Why Aren't Advertisers Screaming For Addressable Advertising?

I spent this past Saturday with my 11-year-old nephew, responsible for his last reprieve before the start of the school year.  Rain doused our AA baseball outing, but all was not lost.  We ended up having a barbeque lunch and watching Stephen Spielberg's "Minority Report." My nephew chose the picture.  Not that it made his mother any happier about the situation.  But I digress.

Despite the missed game and the anxiety I generated by allowing him to watch the PG-13 film, I surprised my wife by calling the day a success.  I had, after all enjoyed a 20-minute conversation with my nephew.  We talked about the neat cars and the cool ("Mac-like" he said) computer displays with touch screen controls.  For those of you who have not recently tried to engage an 11-year-old boy in conversation, well, let's just say it was a special 20 minutes.   

But for the first time in a while, one topic which caught his interest was something I actually knew a little about.  Not much, mind you (just ask him) but a little.  The first question that rolled off his tongue when the movie was over:

"How come we don't have billboards like that?"

"Like what?"

"Like in the movie."

"What did you like about the billboards?"

"They showed you stuff you wanted to see.  Not stuff you don't."

It is not every day that insight flies from the mouth of an 11-year-old.  For the most part, interactive billboards are not ubiquitous -- the efforts of Monster Media and Reactrix notwithstanding -- but cable operators have been playing with addressable advertising for years.  It begs the question, "Why are some viewers forced to watch advertisements that have no chance of ever appealing to them?" and its corollary, "Why isn't more advertising embracing addressable advertising on television?"  

While the jury is still out on the technology, addressability promises to deliver content where and when advertisers desire.  Addressable creative will require more thought, more planning, a robust knowledge of the target audience and arguably larger budgets, but advertisers and their agencies seem intrigued by the gains in efficiency.  So, then, why aren't more advertisers calling for trials?

A few of the advertisers I have spoken to recently seem quite distressed by the difficulty in managing the link between their proprietary databases and the capabilities within the addressable television advertising servers.  "My client decided to participate in a trial six months ago," one agency executive said, "and we are still dealing with the damn databases."  The sentiment was shared by many with whom I spoke.  "My client spends a great deal of time and money to understand the market they are trying to reach with certain brands and specific products.  When we buy television advertising, we target those consumers.  I can't wait six months to match data."  

Enter Visible World and their apparent donation of an open data standard.  The appeal is straightforward: the standard promises to drastically reduce the time and effort required to include addressable television in a campaign.  Acxiom and Experian, two of the leading sources of data used by agencies to target consumers across media, appear to be on board.  According to those involved in the agreement, the standard can reduce the amount of time required to marry data sets from weeks to a single day.  In this era of smaller agency staffs, efficient execution is instrumental in gaining widespread acceptance.

While we can debate whether the Visible World standard will be adopted by other service providers, it undeniably removes one of the barriers for advertisers and their agencies.  But in the bigger picture, it also highlights how much more must be done to make advertisers comfortable with the opportunity. 

There are a number of objections that must be overcome before addressable advertising salespeople can win the hearts and minds of Madison Avenue.  Here are two of the more prominent hurdles and potential ways to overcome them:

 
The premium commanded by addressable technology is too rich for me. 

I hear this one frequently.  One client said he was charged double the non-addressable rate.  Another said she was charged a $200,000 fee on top of the cost of inventory.  Neither client understood the justification behind the pricing.  This is a problem.  The last time I checked, advertising was not a cost-plus model, but rather, a market0driven model.  If an advertiser wants to drive M18-54 to his overloaded car lot, offering very expensive addressable inventory on TNT or USA will probably pale in comparison to college and pro football opportunities.  The pitch is wrong.  I would argue that addressable technology's biggest opportunity lies in freeing up high demand inventory.  Is Monday Night Football inventory sold out on ESPN?  Slice those households into those in the market for cars, and those who are not.  Separate the audience by those likely above, and those likely below, the drinking age.  Let the market decide what the premium should be.  If operators want to move beyond trials, the market must decide the value of addressability.           

 

I would like to try addressable technology, but I am more interested in targeting viewers based on what they watch not who they are. 

I spoke with a consumer products executive about this very issue recently and she said, "My target market is loyal to particular programs, so I don't need to pay a premium for addressability."  Notoriously price-sensitive, this same client often passes on advertising opportunities when a show's popularity or targeting ability drives advertising prices up.  What's a buyer to do when the client's show is out of their price range?  Historical viewing behavior could be used to identify loyal viewers of particular programs.  This label (Loyal Program X Tuner) could be used to target those same set-top boxes when they were tuned to similar, less expensive content.  When "Lost" is unavailable or too expensive, a loyal "Lost" Tuner may be cost-effectively reached while tuned to other first-run dramas like "The Closer" on TNT or "Law & Order: CI" on USA.  For the first time, that consumer products executive was considering how she might leverage addressable technology for her campaigns.

To get Madison Avenue behind a radical shift in the way business is conducted, technologists need to see things the way media buyers see them.  Conducting trials is great, but at the end of the day, even the best technology cannot sell itself.  If addressable advertising salespeople neglect to market their technology as a solution to advertisers' problems, the sea of objections will be never-ending. 

Tags: tv
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