Why Advertisers Are Bullish On Addressable TV

Addressable TV is poised to make a big leap in adoption and spending. It's a simple trial and repeat equation. When advertisers know it, they use it. When they use it, they love it. And then they want more.

In March, we interviewed 154 advertisers – 49% marketers, 51% agency professionals – with an average TV spend of $50 million. More than 50% of those using Addressable TV are new to the medium within the past year, yet already six out of 10 consider it an essential part of their media mix, while 38% call it a must buy.

Also found: 54% plan to increase their spending in the medium over the next 12 months, by 10% on average.

Here’s the kicker: They’re using Addressable TV even more for “top of the funnel” brand awareness and recognition than for “lower-funnel” sales transactions. And one in four count on it across the full purchase spectrum. What once was thought to be purely a direct response mechanism has demonstrated the utility of a primary branding platform.

It usually takes a few years for a medium to achieve this intensity of support.

Addressable TV is getting there faster because it’s delivering and it’s ending a compromise – reach or precision – that advertisers have grown increasingly uncomfortable with. More than half report that Addressable TV ads are reaching their intended viewers, while 38% say they have connected with hard-to-reach audiences and 33% see measurable impact on such key performance indicators as website traffic and sales.

At this point, the only things limiting Addressable TV growth are inventory and education. As inventory increases, education becomes paramount on two levels.

First, providers need to explain how and why the medium works, so new advertisers have the ammunition to sell up and around within their organizations. A surprising number of users lack confidence in justifying their addressable investment.

Second, providers need to agree on effective CPM (eCPM) as a common currency. Many would-be advertisers look at Addressable TV on a general CPM basis and find it too expensive. Waste is cheaper than targeting, by design. On any given user target, it’s likely that Addressable TV actually delivers greater connection at a lower cost. It just has to be sold uniformly on an effective basis.

“What we’ve seen is that [Addressable TV] is driving enough difference in effectiveness to offset the higher CPM and deliver an increase in ROI,” says Michael Mazza, director of marketing at Reynolds Wrap.

We can expect more advertisers to come to this conclusion over the next year. As they do, they will further the movement to prioritize throughput over output – coverage and causation rather than pure reach – that’s extending across media in the data age.

In this way, TV’s bold new frontier has the potential to reconfigure the media landscape.

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