7 Reasons To Up Your Addressable Advertising Game
By: Gregg Rogers, Director, Product Development, Advanced TV & Partnerships
Whether you have tested addressable TV, or you’re still sitting on the sidelines, growth projections show that it’s time to take addressability seriously. Channel ad spending is expected to reach $3.49 billion by 2021. According to NScreenmedia, out of 88.3 million pay TV households, 70M are set-top box (STB) addressable-enabled for pharma targeting.
Source: eMarketer, July 2019
By 2021, the number of cord cutters, shifters, shavers and nevers is expected to increase from 32.9 million to as high as 81 million. According to the SpotX 2019 Stat Pack, one-third of TV households can be reached by CTV.
Roku predicts that about 60 million TV households will be accessing video on TVs exclusively through streaming by the end of 2024. If that transpires, it would mean streamers would surpass traditional pay TV viewers for the first time.
Source: eMarketer, July 2019
All the numbers point to one reality that marketers face. Consumer audiences are getting tougher to reach through traditional broadcast schedules and STB pay TV platforms because they are migrating to addressable streaming platforms in huge numbers. So, as you consider future media buys, consider these seven reasons to increase your addressable media investment.
TV Has Grown Far Beyond the Living Room
“CTV is inherently addressable and can go beyond basic household-level data and holistically optimize audience, contextual and behavioral criteria to drive campaign performance,” said Laura Buchman, Telaria’s vice president of addressable and audience strategy.
More and more households are addressable, providing brands with the ability to target an ever-growing portion of the U.S. population. By 2021, more than 81 million U.S. consumers will cut their cable cord, or never sign up for one. As of May 2019, over 88 million or 74% of OTT U.S. households have at least one internet-connected TV device, for example, a smart TV, or an OTT player such as Roku, Amazon Fire TV or Apple TV.
Brands and agencies have started to recognize the benefits of using addressable media across OTT. For some, challenges in measurement have been one of the hurdles for investing more. In just three years, OTT ad revenues are up 275% to $31.5 billion. By 2020, OTT advertiser spend is expected to hit $40 billion, over half of the $69 billion in projected Linear TV ad revenue.
And finally, the number of streaming platforms continues to grow quickly. In addition to the AVOD, Hulu, Roku, Pluto TVs of the world and SVOD streaming establishments, like Netflix, and Amazon, there are a number of new services on the horizon including Apple TV+, Disney+, and NBCUniversal/Peacock, to name a few. Not only will this mean even more content for viewers, it will also provide even more advertising opportunities for brands.
“These viewership insights can be used to enhance the rest of the TV plan. Addressable’s greater efficiency justifies the premium by eliminating waste and achieving a favorable eCPM.”
Addressable TV Adds Premium Value to Television and Digital Buys
Regardless of the size of a brand’s audience, addressable TV makes sense because it helps reach new audiences more effectively and it can provide valuable insights that can be used to refine the overall TV buy. An advertiser can invest a small percentage of their TV dollars into addressable and run a campaign targeting their ideal audience. Creative testing and reporting show them which networks, dayparts, times, days of the week, etc. their target population watch. These viewership insights can be used to enhance the rest of the TV plan. Addressable’s greater efficiency justifies the premium by eliminating waste and achieving a favorable eCPM. Innovative digital buyers should consider addressable as part of their premium digital video buys. Because of the precision and measurement capabilities, buying addressable TV is easy for digital buyers and can significantly expand their campaign reach and quality. And finally, it is important to remember that addressable TV is only as effective as the data or audience that drives the campaign. The key ingredient to success is the offline knowledge applied to the addressable channel processing.
Growing IP Delivery is Driving Addressable Scale
While ad delivery based on cookies and device ID is a well-established targeting method, ad delivery using the IP address associated with a household’s STB, OTT device or Smart TV is growing in popularity. Nearly 75% of consumer household TVs are connected to the Internet, and that number increases every month. A few key metrics underscore this growth. Across the U.S., the average household uses an average of 7.2 entertainment services—up from 6.3 services per household reported in TiVo research in 2018, and averages of about 4 and 5 services, respectively, in 2016 and 2017. Also, not surprisingly, OTT viewing time is starting to approach that of live pay TV, according to TiVo’s Video Trends Report Q2 2019.
The same report states that more than half (52.4%) of North American respondents regularly watch one hour or more of OTT-delivered content, compared to 65.8% reporting the same for live TV. Nearly half (46.8%) also reported watching an hour or more of DVRed content, and 41.5% said they watch an hour or more of sports across live TV, OTT, and DVR.
