For the past 70 years, television has been a consistent part of our living rooms and—even though we sometimes hate to admit it—our lives.
It’s constantly changing and evolving, but more recently, it’s starting to make bigger, more significant transformations from both a viewing and an advertising perspective.
The early 2000s brought an onslaught of changes to viewing habits with the advent of TiVo and DVR technology. Then came on demand viewing and subscription services like Netflix, which all help personalize the TV-viewing experience like never before.
Although advertising creative is continually evolving (everyone is always excited to see what advertisers come up for the Super Bowl), the way we advertise on television hasn’t changed nearly as much as the viewing experience. Until now.
With the personalization and targeting capabilities of digital advertising, the various players in the industry are finding ways to bring the digital targeting capabilities to TV advertising.
This new kind of advertising is known as advanced TV, which encompasses a few different methods of delivery. By far, the most promising is addressable TV advertising, which enables marketers to leverage finite household data to target and reach specific homes and people through TV advertising.
With every new advertising opportunity, it’s important to assess whether or not it’s right for your brand. Let’s take a look at how the solution works, some of its capabilities and its feasibility for you.
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How Does Addressable TV Advertising Work
Traditionally, brands do a massive ad buy during an opportune TV program, channel and time. Although this tactic is great for broader brand awareness, it isn’t the best for understanding who the brand is actually reaching and if that ad actually impacted a sale. You can spend millions of dollars on a primetime spot without knowing if it affected a purchase.
With addressable TV advertising, brands can finally take the precision they get with digital advertising executions and apply them to their TV-viewing audience. So how does it all work?
With cable or satellite TV subscribers, cable providers have data on who exactly their customers are. When paired with third-party data providers, like Acxiom, Experian and others, brands can match up purchase data with household data, allowing them to send specific ads to households that match their target audiences for specific campaigns. As an example, you could choose to only target in-market, loyal customers with your TV ad spot.
If this sounds like a potential privacy breach, you are correct; however, brands themselves don’t have access to the specific matched information. The third-party data providers act as a clearinghouse to pair information from the different parties and ensure anonymity for the consumer. This allows brands to send ads to the people identified as their target audience, but the brand won’t know the specific names or contact information of who was matched.
Now, being able to reach a target demographic through a TV experience isn’t the only highlight of addressable TV. Using consumer data, brands can actually send personalized messages to their target TV audience, similar to what they experience in an online execution with display and personalized video ads.
Although this is similar to digital advertising strategies, it’s not exactly the same. Based on how cable providers operate, currently, brands can only deliver 5-6 different versions of an ad to a target audience. So instead of having thousands of different personalization options within a single ad, brands only get a few with addressable TV advertising.
But with 5-6 different versions, there are personalization opportunities abound. For example, a retailer could segment its audience out into men and women, age groups, brand-specific buyers, etc. and deliver more personalized communications to the larger groups. Even though brands aren’t getting as much personalization as digital advertising, they’re getting a whole lot more than they ever did before.
Although 87 percent of marketers reported positive ROIs with digital video ads, brands need to assess if addressable TV advertising fits within their marketing strategy and budget—as it is a new medium.
Although an addressable TV campaign is more expensive than a tried-and-true method like display advertising, this medium gives marketers the specificity of audience selection that they’re used to online, but in a traditional TV delivery. And with companies earning up to three times ROAS through personalized addressable TV campaigns, it speaks to the success of the in-market delivery and customized messaging.
It’s also worth noting that an addressable TV campaign is still far less expensive and more effective in determining actual sales than a typical TV ad spot. Even if brands have the money to purchase national ad spots, it can still be hard to track and determine ROAS. Rather than buying programs, brands can buy highly targeted audiences, determined by advanced data, who are likely to buy. Abandonment of the spray and pray marketing strategy of yesterday continues as marketers increase their attention on target markets.
Approaching advertising with a strategic mindset is crucial for brands to see increased ROAS as they continue to test the boundaries of what is possible to reach their target audience. With the wealth of data available and continuing studies proving that personalization is essential to both offline and online purchases, addressable TV advertising makes a strong case for its capabilities.