Blog / January 31, 2017

Addressable TV: Cutting the Waste Out of Your TV Advertising

By Melanie Franke

No doubt you’ve heard the buzz about advanced TV and, more specifically, addressable TV. But what can it add to your marketing program?

Simply put, addressable TV advertising allows marketers to reach specific consumers on their household TV sets. With the help of third-party data, addressable TV connects a person’s digital footprint to their household, giving advertisers the sophistication and targeting of digital video but with a TV advertising delivery.

This capability has enormous value when it comes to managing TV advertising spend. Instead of reaching a large audience based on Nielsen demos and GRPs, you can reach a smaller, more relevant audience based on their behaviors, locations and interests. Additionally, you can segment your target audience to serve customized ads to specific viewer groups.

The targeting cuts down on overall ad spend, and the personalization increases ROAS, which means that your advertising becomes much more cost effective. Let’s take a look at how these components create a perfect, and never-before-seen, combo for TV advertising.

addressable TV advertising

Targeting Capabilities: More than your average Nielsen rating

With addressable TV, marketers target subscribers of multichannel video programming distributors (MVPDs), which are typically subscription cable providers such as Cablevision, DirecTV, Comcast, AT&T and others. These companies provide their subscribers with set-top boxes (STB), which collect troves of data, including the shows and commercials viewed by the household.

That STB data can be married with a range of demographic and psychodemographic data through third party partners, allowing marketers to identify and target their precise audience, whether that’s past customers, cooking enthusiasts, new moms and so on. Moreover, working with other measurement companies, marketers can make probability determinations of offline sales outcomes.

These targeting capabilities far exceed traditional TV, which rely on broad demographic panels that serve to represent actual audiences. Data companies are now creating profiles of households based on actual data, allowing marketers to get extremely specific as to who they target. For example, marketers could reach households likely to have young children, households with outdoor enthusiasts and, of course, households that are already profiled in the brand’s first-party data, such as former catalog customers or recent visitors to a website. These developments allow marketers to use TV advertising to drive, track and measure offline business KPIs.

This presents a cost-savings for marketers who choose to use this approach. Instead of buying a high-priced television campaign to reach a broad audience, you can segment out the most-relevant part of that audience and only show them your ad. It’s a major win for TV advertisers–all of the reach of TV advertising but only paying for your specified audience.

Add in Personalization: Targeting is just the first step

The ability to pinpoint the exact household to target is only one aspect of campaign efficiency. Creating messages that speak directly to the target audience goes a long way in prompting consumers to take a desired action, which in turn drives return on ad spend for a campaign.

Additionally, only using the targeting facets of addressable TV doesn’t account for its ability to deliver versioned ads. “Often times, advertisers come in and run a national TV spot to an addressable audience, but they don’t make it personalized to that audience,” says Curtis Barone, TV and online video strategy and partnership director at Acxiom. “It’s typically because they’re looking for efficiency from a cost standpoint, but they don’t necessarily have messaging that is specific to that audience even though that is available.”

The medium is still in its nascent stages and only allows for advertisers to serve five different versions of an ad per campaign. This is much more customization than has ever been available through TV previously; a baby step that is leaps beyond what has previously been available.

The Impact of Targeting + Personalization

Recent research from Sequent Partners, Digital Video at the Inflection Point, shows that digital video paired with targeting and personalization features outperforms typical digital video benchmarks.

digital video research

This clearly shows that personalization and targeting play a major role in digital video deployment, and the same success can be replicated–to a certain degree–with addressable TV advertising.

So what happens when brands take the time to personalize their TV creative? Simply put: ROAS soars. According to Daniel Solarz, supervisor, Starcom Mediavest Group/SMG, whose agency has launched more than 100 addressable TV campaigns, the medium delivers results that range from 110 percent to 600 percent better than traditional TV campaigns, producing “measurable lifts in sales and return on advertising spending (ROAS), as well as in KPIs such as visits to auto showrooms, conversion to trial offers, brand awareness and ad recall.”

Final Thoughts

This kind of targeting and personalization for a TV campaign is game-changing. For the first time ever, marketers can personalize TV ads to specific consumers and determine which household saw which ad and if they made a purchase. Instead of conducting brand recall surveys months after the fact, brands can see outcomes from their TV advertising.

Learn more about how we drove 15 million impressions across TV and digital with addressable TV advertising.

More about the author

Melanie Franke Content Marketing Manager

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