“Addressable television has all of the opportunity in the world — but we’re by no means there yet.”
That’s the pithy assessment of John Collins, managing director of broadcast and iTV at media planning and buying agency Media Storm. In an interview with Audience Buyer Insider, Collins lays out what he sees as the challenges that will need to be overcome in order for buyers and sellers to realize addressable’s full potential.
First, the industry should acknowledge that there are different levels of addressability, and get its nomenclature straight, Collins says. In his view, true addressable TV is the ability to deliver a specific message to specific households at will — “meaning that you could select a single household if you wanted to,” he says.
The satellite companies, including DirecTV and Dish, have that technical capability, because they have reserved a portion of the household DVR as a holding area for downloaded targeted ads, he says. Because the cable companies by and large made the opposite decision at some point, their household reach to what he calls an “A-Level” addressability is currently more constrained.
So whereas some estimate that total U.S. addressable reach at about 52 million out of the total 116 million cable TV households, Collins puts the number that fit his definition of linear (not including on-demand) addressable at about 27 million (including roughly 14 million for DirecTV, eight million for Dish, and about five million-plus combined among the cable companies).
The various platforms “all say that they’re addressable television, but with the exception of the satellite companies, which are somewhat similar, they’re all very different,” he says. And while it would be ideal if technological capabilities could be standardized, the reality is that “linear addressable through a wired MVPD will likely never look like it does through the satellite companies.”
Even the providers with the largest numbers of truly addressable households are currently limiting the ability to tap those because of “business rules” that include minimum buys for household counts and/or dollar spend, as well as requiring several weeks’ lead time to run a campaign, Collins says.
“By injecting these rules, they’re not letting the marketplace be where it needs to be,” he asserts. “We’re all in business to do well and sell more, and at this stage, we still need to be doing some trial and error.”
In overall big-picture terms, he ranks segmenting capabilities among the addressable universe at “maybe four out of five on a scale of one to 10,” he says.
In entertainment — the category of many of Media Storm’s clients (which include a number of TV networks) — Collins ranks targetability even lower on that scale, because sellers tell clients that they can’t use anonymized viewer history data to target ads for upcoming shows. (“Are there real privacy issues, or is that just a smokescreen because they don’t want to sell that way?” he asks.)
The exceptions, he says, are the categories of automotive, insurance and financial, where operators have become quite adept at matching large industry databases, like Polk’s, to households.
The Inventory Crunch
Addressable’s scale challenges are multidimensional, Collins says.
Growth in households is, of course, critical: “We need to build up those numbers of households with true, A-Level addressability,” he says.
But he stresses that the limited scale of available inventory is also a core obstacle to addressable’s growth.
“Today, in most cases, it’s just local avails, limited to two to three minutes per hour, and that amounts to only about 10% to 12.5% or so of the total inventory in the marketplace or on a particular channel,” he says. “So you have X millions of households reachable through addressable, but you’re only going an inch deep, because you don’t have access to that broader swath of network-controlled inventory. The inventory is very, very limited.”
Collins believes that the cable networks are still years away from allowing MVPDs to use technology to offer or sell the broader linear inventory.
First, management will need to truly embrace the concept that enhanced data and segmentation can enhance the value of their overall inventories and actually increase CPMs — which should in turn allow them to compete more effectively with subscriber video on demand by lessening ad loads and improving the viewer experience.
“Have you tried watching a movie on linear cable recently?,” Collins asks. “The experience absolutely needs to be improved to keep the business model healthy going forward.”
Once management starts getting on board, sales teams will need to be reeducated, he adds. Currently, he says, sellers “are still able to make a lot of money with very simple sales, and advanced technology hasn’t been enabled to them,” so data-enabled, segmented buys aren’t of much interest to them. “But it’s going to happen soon,” he says.
The MVPDs, for their part, “are going to need to enable a lot of the technologies for network addressability to happen,” says Collins, who asserts that local operators will ultimately benefit, despite their concerns about national competing with their addressable buys.
“The local inventory owners should allow the technologists and the ad tech companies to figure out how we can enable addressable to go deeper on inventory — to make addressability scale in depth, as well as breadth, for the ultimate benefit of everyone,” he asserts. “The linear addressable for network inventory is going to be a harder to do technologically, but in my opinion, the MVPDs should be working on it. It should certainly be starting to be discussed.”
“In addition to questions about differences in segmentation capabilities and definitions, you’ve also got inconsistent reporting coming out of these various platforms,” says Collins.
“What data will I get back from the different providers? Will it be consistently delivered? In a consistent time frame? Everybody sort of glosses over that part of the sale, but even seamless, brilliant planning and execution aren’t worth much in the end unless you can understand what happened and compare results on different platforms. You may be able to push a button and generate a report, but that report is going to differ by supplier or operator.”
Reducing the overall complexity of the process is another challenge that needs to be tackled to enable addressable to scale up as quickly as possible, Collins observes.