CES 2014: Advances In Addressable TV

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monteferrante-attThe proliferation of DVR services, set-top boxes and IPTV services has created a wealth of data marketers can mine.

But the process by which one can purchase these targeted, data-driven ads is still in its infancy. For instance, extending programmatic buying concepts to "advanced television" (a custom system that algorithmically optimizes media against an advertiser’s target and automatically accesses nationally syndicated television content to acquire that inventory) has been an area of interest for marketers.

This type of process does not, for the most part, exist today, said Chris Monteferrante, VP of media sales at AT&T AdWorks, at a client huddle hosted by media agency Mindshare at CES 2014.

“There are a lot of challenges to this,” he explained. “You have to have certain deals with the networks and the providers to get access to that inventory.” He acknowledged that providers like AT&T U-Verse – a video program distributor similar to Comcast, Dish Network and DirecTV – “are very skittish about committing our inventory to this sort of programmatic buying.”

Ultimately, some of the positives around programmatic buying of digital TV inventory, like high efficiency and potential cost savings, are undermined by the fact that there’s little to no transparency, no regard for program environment and that the entire system is dependent on inventory access which, as Monteferrante indicated, is difficult to come by. Still, he anticipated the industry evolving past these early growing pains.

He’s not alone: Advertisers, device makers and media agencies have invested a lot in creating tools for addressable TV ads. After all, the viewer data available in, say, a set-top box environment enables more precise targeting, which is why service providers like TiVo initiated and expanded upon partnerships with ad-targeting companies like Simulmedia.

Media agencies have also built dedicated units anticipating the arrival of addressable TV ads – for instance GroupM’s spinoff Modi Media, which debuted in early January. And despite recent hiccups like the early-2012 implosion of Canoe Ventures, an attempt by six cable companies to build a TV ad sales platform, marketers have a strong desire to build an effective digital TV advertising strategy as the consumer hardware that enables it continues to proliferate.

It’s important to note that addressable TV advertising serves to complement a broadcast buy. Addressable advertising might be more targeted, but its scale and reach are more limited than a campaign attached to a nationally syndicated broadcast.

“Only a portion of the boxes for DirecTV, Dish and CableVision are active in terms of addressable advertising,” Monteferrante said.

It’s the familiar problem of oversegmenting. For instance, if there’s a combined total of 20 million households where addressable advertising can be served, how effective is it for advertisers to target a demographic as precise as 36-to-60-year-olds with a household income of over $150,000 and investable assets of $100,000?

“If you go even deeper into that, you’re slicing that onion so thin, it’s difficult to obtain efficiency from it,” Monteferrante explained. “So from that 20 million, only 10% comes up as a match. And of that 10%, how many people actually view the ad?”

For AT&T AdWorks, the three-and-a-half-year-old ad sales arm of the AT&T conglomerate, the solution to issues around reach is to add lookalike modeling, based on viewing habits, on top of an addressable TV advertising buy. AT&T U-Verse has 14 million set-top boxes in 5.3 million households, and AdWorks matches advertisers’ criteria across this entire footprint (buying placements isn’t programmatic – advertisers tell AT&T AdWorks the audience they want to hit, and AT&T AdWorks builds a media plan around it).

Ultimately, changing consumer viewing habits – and the ability to track those habits at the household level – ensures continued interest in addressable TV advertising, despite its current limitations. Audiences, Monteferrante pointed out, are no longer loyal to networks; they watch specific shows. Consequently, network programming has fragmented.

Whereas old school contextual advertising on TV focused on broad categories like age, gender and income – for instance, buying an upscale target simply meant positioning advertising with news networks – this tradition is being upended as networks like CNN and Weather Channel broaden their programming by launching, for instance, reality shows.

“A lot of real niche programming flies in the face of what contextual is because now we’re all over the place in terms of what shows the viewers really want to see,” Monteferrante said.

Still, the ecosystem for buying, building and measuring (as always, attributing advertising activity to offline buying behavior remains the sticking point) an addressable TV advertising strategy remains both intriguing but frustratingly complex for marketers.

“We want this,” said one automotive marketer during the huddle. “We’re just trying to figure out how to make it work.”

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