All advertisers have expectations around targeting. Depending on the product or service, it can be very niche or more expansive. So, how do you offer these targeting options when it comes to TV spots? Addressable TV advertising enables this. In this post, we’ll define it, tell you how it works and explain its value.

Addressable TV Advertising Gives TV Digital Targeting Options

Digital advertising will continue to take budget share from broadcast TV, so TV needs to even the playing field on targeting. Addressable advertising does this. While it’s in use, it’s a fraction of the total market. eMarketer data predicts spending of $3.53 billion in 2022, equaling 5.2% of total ad spending.


Image: eMarketer

For addressable TV advertising to be adoptable at scale, there is still much to do in the TV landscape.

Until then, what’s the real value — targeting or reach?

Addressable TV: The Perceived and Actual Value for Advertisers

Of course, targeting gets the headlines in discussions about addressable TV. These capabilities appeal to advertisers that want to connect with an ideal audience. What hooks them, at first, may be the ability to differentiate messages by household or viewer. They might become mired in niche content creation that may not have the value they think it does.

Most TV ad buyers need clarity on that ROI before they’re ready to say yes. A new study asked these decision makers their thoughts on addressable advertising.

What Advertisers Think About Addressable TV Advertising

First, a large portion (67%) are including it in their media campaigns. The teams purchasing it have responsibility for linear and digital buys, which is a good thing for media sellers because addressable TV is a hybrid of this. The research also revealed that those using it do so because of better targeting, ability to measure and successful past performance.

Advertisers not using addressable TV cite budget limitations and lack of value relative to cost as the reasons. However, 50% said they would invest in it if there was more proof of performance. Many are still unsure about whether the data is accurate and accessible.

One way to change their mind is through this proof and the positioning that it extends and expands reach over just the targeting talking point. Linear TV still exceeds digital in its reach capabilities even as consumers ditch traditional TV for streaming. Addressable keeps linear TV advertising relevant and viable to the 21st-century advertiser.

Many also may wonder how addressable TV is different from OTT/CTV.

Addressable TV vs. OTT/CTV

Addressable TV and OTT/CTV have similarities in how they target. The delivery method is different. Addressable TV ads run through set-top boxes, delivered to linear TV viewers. OTT/CTV content consumption happens through an internet-connected device through ad-supported streaming services. One reaches traditional audiences, and the other reaches cord-cutters. Investing in both provides advertisers the ability to target and expand their reach.

Targeting and reach also evolve with addressable TV to meet customers at every stage of the funnel.

Addressable TV and Full-Funnel Advertising

Another component of value in addressable TV is that advertisers can reach buyers at every stage of the funnel. Traditional TV can’t currently do this. Most brands use it for the top of the funnel, delivering a broad message and creating visibility. If they complement this with addressable TV, they can meet audiences at consideration and decision, and those viewers will already have some familiarity with the company.

Even if advertisers are completely on board, there are challenges on the sales side.

Full funnel

What Is Addressable TV Advertising?

Addressable TV advertising technologies allow advertisers to segment TV audiences selectively and serve different content to them within a common program. Segmentation options include geography, demographics, behaviors and household-level information. Addressable linear ads serve through set-top providers like cable services or video-on-demand (VOD) inventory.

How Does Addressable TV Advertising Work?

Addressable TV advertising works much differently than traditional TV linear advertising. In the latter, advertisers and agencies choose a network or programming for ads to run. There are assumptions made that specific audiences would tune in to these channels.

Addressable lets advertisers “build” an audience based on the targeting capabilities listed above. It’s based on household data and doesn’t focus on programming or dayparts. As a result, TV advertising takes on the targeting attributes of digital advertising.

Selling Addressable TV: Challenges and Solutions

The most critical piece of the puzzle on the sales side is aggregating and understanding the inventory available for addressable TV. The entire broadcast TV ecosystem must upgrade its capabilities. The easiest road to this is with NextGen TV. It allows them to “buy” audiences in aggregate but is still only a portion of inventory for those markets that are live.

Overall, addressable TV is in its infancy. Data on audiences is improving, but it’s still “big” data of viewers’ individual actions. It’s missing pieces that would make it more strategic. Additionally, co-viewing is something that increased during the pandemic. It expands the audience, but who’s really watching?

Addressable TV’s ecosystem must mature to realize high adoption by media companies and advertisers. That will require much more data, proof of performance, audience insights and inventory availability.

It has lots of potential and will be mainstream once there’s a streamlined way to sell it. We’ll keep you updated.

You can learn more about NextGen TV and its role in addressable advertising by reading How NextGen TV Is Powering the Future of Local TV Advertising.

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