• by Karlene Lukovitz  @KLmarketdaily, March 25, 2016

While some broadcast and cable networks continue to be leery of addressable television, others view it as a logical gateway to “full-blown” programmatic television.

“I think that short-term, addressable is the way to go while we work through how to fully set up the first- and third-party data and really function as is currently true in the digital world,” said Rob Weisbord, COO of Sinclair Digital Group, whose properties include more than 170 TV stations and the American Sports Network, during a recent BIA/Kelsey seminar on programmatic’s status in local TV. “That will happen over time, with the evolution of technology easing the transaction.”

Weisbord reports that Sinclair has a joint venture with Visible World and AudienceXpress, still at the “rudimentary” stage, in which “we take a carve-out of the sell-side, so that the yield is taken away from the stations.” That enables the partners “to set up a cost-per-point, cost-per-thousand converter that depends on the currency that the audience network group we’ve set up is talking” — allowing for using either broadcast currency or network currency, he explained.

“We’re now in the process of working with third-party data, because our view is that big data is going to drive a lot of the transactions down the road,” he said. “Then again, I think from a broadcaster’s standpoint, it eventually will become a CPM world, so that there are not two different currencies. That will need to take place, as well.”

Weisbord added that Sinclair has a relationship in the addressable world through smart TV. “I believe that’s the first start from a broadcaster’s position in leading into full-blown programmatic TV solution,” he said. “The addressable gets us so far; it doesn’t matter who the MVPD or BBS provider is, because it’s gone through the ACR [automatic content recognition] technology.”

The ultimate goal, Weisbord stressed, “is to warehouse all inventory so that television gets blended with video, audio and all streams, and we’re able to use third-party data across all screens so we can drill down to who the customer is, including the psychographics the [advertiser] is looking for. We’re working toward that. We will need traffic systems to smooth the programmatic, but it’s our belief that the industry is not there yet.”

While no one is pretending that addressable doesn’t have significant issues — including still-limited scale and challenges in integrating it with traditional TV buys — some agencies and platform vendors are bullish about the results of initial experiments.

Russell Zingale, president, eastern division, U.S. International Media (USIM), reported that one client, Aruba, had been able to afford television only to a limited degree in five major U.S. markets. In Q4 2014, when the possibility of using addressable television began to open up, “we were able to do a buy with a large satellite company where we were buying Maine to Florida, Texas, Illinois and parts of California as a test,” he said. “Maine to Florida was our key market, and we were able to buy an audience that was primarily adults 25-54 with household income of $125,000 plus, who had traveled to the Caribbean.”

DMA and geotargeted analysis of visitation patterns correlated with the campaign ads confirmed significant results, particularly in markets where Aruba had previously done little or no marketing, said Zingale.

Last year, Aruba ran several different flights of addressable, including new efforts targeting families with children who are somewhat less affluent than the client’s traditional target demos.

“When we had looked at buying not just the 650,000 more-affluent households but 10 million to 30 million less-affluent households, at a high CPM, the costs were not affordable,” Zingale said. “But when we moved to buying programmatic on an addressable basis, the costs were significantly lower. It showed us that we could do national,” using a defined audience to carefully select cable networks and dayparts.”

Last year's addressable efforts also included targeting three different segments of affluent empty nesters at three different times of the year, he said. “We’re continuing to do more this year, working with vendors with the goal of reaching new households.”

Advanced use of addressable has the power to “democratize” use of television on a national basis, declares Randy Wootton, CEO of Rocket Fuel. Wootton stresses that Rocket Fuel offers an addressable predictive optimization solution based on its proprietary Moment Scoring and bidding and buying on moments at the impression level, rather than targeting based on program audience composition.  

“We’re finding that it’s the brands that aren’t traditional TV buyers who are really interested,” he tells Audience Buyer Insider. “It’s expanding the pool of advertisers who buy in the space beyond the traditional advertisers with large budgets.”

In addition to being a partner in a well-publicized addressable RTB test buy made for Glenfiddich on DISH’s programmatic platform, Rocket Fuel is doing tests with several advertisers that haven’t been able to afford national television on a consistent basis, including ones in retail, financial, travel and real estate. Initial results indicate “huge” savings possible through slashing waste and serving ads just to highly targeted impressions, Wootton says.