If you haven’t heard of addressable TV, it’s time to start getting familiar with the concept. Addressable TV is a technology and marketing practice that selectively segments the ads seen by TV viewers, allowing groups of people to watch the same program yet see different, more effectively targeted ads- regardless of their physical distance from one another.
Here’s how it works: marketers use data-driven household profiles to send targeted ads to specific households. With information like income, family composition, and even car leases and mobile contracts, marketers can designate specific ads to be shown to certain families. This effective targeting increases ROI in sales and enhanced analytic potential, just like targeted online advertising.
It’s Programmatic for Television. Which also means it’s driven by a virtuous cycle of consumer-centric data, including viewing and impact.
Sounds complicated, but as it turns out, setting up the technology is simple. Boxes on top of TV sets have their own IP addresses, which allows a TV’s Nielsen data to be integrated with the data from other devices and databases.
Addressable TV advertising has several advantages that sets it apart from its advertising counterparts. Television has the largest audience reach of any media today at 96%, and it draws more than $70 billion annually in media spending. And even though spend is trending away from broadcast media (radio and television), the average adult in 2014 spent five hours a day watching television, despite the growth of mobile.
In 2014, addressable TV was estimated to only represent $200-$300 million of the $70 billion ad spend on TV. However, industry leaders predict that 25% of TV ad budgets will be spent on addressable TV within three years. Addressable TV will revolutionize the way that advertisers plan their campaigns, and the focus will change from quantity of ads to quality.
As that shift happens, it will speed the transition from panel-based measurement to real-time single-source market measurement. The implications for researchers, marketers, consumers, and advertisers is simply immense.
Check out this great infographic (click on it to make it bigger) developed by the fine folks at Signal, a tech company that is aiming to play a central role in this brave new world. It’s well worth a read and paints a compelling picture of the data-driven marketing world of Addressable TV we’re entering now.