Television has long been a cornerstone of advertisers’ national assault strategies. Trends in television advertising, primarily established during the 1950’s, remained largely unchanged until the advent of digital. While previous efforts were “scatter-shot”, hitting all viewers of a given program with identical messages, today more sophisticated techniques are coming to the fore. With the introduction of addressable TV advertising, companies can tailor their message to groups of potential viewers or even to specific individuals.
Using “addressable” advertising, firms can choose to show their commercials only to people of a specific demographic – taking into considerations attributes such as gender, age, income level, geographic location and previous purchasing history. This information can easily be obtained from cable or satellite TV providers as well as third-party data providers. Once a household with the desired traits is identified, a relevant ad spot is shown to that television set. Corporations that lack the infrastructure or in-house expertise to design addressable advertising campaigns are now able to contract out to dedicated agencies that focus specifically on such advertising routes.
Many of the relevant advances have been pioneered on the Internet. It’s not uncommon for online ads to be targeted based upon search history and a user’s browsing profile. This allows even smaller advertisers to get the most bang for their buck by reaching out to those individuals who are likely to purchase their products after viewing an ad. Now that TV set-top boxes are becoming more advanced, this same functionality is appearing in living rooms throughout the United States.
Despite the much-ballyhooed impending death of the traditional TV platform, advertisers have shown no intention of abandoning this popular form of media. Advertisers spend more than $70 billion annually on television alone. In 2014, addressable TV advertising was believed to represent less than $300 million of this total, so the potential for growth in this exciting new paradigm is immense. Programmables have already shown considerable increases in ROI and customer engagement versus traditional TV advertising, so firms will be able to maximize their marketing spend by shifting their advertising dollars towards this new model.
The implications in the political arena are interesting, to say the least. It’s not uncommon, with present-day methods, for some ads for candidates to be viewed by people outside the relevant constituency. This is basically just a complete waste of resources all around: The campaign has spent money for no return while the viewer is watching information about a politician who possibly cannot accurately represent him or her. This problem could be significantly reduced or even completely eliminated through the pinpoint targeting possible with addressable TV ads.
At current prices, addressable ads aren’t feasible for the vast majority of political contenders. This will change, however, as methods are improved and prices drop. We could see specific ads tailored to the issues that individual voters are most interested in, like education for parents, social security and medicare for the elderly, and ecology for those with an environmental bent. This is already coming closer to fruition as Dish Network and DirecTV have partnered with Democratic and Republican data firms to enable candidates to take advantage of addressable campaign ads. In closely run elections, the proper use of voter targeting and advertising could make all the difference.
Although the growth of the Internet has been phenomenal these past couple of decades, there are still those who don’t use it all that much. By contrast, television is watched by almost everyone in the country. This means that addressable advertising has a role to play by bringing the marketing lessons learned in the online space to the broader and more diverse television-viewing audience.
Privacy advocates are concerned about the vast collections of personal data that are employed to make addressable TV ads a reality, though. While there is the potential for abuse, there’s no reason why advertisers must themselves know the identity of anyone targeted for their ads – they can specify their demographic criteria and let the television companies match viewers to commercials without their involvement. With adequate safeguards in place, we could see addressable TV advertising become a routine feature of daily life.
The development of processes for mining big data combined with decades of marketing experience and cutting-edge equipment enables advertisers to more effectively focus their efforts on the viewers who are most desirable to them. Waste can be eliminated across all channels as product information and buyers are more efficiently matched up than they are at present. Addressable television advertising is here to stay and will likely grow by an order of magnitude in the coming decade.
