The big reason for that disconnect is that addressable boxes show mostly linear TV. Ads inserted at the network level don’t benefit from addressability, and don’t count as addressable ad spend, even though they are showing on an addressable box.
The squirrely underbelly
What makes planning harder is that in most, but not all addressable, you can’t use content as a surrogate for audience. You can’t buy presence on a program.
This is not only a technology issue. It’s a channel conflict, resulting from the simple fact that carried networks don’t want their distributors selling against them. Instead of selling an ad in a program, the distributors drop it on top of a broader denomination such as a daypart.
For example, ad insertion for satellite networks, which comprise many of those 50 million households, is simply an overlay, at a wall-clock time. If the TV was on, the ad can display. In these networks, each set top controls its own ad serving by dynamic rules transmitted as data over the satellite network. All available creatives are stored locally in the set-top box.
Free of the constraint of content-based insertion, it’s easy to show an ad to any household because it does not matter what they are watching.
Addressable and programmatic
Denizens of the programmatic domain swim in the concepts underlying addressable TV all day. For example, a device identity (like a cookie) is anonymous, but points to deterministic attributes (derived, in this case, from the relationship between the network and the household). Privacy is complete, but audience attributes are known per device. Despite this, digital folk are often unaware of what is technically possible. Custom audiences? On-ramping? All possible.
What is addressable? Broadly, it’s a communication system in which end points can selectively talk to each other. Almost anything with a black box is technically addressable (cable, satellite, streaming, etc.) — but addressability, by itself, does not assure any media capabilities. To know what’s possible, you have to work with each supplier. That, by itself, chafes against easy scale.
At its core, addressable TV fits with programmatic delivery due to the relative certainty of being able to put an ad in front of a defined audience, and only that audience. Dish offers a private marketplace for addressable TV that presents ad opportunities, impression-by-impression, available to demand-side platforms. This is almost like digital video, except delivery data is household-level, and there are no clicks. For brands, these departures should be trivial compared to the benefit of ultra-targeted, one-to-one video shot straight into the living room.
The measurement advantages of addressable, despite the limitations of household-level data, are significant too. Basically, you can tell exposed from control with high precision. The household maps to purchase data (behind a firewall), and presto, reliable attribution. As with online, the 1/1 targeting means measurement can be designed into campaign. Setting up exposed vs. control is straightforward (if not simple), and the results are reliable.
Broadcast has no knowledge of where ads land except via statistical samples. But stay tuned. Addressable protocols are being developed for over-the-air broadcast channels.
Ockham's Razor, a long-standing idea in philosophy, gives the story a boost. Ockham said, "What can be done with fewer [assumptions] is done in vain with more." Surrogacy of content for audience is a big fat assumption, and so is the surrogacy of age and gender for consumer need. With addressable TV, you find a home you like, and send an ad to it. Done.
So, as TV becomes more addressable, advertisers should try it on for size. You may discover it won’t fit very well, though, as part of a GRP-based TV plan. But it may fit like a glove as targeted reach in a digital video campaign.