if you haven’t heard of addressable TV, you are not alone. This form of advertising has been discussed internally throughout the advertising community for dozens of years yet it hasn’t been implemented as quickly as some expected. As time progresses, addressable TV advertising will continue to gain momentum, primarily because of its targeting capabilities.
Why Advertisers are Spending More on Addressable Ads?
Addressable advertising is a bit intimidating at first sight yet it isn’t as complicated as most assume. This approach to advertising uses first-party data in combination with third-party data to zero in on target audiences with directed messages. First-party is a term used in the advertising industry to refer to personally identifiable information. Marketers willing to pay a premium are winning the advertising war through next-level addressable TV advertising.
The aggregate spend for addressable ads of the linear variety is around $4 billion per year in the United States alone. This alternative approach to customer connection rakes in around $8 billion per year, equating to a spike of over 350% across a half-decade.
Addressable ads first hit the scene in the 90s through set-top cable TV boxes along with multiple systems operators for overlaying, replacement, and optimization. However, addressable TV ads didn’t hit their stride until 2012 when Cablevision, a cable operator powerhouse, teamed up with Dish and DirecTV to zero in on households through geotargeting.
Data analysis is essential for zeroing in on a target audience. This approach provides advertisers with scale along with elite targeting capabilities made possible with data. The end result is audience targeting with the optimal frequency and reach.
The Targeting Every Business Needs
The primary sell of addressable TV ads is that they create an invaluable conduit with those most likely to need or desire a product, service, or other form of value. This technology empowers businesses and advertisers to tailor ads to specific audiences for optimal impact. The bottom line is it is not economically efficient to target a broad audience when it is now possible to narrow the field down to specific households to maximize marketing efficiency.
We would be remiss to gloss over the fact that the targeting that occurs with addressable TV ads is not the same as that which occurs with OTT/CTV (connected TV) ads. Ads of the addressable TV variety are delivered via set-top boxes in a linear manner to TV watchers.
At this point, you might be asking, “What is CTV marketing?” OTT/CTV marketing content contrasts with traditional TV commercials as it occurs by way of a web-connected device through streaming services that support ads. CTV ads are delivered to those who have cut the cord on cable while addressable ads target more traditional viewers.
Such segmenting is becoming more refined with each passing day. At the moment, addressable TV ads segment audiences based on:
- Household information
- Consumer behaviors
Instead of advertising companies or businesses selecting a program or network on which ads will run, addressable TV advertising empowers advertisers to create an audience in accordance with targeting desires rather than strictly focusing on programming as was the traditional approach.
Ad Customization Holds Power
Think back to the last video advertisement you watched on traditional TV or streaming video. Chances are the ad was not customized for you simply because most video ads are intended for regional or national audiences.
Though some commercials are strategically aired during specific hours of the morning, day and night, or during unique programs, others are not customized for such narrow targeting. Addressable TV advertising is changing that with tailored ads that are highly precise. Though surveys reveal mixed results in regard to whether audience members desire tailored ads or non-tailored ads, tailored ads with a novel presentation make a truly lasting impact.
Addressable TV Advertising is the Wave of the Future
Though addressable TV advertising is still in its infancy, it has unlimited potential. Audience data collection and analysis will continue to improve as time progresses, fueling addressable TV advertising segmented targeting. It is this gradually improving targeting capability that will catalyze ongoing growth, improvement, and also a higher adoption rate.
Advertisers and business owners who carefully use addressable TV advertising to contextualize video ads for precise targeting will find this approach to advertising proves quite effective. When in doubt, tap into the expertise of an addressable TV advertising specialist for invaluable insight as to how to best connect with viewers through this unique approach to establishing customer connections.