Getting Halfway To Addressable Commercials before Deploying Addressable Technology - Bill Harvey - MediaBizBlogger

In the November, 1979 edition of my Media Science Newsletter I predicted the industry would one day send the right commercial to the right home through TV. Many know that I have been a proponent of that vision since founding the Addressable Advertising Coalition in 1996 with John Hendricks, and Next Century Media in 1993 with Len Matthews.

Notwithstanding the great progress to addressability, in the upcoming upfront, buyers and sellers will still be doing business as usual. However, some advertisers, agencies and networks will be innovating methods that bring home some of the hoped-for benefits of addressable commercials even before there is a single addressable TV technology deployment commercially available. To explain how this will work we have to look first at what it is about addressable commercials that advertisers and agencies want.

The Aurora trial (conducted in Denver suburb Aurora in 3Q 2003 by Comcast using the OpenTV SpotOn system for four top advertisers and their agencies) showed that by using addressable commercials without requiring one advertiser to buy out all the impressions within one avail – that is, allowing disparate brands to split up those eyeballs – the average lift in target impressions per dollar before premium negotiations was +153%. It would have been even higher if fine-grain targets had been used; however, the typical target group was 25-50% of total homes. As a result, it was concluded that the seller could get a premium as high as +50% and the buyer would be enticed by cutting his/her eCPM in half.

This is why the industry wants addressable commercials, because it creates a simple economic face value win/win for buyer and seller – higher revenues per spot by selling it off in pieces, while each buyer gets a lower cost to produce the same number of impressions against the desired target group, presumably driving more product sales. Any other form of advanced advertising (zone targeting, versioning, telescoping, RFIs, polls, etc.) requires proof of efficacy increase in order to justify a CPM premium, creating a chicken-egg situation and dependency on creative execution. By contrast, addressables are an open-and-shut case because without any efficacy proof they improve the economics for both buyer (gets more target impressions per dollar) and seller (gets more aggregate dollars for the same 30 seconds).

It turns out a percentage of the addressable lift effect on Target Rating Points (TRP) can also be achieved just by simply picking programs better – i.e. before we have addressable commercials (“picking” households). But to do so, we need intelligence on the stable and meaningful skews of individual programs to relevant target groups – not just the sex/age surrogate targets but the true desired marketing targets, i.e. purchasers of whatever typology is suspected of being the probable sales responders to the current campaign.

Because such a true target group of purchasers tends to be even smaller than the 25-50% target sizes used in the Aurora trial, in a recent series of theoretical rebuys of programs based on singlesource data to purchaser targets, TRA and its clients found an average lift in purchaser TRPs of +142% -- darn close to the lift from addressable commercials. Even in other tests where the target sizes were artificially enlarged for comparability to Aurora, the average lift of “non-addressables” using singlesource data to target purchasers was +67% -- about “halfway to addressable commercials.”

In this Upfront, with TRA, the leading edge buyers and sellers now have the ability to use this approach in one form or another to get a jump on others still picking programs based solely on the age old sex and age proxy. Buyers and sellers can determine whether such media shifts make an ROI difference. If you like the promise of addressable commercials, you will love the ability to gain the benefit of addressables without having to wait for the technology to be deployed.

Welcome Bill Harvey as our newest MediaBizBlogger

Bill Harvey has spent over 35 years leading the way in the area of media research with special emphasis on the New Media. Bill can be contacted at bill@traglobal.com