Source: TiVo Video Trends Report Q2 2019
According to Roku, five key factors are helping to accelerate cord cutting:
- vMVPDs (virtual multichannel video programming distributor) offer flexible offerings without long-term contracts
- The ever-growing abundance of subscription video on demand (SVOD) content
- Viewer perceived value of ad-based video on demand (AVOD)
- Ease of streaming
- Fewer enticements from cable and satellite companies for pay TV subscribers
The ongoing consumer shift from traditional TV services to new digital TV offerings is hitting a variety of providers, especially satellite providers such as DISH Network and DirecTV, very hard. According to NScreen Media, in the first half of 2019, cable, satellite, and telco TV providers have lost just under 3 million subscribers. Since the industry’s 101.9 million peak in 2014, 13.6 million homes have called it quits on traditional pay TV. Watching this category of TV provider systematically disappear at the same time new IP broadcast standards such as ATSC 3.0 started rolling out serves to highlight that IP delivery along with a data-driven audience targeting approach are the future of television.
Your Brand Can Influence Consumers Directly Across the Purchase Funnel
Addressable TV is sometimes compared to direct response advertising, which is typically used to convert viewership into immediate sales via phone or the web. But it’s the precision elements applied through offline knowledge, custom audience segmentation and creative messaging that make it perfect to use at all levels throughout the purchase funnel across a variety of verticals. While CPG, auto and travel advertisers are big ATV advertisers, there is still opportunity for growth in categories including pharma and apparel.
Michael Stephenson, chief sales officer at Nine Entertainment states, “Whether it is one-to-one addressability at the bottom of the funnel, a one to many brand campaign at the top, or a one to a few in the middle – the ability to target particular audience segments, behaviors or interests should allow you as a market to fill all the way through the funnel and deliver the greatest return on investment.” The hyper-targeted nature of this approach allows marketers to speak to each audience’s need-state and -stage in the purchase process to drive conversion.
Measurement Throughout the Purchase Funnel
Several factors can influence actual conversion to a brand, but at Medicx, we know that the first step for campaign success is to put your ad in front of the right consumers using our patented Micro-Neighborhood® targeting platform. The addressable channel has measurement capabilities throughout the purchase funnel. It is possible to determine the quality of those exposed and the actions taken to get to a sales outcome. Addressable viewers can be linked in a privacy-compliant manner to outside data sources to assess on-target delivery and actions taken relative to a purchase. Actions taken by exposed consumers can be compared to an appropriately developed control group (depending on advertiser objectives) to determine incrementality. The insights gained through analysis of the advanced TV channel have additional applications when applied to a broader advertising buy, for example, traditional broadcast.
A Precise Medium = Brand Safety
By its very nature, addressable TV is safe for your brand. Content creators not only produce premium content for the space, but they also monitor it carefully. The combination of the large screen with extremely accurate household level targeting at scale provides brands with an extremely valuable and brand-safe resource. Access to extremely specific, trusted audience segments using both evidence-based and self-identified data, makes it possible for brands to build very accurate profiles and successfully reach them across major addressable platforms.
“But it’s the precision elements applied through offline knowledge, custom audience segmentation and creative messaging that make it perfect to use at all levels throughout the purchase funnel across a variety of verticals.”
Business constraints have historically limited addressable inventory to only the MVPDs and the two-minutes per hour across non-network local-avails and technically supported STBs. Expect this to scale and the percentage of addressable inventory to increase. As emerging technology and TV standards continue to evolve, including ATSC 3.0 and HbbTV 2.0 in the EU, advertisers will have access to new interactive functionalities that provide census-based information on household and personal viewing habits including viewing time and time in program. ATSC 3.0 will be the new IP broadcasting standard by which local broadcast could become truly addressable.
ACR (Automatic Content Recognition), which allows consumers to opt in and permit smart TV manufacturers to track their viewing behavior, is considered the future of TV measurement. ACR data is built into Smart TVs to track second by second viewing behavior. The information also gives marketers a verifiable source of addressable audience data and the ability to leverage DAI (dynamic ad insertion) capability to insert the ad right on top of it.
Advertisers are starting to warm up to programmatic TV adoption as broadcast and cable networks are opening up their premium inventory through the set-top box across a few MVPD players. This shows the continued growth of IP delivery through more cost-effective and data-driven channels.
Source: eMarketer, June 2019
The key to standardizing addressability across all platforms is bringing together the many players, including the publishers, networks, and different platforms to align on universally accepted technical and business standards. The MVPDs, networks, and publishers also need to work together on a unified system of versioning ads to the household level on a national scale. Easier said than done. A new consortium, led by TV manufacturer VIZIO, called Project OAR (Open Addressable Ready), is promising to assemble the right technology platform and media partners to make addressable ads on television a reality as soon as early 2020.
Traditional TV advertising has been handled the same way for 60 years; updating previous protocols needs to be a conscious choice driven by distributors, marketers and their agency partners. It’s time for the industry to take the next step and be more creative, innovative and better meet clients’ digital video and TV cross-platform goals.