Commentary

Fulfilling The Promise Of Addressable Local TV

by Brett Adamczyk , Op-Ed Contributor, April 6, 2018

How close is the television industry to realizing the dream of addressable TV?

As the results of the latest ANA/Forrester State of TV and Online Video Survey suggest, the moment might be just around the corner. With 15% of ANA members now including addressable TV in their plans, and another 35% experimenting with it, it looks like addressable TV is about to move out of the hands of early adopters and into an early mainstream that will help the technology gain momentum quickly.

Traditionally slower to capitalize on the addressable capabilities of advanced TV than its national counterpart, the local TV broadcast industry is increasingly taking note of this inflection point and quickly starting to adapt.

In early March, Sinclair Broadcast Group announced it will offer connected TV and OTT advertising to local companies through its 193 local TV stations across the country.

This offering is powered by data insights available through third-party partnerships, the same data insights that will eventually help make addressable TV a reality in all those local markets. But, it’s important to mention that data alone does not make local addressable, at least not in the way addressable TV is currently defined.

Furthering this goal is ATSC 3.0 – the new broadcasting standard by which local broadcast could truly become addressable – which needs to be considered when discussing addressable TV. The integrated, hybrid broadcast/broadband delivery capabilities of the standard will allow broadcasters to implement innovative ways of content and advertising delivery.

With a signal that allows for two-way technology, local TV stations will be able to send different content and ads to neighboring households, and even multiple content streams to different target audiences within the same household.

However, these are just the first steps in a series of deeper changes that need to be implemented by local TV stations to achieve addressable advertising capabilities on par with those of digital video.

How Local Stations Can Accelerate Growth

The number of addressable-ready households is quickly growing. According to IAB and ComScore, there are 51 million OTT households and 56% of consumers’ TVs are IP-connected. So why isn’t addressable TV scaling up at the speed of, for example, programmatic display advertising?

Oscar Orozco, senior forecasting analyst at eMarketer, suggests that “for programmatic TV ad spend to grow as fast as we’ve seen on the digital side, it must advance to complete automation.”

Other issues that need to be addressed to usher in faster growth include:

Audience measurement, formatting, and technical inconsistencies between MVPDs/STB providers
Significant operational investments required on the sell and buy side (similar to those made by Sinclair)
Analog/digital silos within companies on both the buy and sell side
Need to build trust in a new process of buying and its performance
Potential consumer privacy concerns and regulatory issues

Additionally, local TV buyers and sellers need to take advantage of the more counterintuitive opportunities that OTT and connected TV offer. Along with skinny bundles from streaming video-on-demand (SVOD) providers like Sling TV and YouTube TV, national and local TV broadcast programming—through the local network affiliate system—have the opportunity to be offered through data-collecting OTT devices like Roku, Apple TV, and Chromecast.

Accordingly, stations need to ensure those channels are included in their planning and effectively marketed as more cord-cutters move away from traditional TV distribution.

Addressable TV has clear advantages for all sides of the ecosystem. It offers advertisers the ability to reduce waste in ads that spill out to non-prospects, while allowing TV providers to charge more for highly targeted ads. At the same time, the relevance of the ads being broadcasted helps enhance the viewership experience for consumers.

The turning point for addressable TV is finally here — but it’s still up to local TV buyers and sellers to make it a reality.

addressable tv, advertising, commentary, ott, tv

1 comment about "Fulfilling The Promise Of Addressable Local TV".

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Ed Papazian from Media Dynamics Inc, April 6, 2018 at 8:05 a.m.
Brett, the ad spending estimates for "adressable TV" don't jibe with the findings of the ANA study you cited---unless those advertisers claiming to be currently using "addressable TV" use it very sparingly.

But a more fundamental point concerns the ability to target specific households with tailored messages. This sounds fine in theory but how does the advertiser determine which homes are "in the market" for the product or service and how does the system know who is watching? In addition, if you examine the audience profiles of most of the programming that is available for local TV ad sales, you are dealing largely with news---where virtually all shows display the same older viewer signiture or several types of syndicated fare---game shows which are all very old in orientation, daytime courtroom shows and talk shows, which also display an array of very similar profiles and sitcom reruns, which, generally skew younger but also low brow. My point is that an advertiser trying to fine tune its targeting has relatively few options with such content. If, instead, the focus shifts to station break spots adjacent to nationally -aired content, here you get much more variability for targeting purposes---mainly via cable shows----but now the issue of ad exposure raises its ugly head. While there is a reasonable chance that in-program commercials will be seen, this is much less trus for station break ad messages.

In short, "addressable TV" makes sense in terms of the ability to direct ad messages where you want them to go and it's also a fine concept---where it applies---from a targeting viewpoint. But, so far, what is happening is primarily profiling ----nothing new here----and the problem of determining who in the home is watching has yet to be dealt with. We don't really have "addressable TV" as it is described and promoted.
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