Have you ever seen a television commercial play for two seconds, and then it suddenly gets cut off for a different ad to run? That’s addressable TV done poorly.
Today, there are a handful of consortiums made up of distributors, programmers and ad-tech companies working toward doing addressable TV right. Addressable initiatives are taking off as TV consumption habits drastically change, leaving marketers with fewer opportunities to reach engaged audiences.
“The consumer’s expectation is becoming a viewing environment that has less advertising. Is there a way to make each ad that a consumer sees more valuable and an advertiser willing to pay more for it because it is more valuable? That answer is addressable,” said Tracey Scheppach, CEO of video agency Matter More Media.
Addressable TV advertising has traditionally been limited to the two minutes of inventory that multichannel video programming distributors (MVPDs) hold every hour. The networks controlling the other 14 minutes of inventory are facing a serious dilemma that’s been accelerated by the novel coronavirus pandemic.
Stay-at-home orders have correlated to a spike in streaming TV, which usually has no ads or considerably fewer ads than traditional linear TV. According to research firm MoffettNathanson, traditional linear TV’s subscriber count is expected to drop by 27 million over the next four years.
Brad Stockton, vp of video innovation at Dentsu Aegis Network, said addressable advertising can help solve the frequency-capping issue of linear TV. By using viewership data to understand who’s seen a particular ad, marketers can then run an addressable campaign for incremental reach.
“Undoubtedly TV still works, but it has a frequency problem. Addressable television can help level-set your frequency problem and only reach those households that are light TV viewers and reach the unexposed to your national TV buy,” said Stockton.
Three consortiums are testing technologies to extend addressability to programmers, meaning marketers now have more opportunities to buy targeted TV ads. AMC Networks began trialing set-top box-delivered addressable ads on June 10 as the first network to join On Addressability, an initiative from Charter’s Spectrum, Comcast Advertising and Cox Media.
Nielsen and Project OAR (Open Addressable Ready) are also building technologies to bring addressability to smart TVs. Nielsen kicked off a beta test for its addressable initiative in January with eight programmers on board. It added Univision in May and Disney’s networks in June.
Project OAR’s tests will roll out in phases, with five participating programmers beginning trials in June. The other four will start testing in August across a small subset of Vizio’s roughly 10 million opted-in smart TVs.
Jodie McAfee, svp of sales and marketing at Inscape, the Vizio-owned data company leading Project OAR, said some members are selling addressable inventory as part of their upfronts, but activation is ultimately left up to each programmer.
“Our role in this is as an enabler,” she said. “How each of the members chooses to present this to their customer, we’re leaving it up to them.”
Smart TV manufacturers like Vizio control the glass through automatic content recognition data, meaning they can read and adjust content that reaches the screen in real time, no matter if it’s sent via a stream, satellite or set-top box.
“It’s the last mile to the screen,” said Kelly Abcarian, gm of advanced video advertising at Nielsen. “It enables [programmers] to have the flexibility to work across however the consumer is consuming on the TV set.”
However, smart TVs generally aren’t logged-in experiences, so targeting is based on IP address, which Scheppach said doesn’t provide the same level of accuracy compared to set-top box data, which is linked to billing information, when trying to match data to a particular household.
Nielsen’s beta was supposed to last through the first half of the year, but Abcarian said the test will run until the end of the year due to the pandemic. The trials are currently running across 2020 models of LG and Element smart TVs.
“We’re not getting in the mix of creating a marketplace or being an aggregator. We’re merely creating what we believe is a transparent, independent, third-party ad-tech stack,” said Abcarian.
Addressable ads typically come at a significantly higher cost than regular TV spots since all those fees are ultimately borne by the advertiser. But all that targeting ideally leads to some financial good. Stockton said the effective CPM of an addressable buy is usually a solid deal.
“You will find more often than not that addressable television, on an eCPM [effective cost per mile], will be more efficient than your national TV buy,” said Stockton.