5 Things You Should Know About Addressable Ads as More Dollars Shift to Digital

Advanced advertising needs better clarity

The momentum behind addressable TV, delivering household-specific advertising based on an advertiser-defined target—regardless of programming or time of day in both live and playback modes—has reached an important inflection point for both consumers and brand marketers.

In a recent study we conducted with Adweek, leading marketers indicated that current TV buying (without addressability) isn't fully meeting marketing needs, and there is both frustration and a desire to reach relevant audiences more effectively. Nearly all respondents agreed that there is too much waste associated with TV and that traditional methods of measurement are outdated. As a result, over 80 percent of respondents are shifting TV dollars into digital for greater accountability and effectiveness. However, nearly all agree that TV would be more attractive, and stand as a better competitive option to digital, if they "could target more finely."

Rick Welday Alex Fine

But that is starting to change and I have a front row seat. With AT&T's acquisition of DirecTV in 2015, AT&T AdWorks has become the largest national addressable platform, offering addressable TV advertising across nearly 14 million DirecTV households out of the 25+ million combined DirecTV and U-verse TV households. Every day, I'm having interesting conversations about how valuable this advertising tool is for advertisers across all industries, as well as for consumers. But for those that haven't used it yet, there is still some confusion about what addressable advertising really is and why it's so compelling.

So in an effort to help clear things up, here are five things to know about addressable advertising.

Zero waste
In essence, addressable advertising turns the ad-buying model upside down. Instead of projecting what programs a particular audience will be watching, addressable advertising targets an audience regardless of what they're watching. Whether your target audience is watching TBS at 2 p.m. or ESPN at 10 p.m., they'll be served your ad. And it is served to your target whether they're a heavy or a light TV viewer because the ad finds the audience versus the old model of having the viewer come across the ad. And advertisers are only charged on impressions that are served to their target audience.

The proof is in the eCPM
Advertisers sometimes balk at the premium CPM for addressable advertising, but let's look at the math. With traditional linear TV, you may have a $10 CPM. When your ad airs, let's say that 25 percent of the viewing audience is within your target. That's an eCPM of $40. With addressable TV, you may pay a $30 CPM but it's much more efficient, since all of the impressions that are paid for are within your advertiser target. Think more bang for your buck.

Premium TV inventory
There's an overwhelming amount of advertising inventory out there, and the reality is that a lot of it is not so great. On top of that, advertisers don't always know that they're spending money for placement in remnant or user-generated inventory. Conversely, addressable TV is premium and transparent. Your addressable ads run during high-quality, live TV and VOD programming, and you're getting detailed reporting on exactly where your ads ran on a weekly basis.

You can measure ROI through the marketing funnel
What's the purpose of doing all this advertising if you're not sure that it's working? The ability to analyze and measure activity at all levels of the marketing funnel is something our clients get really excited about. They can see where their dollars are and aren't working, allowing them to optimize and modify future campaigns. Whether it's brand awareness lift, visits to a website/brick-and-mortar location or actual sales, addressable TV provides the end-to-end measurement and accountability advertisers are looking for in a privacy compliant way. No need to leave it to chance.

Addressable across screens
I believe addressable advertising has a benefit to the consumer. The average consumer is bombarded with advertising all day, but addressable gets at the goal providing more relevant marketing. Advertising really does work, and if you're reaching people at the right moment, the message can resonate more powerfully. There is tremendous opportunity in reaching the same consumers with messaging on their TV at home and on their phone while on the go: complementary messaging between TV and mobile channels, taking advantage of mobile functions like click to call, mobile coupons, location, etc.

Advertisers have long sought to couple the emotional impact and reach of television with the precision of direct marketing, and addressable TV is that long-sought-after hybrid solution, allowing advertisers the best of both worlds. Addressable TV is an efficient ad delivery system and continues to deliver hundreds of successful campaigns driving the future of advertising forward.

I'm really looking forward to being a part of this next phase of advertising innovation. It's an exciting time to be in the business in which genuine commercial and emotional connections are being made.

Rick Welday, president, AT&T AdWorks (@ATTAdworks), currently leads a $1.4 billion national ad sales business.

This story first appeared in the September 26, 2016 issue of Adweek magazine.
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