Growing The Addressable TV+ Pie

Allen Klosowski headshot"On TV And Video" is a column exploring opportunities and challenges in advanced TV and video.

Today’s column is written by Allen Klosowski, senior vice president of advanced solutions at SpotX.

The rise of cord cutting, new streaming services and advanced digital delivery have changed the face of TV advertising’s future. While traditional TV represents most television ad spend, advertisers have diverse options for their media plans these days. TV advertisers can target audiences with precision in ways that are not possible exclusively on traditional.

As more environments shift to supporting VAST compatibility, advertisers can serve ads into linear programming, targeted to the household, using digital strategies to create seamless, open interconnectivity across the TV ecosystem.

The definition of addressable TV has expanded from early proprietary systems that were difficult to scale to new distribution platforms that allow buyers to insert personalized ads to the television. As a result, we face a future of frictionless buying across multiple television delivery methods, but the results will be the same: a better experience for advertisers and viewers, and more revenue opportunities for programmers and distributors.

However, confusion about addressable TV advertising abounds. There is a persistent myth that there's not enough OTT addressable TV inventory to efficiently scale and support an effective video campaign.

While it’s true that very few single OTT offerings can provide sufficient scale when there are tight audience and geotargeting requirements, in reality there’s ample addressable inventory when looking across the total TV+ landscape, which also includes video on demand and cable set-top boxes upgraded to use open and flexible technologies, such as the Android TV operator tier.

Every video viewing platform has the potential to be addressable. The only questions that remain are whether advertisers can find their audiences and intelligently create reach and frequency at scale.

Advertisers must prepare for addressable

The ability to combine data from digital and traditional environments with video viewing creates endless possibilities for advertisers. In a few years, every endpoint will be VAST addressable, creating widespread integration, but advertisers must get their ducks in a row now in order to reap the benefits.

Precision loses its punch without personalization. If most TV screens are VAST compatible and can easily deliver personalized content, it will be more important than ever to deliver the right message to the right audiences.

There will still be a huge value in pure reach campaigns for universal brands. However, even the largest universal brand would benefit from some personalization, depending on its target audience. For brands with highly specific or niche consumers, such as luxury automotive or direct-to-consumer personal goods products, personalization is absolutely critical to ensuring return on ad spend.

This means that brands that are heavy into pure reach campaigns need to quickly determine how to take advantage of personalization.

To do so, advertisers should consider how to find their audiences. This can be difficult for many companies because even if they have invested in data, putting it to good use in CTV environments can be challenging. The first step is to understand how the data can be matched to audiences in new environments and be compliant with myriad privacy laws from the California Consumer Privacy Act to the EU’s General Data Protection Regulation.

Advertisers should also create a strategy to merge TV and digital campaigns. Often the best approach is to use traditional television to reach pinpointed demographics or a broad audience cost effectively, while implementing an impression-based approach in new addressable television environments. The sooner buyers adopt hybrid addressable TV plans, the more effective they will be in reaching their key audiences.

Lastly, advertisers should think through how they can stay safe and prevent fraud when working in an addressable TV+ environment. Addressable TV has scale, but it is overwhelmingly a controlled ecosystem based on direct deals between buyers and sellers. Establish direct relationships with inventory suppliers and know where ads are running, even if buying programmatically.

These are just the tip of the iceberg in a future where TV budgets may be 50% traditional reach-based TV and 50% audience-targeted across addressable TV endpoints. OTT is a great place to start – the scale is there now, and continuing to grow.

The expansion of addressable TV+ will also benefit major broadcast companies, improve campaign performance and attract greater ad budgets to the category. When implemented intelligently, addressable advertising will expose consumers  to more relevant ads, dramatically improving their viewing experience and audience sentiment while reducing ad exposure to individuals with no interest in the brand.

While TV viewership undergoes a transition, with now more than 69.8 million US households that can be targeted with addressable ads – a number that is on the rise – addressable allows advertisers to tap into the power of an connected TV landscape. There is scale and efficiency available across this landscape, but the industry must be willing to try new ways to tap into audiences and enable a true TV marketplace of the future.

Follow SpotX (@SpotX) and AdExchanger (@adexchanger) on Twitter.

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