Commentary

Segmentation Can Help Overcome Addressable TV's Small Scale

While TV has long been a fantastic way to deliver messaging to a wide audience, marketers have recently been attracted to new methods that allow them to use the deeply engaging medium in a more targeted fashion. Delivering TV ads to highly specific audiences by leveraging data is something of a holy grail for marketers, and can help them reduce the waste that comes with typically massive scale buys.

The emerging world of addressable TV is bringing marketers much closer to that, allowing them to make targeted buys through traditional cable as well as over-the-top (OTT) services, going deeper than ZIP code, all the way to a household level. Understandably, this development holds interest for marketers searching for a qualified, affluent audience.

But addressable TV is still in its early days, and as a result, the audience size may still be relatively small, which could dissuade some marketers from experimenting with this channel. That small audience size, however, could be beneficial to marketers, especially those pursuing affluent audiences. They simply need to approach it as they would any other advertising vehicle for targeting qualified audience segments.

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The easiest way to help marketers get a better understanding of addressable TV is to stop comparing it to broadcast TV. Traditional broadcast TV is a branding channel, and addressable TV is not. It is unlikely in the near term that global CPG companies will shift the majority of their budget into addressable TV, and marketers typically will not risk pushing all of their branding dollars into this channel. Instead, addressable TV should be thought of as a cousin to targeted, more call-to-action-oriented vehicles like direct mail, email, and even online display ads.

When addressable TV is placed together with those channels, the opportunity comes into better focus. Yes, the total audience available for targeting via addressable TV is small compared to broadcast TV, but it may be fairly close to the size a marketer would address in a direct mail campaign aimed at the affluent. In fact, there is a strong possibility that the audiences accessible through addressable TV, whether through a cable or OTT provider, may already display some characteristics of an affluent audience, due to the fact that they have the disposable income to spend on these TV programming services.

When it comes time to build a campaign, marketers should approach addressable TV much as they would the comparable vehicles. The first step, as always, is to deploy a segmentation strategy that gives the marketer insights into the audience they should pursue with their message – the demographics, behaviors, and financial qualifications that define the “best” audience to reach with the messages. 

Once armed with this information, the marketer can work with their addressable TV providers to find that audience on their services. Marketers can push their media partners to use targeting segments that are transferrable to digital and other addressable advertising products, allowing the marketer to further segment the audience and improve the effectiveness of their efforts.

After all, the best way for a marketer to compile an effective media mix is if they can “address” the same audience segments across all media, including TV, direct mail, email and online display. In fact, by including a call-to-action within an addressable TV add, marketers can train the consumer in some respects to treat TV like they would direct mail. This allows greater measurement on the marketers’ part, which in turn helps them improve future campaigns. 

This push for more segmentation within addressable TV actually has dual benefits. Marketers benefit because they’re able to drill down and deliver their messages only to specific households with desired characteristics, while the communications companies can use the same segmentation to help them better understand who is consuming their content and then offer the most relevant programming to their advertisers.

It’s important for marketers to avoid comparing addressable TV to the larger traditional TV world, and instead think of it alongside other tactics built around household-level targeting. Despite the smaller audience available via addressable TV, the chances are that a good portion of the audience available via these services is attractive to marketers who are pursuing affluent audiences.

Marketers thinking of experimenting with addressable TV should do so as part of other targeted campaigns, and work closely with their providers and data partners for the same kind of segmentation and audience capabilities that they expect across other media.

2 comments about "Segmentation Can Help Overcome Addressable TV's Small Scale".
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  1. Ron Kurtz from American Affluence Research Center, March 8, 2017 at 10:12 a.m.

    Very interesting. I wonder how the cost of addressable TV would compare to highly targeted direct mail that encourages the affluent to visit a website. This need not involve expensive and postage heavy promotional materials. 

  2. Ed Papazian from Media Dynamics Inc, March 8, 2017 at 11:12 a.m.

    "Addressable TV' is small because many homes are not covered---though this is slowly changing----and the number of commercials that can be sold is limited to only a few minutes of time per hour. Also, many "addressable TV" sales are based on profiling by demographics---especially geography---and behavioural typing but they no not know who in the household is watching, merely that the set was tuned in. Finally, with most advertisers interested primarily in placements in upscale or younger adult oriented TV fare there are only so many shows of this type that can be singled out. Who is going to buy time in the more numerous older skewed low brow content that the sellers must also unload on "other advertisers", and at what CPM---certainly not at premium levels.

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