The a4 Advertising View: Addressable TV Advertising Passes Critical Milestones

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The addressable advertising marketplace is like a baseball game in the seventh-inning stretch. That's the assessment of Hasan Rahim, a4 Advertising's Vice President of Advanced Television.

Indeed, numbers speak to how quickly the revenue pool is widening. The Myers Report Marketing/Advertising Forecast estimates that addressable TV advertising will reach $3.1 billion in the U.S. this year -- up 30% over 2021 and projected to grow by 30% annually over the next two years.

"We have scale, simplicity and execution," Rahim explained. That goes for both multichannel TV in general and a4 Advertising (the ad sales unit of Altice USA) in particular. "The scale and footprint of addressable advertising capabilities has steadily increased to more than half of the entire cable footprint." He estimates that the number of households that access linear addressable cable service in the U.S. is 45-55 million.

Adding to the opportunity: privacy protected advanced data is now more readily available and actionable across the entire ecosystem. "The value of addressable advertising has become much more clearly related to measurement, results and effectiveness," Rahim noted.

It's also expected that more national network groups will enable addressability on their owned inventory, adding supply to the two or three minutes per hour historically available by multichannel operators. That's one of the reasons why the $7.5 billion estimate for addressable ads is as high as it is.

This outlook is certainly exciting for a4 Advertising, but it's taken a while to reach this point. It introduced addressable commercials to advertisers more than a decade ago. For addressability to catch fire, cable operators had to implement key technologies. First, they had to get the addressable commercial message in front of the viewers, then they had to deliver data about effectiveness of the message in reaching specific audiences back to ad agencies and media buyers. That, of course, needed to happen as quickly as possible.

"Ultimately, it's about first getting the right spot or message in front of the right person at the right time and then creating an optimization feedback loop," Rahim said.

Two important developments have contributed to their success. "The pandemic accelerated all the 10-year projections that everybody in the industry had as it relates to content consumption and distribution channels," he explained. "The explosion of streaming has led to a sea change in the way all the various parts of the ecosystem think about their roles."

For example, last year smart TV manufacturer Vizio launched a collection of original ad-supported channels known as "Features." (There are six running now, with more scheduled to start throughout 2022.) It has joined a4 Advertising, Comcast and other multichannel operators in the Go Addressable initiative, which aims to accelerate efforts to deliver scaled, addressable TV capabilities that make it even easier for advertisers to incorporate addressable TV into their advertising campaigns.

Improvements in technology, deployment and data retrieval are encouraging a wider variety of advertisers to enter the marketplace on a regular basis. "It used to be that the early adopters could all be lumped into a bucket back in the day -- advertisers [of expensive products or services] looking to target a national audience of less than X million homes with a product that had a cost-per-acquisition above Y," Rahim asserted. "Today, addressability on the big screen is more accessible for any advertiser looking to see what kind of reaction they get from a test audience segment for a new product."

One of the advantages of using linear-household addressable TV as part of a marketer's media strategy is the assurance that there are well-established rules around viewership and reporting of set-top-box impressions, reducing the fear of poor data or outright fraud.

In the long run, a4 Advertising sees interactive ads as another "interesting opportunity" to explore for addressable buys. When that opportunity can be realized is unclear at this time. But with a seventh-inning mentality, and $7.5 billion revenue projections, a4 Advertising has plenty of opportunity to work with right now.

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