Advertisers Are Spending More in Addressable TV, But Some Aren’t Convinced It’s Worth It

Many are struggling to figure out what it means for their brand

Spending in addressable is expected to hit $3.3 billion by next year.
Alexei Vella

Ask any media buyer, tech company or cable provider about addressable TV, and they’ll ask a question in return: How do you define it? Because while addressable TV simply means using data—rather than content—to buy audiences, the industry as a whole is still playing catch-up when it comes to the concept of serving different ads to different viewers watching the same programming. At least, parts of the industry are playing catch-up.

“Addressable is a term that was invented by the TV business to describe data,” says Scott Rosenberg, general manager of Roku’s platform. “You don’t hear digital people who sell digital media use that term because it’s just baked into the assumption that their media is targetable.”

Addressable TV has been hailed as a win-win-win that enables brands to better target consumers, networks to better monetize placement and consumers to receive ads they might actually want to watch. According to the Video Advertising Bureau, spending in addressable is expected to hit $3.3 billion by next year, up from $2.5 billion this year and $2.1 billion in 2017. Among advertisers already using addressable TV, 55% plan to increase their investment.

But, as 360i chief media officer Doug Rozen notes, “Is the juice worth the squeeze?”

Bridging the gap

Though media buyers say that linear TV still works for reaching mass audiences, a sizable number of viewers are being missed.

“If you think about television as a road, there are cracks in the road, and those cracks are audiences shifting to other screens or not even watching TV anymore,” says Mike Piner, svp of video and data-driven investments at MullenLowe’s MediaHub. “And over time, those cracks become bigger.”

The idea is that addressable TV can bridge those gaps, delivering targeted ads to audiences that were either being missed or were tuning out. And media companies have taken note of this potential. In March, Viacom acquired ad-supported streaming service Pluto TV for $340 million, giving the company access to Pluto’s 15 million users—half of whom are ages 18 to 34—and the data that comes with them. (John Halley, Viacom’s chief operating officer of ad sales, says he expects that viewership to grow to 20 million in the “near term.”) Just last week, telecom Altice USA announced the acquisition of the digital news company Cheddar, with advertising plans that include additional scale and local targeting through dynamic ad insertion.

Companies like Roku and Hulu, meanwhile, have already been using first-party data, which provides a direct line to their respective 27 million and 25 million monthly users—not to mention whatever data of their own that advertisers want to bring in.

Brands from CPG, auto, insurance and financial services companies have been among the most willing to embrace addressable advertising, says Doug Fleming, Hulu’s head of advanced TV. These brands have traditionally reached viewers through linear TV, and the irony, he says, is that 81% of current viewers are in the living room—where they’ve always been. So it’s not a matter of going where the viewers are but rather personalizing what you show them. “The phrase we use a lot is about choice and control, and it’s about putting the viewer first,” Fleming says of the appeal of addressable TV.

“I believe that [viewers] want messaging that is more relevant to them and their lifestyle and the emotional connection for that moment,” says Donna Speciale, WarnerMedia’s president of ad sales. “It’s all about relevancy in that moment.”

Hershey’s, for example, has begun buying TV audiences based on data from purchase- and affinity-based audience segments that are combined with individual identifiers from various linear and streaming providers.


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This story first appeared in the May 6, 2019, issue of Adweek magazine. Click here to subscribe.

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