set-top boxes and standardization of measurement and analytics for addressable ads is still far from perfect.
But the tipping point for addressable TV will come this year. Thanks to political imperatives, a mature infrastructure and media industry consolidation, addressable systems are about to become a regular -- and necessary -- part of the TV ad buying routine.
It’s time to deliver on the cable industry’s long-promised, long delayed dream: Enabling advertisers to reach highly qualified prospects with the most relevant, personalized ads possible.
Image at top courtesy of Corbis. The opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaVillage/MyersBizNet management or associated bloggers.