• by John DeFilippis , Op-Ed Contributor, August 26, 2017

For years, addressable TV advertising has been an ideal that was more often theory than reality. Rather than place a television buy that reached tens of millions of households, but would only appeal to a small minority, the addressable buy promises to largely remove the waste.

The appeal of such a targeting mechanism is clear: efficient marketing meant to drive higher ROI. If a campaign was digitally targeted to people in the market for a new car, the TV buy could follow suit instead of relying on broader targeting aimed at everyone who was watching the same program.

What has made the prospect of addressable TV advertising frustrating for many marketers is that, while it’s technically achievable, the economics are difficult to balance. Meanwhile, tapping data from third-party sources requires extra work for marketers, and it’s not always worth the effort.

There may be a real shift in the market coming soon, though The highly targeted audiences that are and will be available from the media giants will (eventually) attract marketer budgets that are earmarked for traditional TV.

Traditional TV, the incumbents, will not passively stand by as the market shifts. The stakes are too high. This is one of the primary market forces having an impact on change in the traditional TV industry. The other is a change in consumer behavior. Consumers want top quality programming, and they want it on-demand and on all devices, which is an inherent characteristic of digitally delivered content today. Evolution is inevitable.

As a result, I expect to see a rise in addressable TV advertising, but it will remain a relatively small slice of the market for the next few years as the industry sorts itself out.  

The current state of addressable

Right now, tens of millions of homes in the U.S. are able to receive addressable TV advertising, and 70 million will be able to by 2020. But just a fraction of homes are actually being served ads this way. According to eMarketer, addressable TV accounted for 1.3% of the total market in 2016, a figure forecast to  be 3% by 2018.

As those numbers indicate, addressable has been used more for experimentation than a regular line item on media plans. So far, carmakers have shown the most interest in addressable. Last year, Toyota promoted its Prius Prime to 18-to 49-year-old tech -avvy consumers with annual incomes of $75,000-plus. Hyundai placed a similar addressable buy to promote its Genesis model, targeting consumers with annual salaries of $100,000-plus.

Marketers, looking to gain a 360-degree view of their customers, are clamoring for more data so they can connect their audience buys across all screens. Ultimately, driving outcomes that build a business is the goal, and knowing what and where to spend requires a holistic planning, execution, measurement, and optimization effort.

That said, I don’t expect the addressable TV market to crack wide open soon. There is much invested in the history of the industry; cable operators, for instance, are likely to keep experimentation on the edges until they see a clear benefit.

But the momentum is moving toward an addressable world. That means even though addressable TV has been on the table for years and the pace of progress has been a source of frustration, marketers may soon start achieving what until now has merely been an idea.