The High Cost Of Missing Out On Addressable TV

  • by , Op-Ed Contributor, June 13, 2017

In the ongoing tale of what the hell is going to happen to broadcast television, there’s a lot of noise and attention going on about audience size. The concentration of eyeballs to linear TV is not what it was in years past, yes, but that doesn’t mean there isn’t opportunity for TV to remain a massively viable avenue for advertisers and even, dare I say it, grow revenue. The answer lies in precision targeting, digital style.

It’s no surprise that people are intrigued by precision targeting of TV ads, or “addressable TV” — it is increasingly becoming the idea that will help traditional TV take on what the big players in digital advertising have been delivering to customers for years: targeted advertising. There is a fair share of issues to clear up before addressable TV can be implemented smartly and widely enough to make sense for a shift — technical standards and data privacy to name just a couple. But the point of wider adoption could be coming faster than you think. However, for the platform to become a real solution, the economics and approach to traditional campaign production and delivery are going to have to change.

Television advertising typically takes a one-size-fits-all approach, i.e., it is still mass marketing. How quaint. It is expensive and time-consuming to produce effective ad campaigns for the medium. Typical creative TV ad production costs are generally over $1 million. In fact, with addressable TV and without overhauling your ad production process, those costs could increase, as the more precisely you target ads, the more videos you need. 

Of course, the more targeted and relevant the ads,the higher the CPMs. So why do it? For TV companies, it’s about survival. Neither consumers nor advertisers will not tolerate badly targeted (and therefore irrelevant, frustrating and wasteful) TV ads. For advertisers, it’s efficiency. Smart advertisers don’t want to pay for ads that are seen by people who are not their target audience. To win, powerful and effective addressable TV advertising will need to be become truly user-centric — like the zillions of examples you can see every day in Google search results, Facebook and Instagram feeds, or YouTube pre-roll. Of course, not all campaigns you’re subjected to on the front lines of the big digital and social media platforms are effective, but digital’s insight into targeting in action is a sign of things to come for addressable TV done right.

Imagine advertising with the wide reach of television, yet with precision targeting based on deep knowledge of each individual. The segments of the audience that feel left out in the average shotgun blast of a mass-market campaign can finally come to the party engaged and willing to spend their money. How about the millennial with money or the empty-nest single parent? Both have a higher income than the broad age group they’d typically be marketed to on linear TV. They may not have the wide coverage of an age-based demographic, but as digital advertising can show us in its ability to target and convert, these user-centric shifts can potentially offer advertisers who leverage addressable TV much more impactful results.

I used to be a cynic about the future of TV advertising, but with good execution, addressable TV could, one day, become the new “hot” media.

1 comment about "The High Cost Of Missing Out On Addressable TV ".
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  1. Ed Papazian from Media Dynamics, June 13, 2017 at 9:30 a.m.

    Ben, the last time we reported on this the average cost for producing a major advertiser TV commercial was about $400,000 not  $1 million, but my main reservation about this pro-addressable TV pitch is still that most of these applications are based on profiling households----not viewers---based on highly misleading set usage data merged with product user information by zip codes, age of HH head, HH income, ethnicity, etc. As for the oft spoken critique of TV's supposed age/sex targeting, I should note, once again, that this is merely a way for a time buyer and seller to quantify gross audience guarantees and is not the basis for the ways brands are positioned, how their commercials are executed nor how their share of their corporation's TV buys are allocated. While it is always desirable to send the right message to the right person when that person is most likely to be interested, so far, "addressable TV", while having merit in some cases, does not provide the kind of precision nor scale that is needed to cause a "revolution" in TV advertising. That doesn't mean that I'm opposed to the core idea---when applicable-----but we aren't there yet and we have quite a way to go before we get there.

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