Taking Aim On TV: An Old Ad Model Learns a New Trick

by Paul Delzio, Jul 17, 2007, 12:15 PM

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Scanning through the agenda at a recent Ad:Tech conference in San Francisco, it was interesting to note that only one panel was devoted to television. Indeed, the phrase "advertising technology," for most, probably conjures up associations with the Internet. Undoubtedly the targeting capabilities of the Internet, combined with the accountability of the click-through model, have made a fortune for Google and its investors, and made Internet advertising a force to be reckoned with on Madison Avenue.

However, while advertisers have been obsessively watching their cost-per-click, television service providers have been positioning themselves to take back ad dollars that might be earmarked for the Web. Some of the most well-known cable operators and telephone companies have been modifying their networks in ways that could give them the capability to deliver TV content, including advertising, to very small groups of users within a larger demographic region, or small groups of users with common interests within a market or system. This phenomenon of delivering promotions to small groups of individuals, called addressable advertising, has the potential as a change agent that the Internet once did.

Traditionally, television advertising's prohibitive cost has made it practical only for advertisers with large budgets, and products with mass consumer appeal. Addressable television advertising has the potential to change that, by offering advertisers the ability to tailor TV commercials to small groups of viewers with similar interests. Though the cost per impression for addressable promotions might be higher, smaller audiences mean many addressable ad campaigns can be more affordable than national campaigns. Smaller advertisers can afford to reach an audience of hundreds or thousands on TV, if not an audience of millions. The premium paid for an addressable ad is justified by the increased likelihood of reaching an audience that is interested in the product or service. The ability to tailor ads can allow even small businesses such as local retailers, or sellers of specialized, low-volume goods such as tractors, yachts or private jets to find relevant audiences on television.

In the age of the DVR, when consumers have more control than ever before of which ads they watch, and don't watch, relevance is becoming increasingly important. Advertisers aren't losing a tremendous amount of sleep over DVRs today, because they have not yet turned up in most American homes. However, as DVR penetration increases, advertisers will undoubtedly begin to ask tough questions about how many viewers are actually watching their ads. Addressability and relevance could be among the better antidotes to the ad-skipping phenomenon that looms large on the horizon.

Addressable advertising can be a good thing for advertisers, consumers and service providers alike. It combines the audiovisual richness of television with the relevance and measurability of the Internet. TV is a natural environment to receive high-quality video advertising; more natural, say, than new media platforms such as the video-enabled mobile phone or portable media players where ads are perceived to be intrusive. Over time, addressable ads may also fuel new creativity in ad creation, as agencies and advertisers begin to experiment with tailored messages. The Internet may be getting all the attention right now, but TV may literally be turning heads again very soon.

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