4A’s: What’s Delaying Ad Addressability?

The ability to target ads to individual households on a scaled nationwide basis is a technique that’s been in development for decades. And how long full-scale implementation will take is anybody’s guess, but it’s probably years away.

What’s the hold up?

“It’s complicated,” said Bill Harvey (shown), vice chairman of TRA Inc., speaking Tuesday at an American Association of Advertising Agencies Transformation Conference session on the ins and outs of addressability. “The big problem is the money,” he said.

By that Harvey meant how all the interested parties would divvy up potentially hundreds of millions of dollars (possibly more) in additional spots that media owners could add to their inventory if they adopted addressable TV platforms.

Such platforms allow advertisers to target specific regions, zones, even individual households that they believe are more likely to buy their products and services. Thus, their ad buy might cover one-fourth of U.S. TV households, enabling them to reduce wasted spending while the seller could take the remaining three-quarters of the household universe and offer three additional spots for sale.

Of course, that would also turn the existing TV sales model on its head, and networks and other distributors are concerned they don’t yet know how to fully monetize inventory under an addressable model. “Nobody wants to share with anybody else,” said Harvey.

And individual players are looking out for their own self-interests and slowing the rollout process at the same time, said Tracey Scheppach, svp, innovations director at Publicis Groupe’s SMGX. “The people in control don’t care and the people who care are playing defense,” she said. Many players, she added, remain in denial about the impact of DVRs and the effectiveness or lack thereof of current measurement techniques and are now “trying to defend money from moving online.” What they should be doing, she added, is playing offense using addressable techniques.

The technology is also complicated, said Michael Kubin, evp at addressable tech firm Invidi. “It really is rocket science,” he said. When he first joined the company in 2003, Kubin said Invidi thought they’d accomplish full nationwide deployment of their system by 2006. Two months ago, they signed their first deal with a distributor — Verizon Fios. “We have to persuade the business guys that the model can be improved,” he said.

Tara Walpert Levy, president of addressable tech firm Visible World, agreed that was part of the issue. She noted that distributors sometimes respond that eliminating waste in ad buys “is what gutted the newspaper industry.”

“The technology is here and we’re doing [addressable ad deals] today,” she said, albeit not on a mass scale.

David Verklin, CEO of Canoe Ventures, the partnership of MSOs that is developing an interactive and addressable platform designed to link distributors nationwide, said the firm is “tantalizingly close” to completing a platform for interactive advertising that he expects to unveil in the second quarter. But Verklin also said it was the non-tech issues that concerned him the most. “I’m less concerned with technology than I am with marketplace creation, privacy” and other issues, he said.

And while most firms in the space are aware of privacy concerns and insist that they’re nowhere near the “fault line” as Scheppach put it, Verklin noted that there is still consumer perception to deal with. A dog food ad can be delivered to only homes with dogs, but inevitably some consumers will ask, “How’d you know I own a dog?”

Regarding the marketplace, Verklin noted, “programming networks have made a lot of money on waste.” And they have to be convinced that they can make as much or more on efficiency.

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