While they’re hardly the first to note addressable TV’s important potential for helping advertisers optimize reach, Deloitte Global has just published an analysis that drives the point home in no uncertain terms.
Deloitte now estimates that addressable television will generate about $7.5 billion globally next year, or about 40 times more than the revenue it forecast that addressable would generate in 2012, when its technology, media and communications (TMT) practice experts last evaluated the format in its “TMT Predictions.”
However, it also points out that that’s a small part of the estimated $153 billion forecast for the global TV market as a whole in 2022.
Addressable TV advertising “has a long way to go before it’s a major part of the TV advertising landscape,” say these analysts.
More intriguingly, they argue that “what can get it there will be its ability to show the same ad to far more viewers,” rather than individual advertisers making different ads with which to target different households.”
For the next five years, Deloitte expects major advertisers to value addressable “more for its ability to extend reach — and so spread their message to the majority of each market, rather than for its capability to differentiate messages by household or individual viewer” (their italics, not mine).
While (at least for the immediate future) it’s still true that “no other medium is likely to be able to match TV’s ability to deliver high-production-value, 30-second stories to 80% or more of the population within seven days,” the time and cost required to create a TV ad (especially one for primetime) limits the supply of ads at any given time, “diminishing the benefit of targeting,” they argue.
On the other hand, with traditional TV audiences shrinking, the possibility of using addressable to add viewers (at least if this is possible in deduplicated fashion—see below) across broadcast, ad-supported video-on-demand (AVOD), social media and/or online video games is very attractive to advertisers.
So what’s holding up the flood of robust advertising investment in addressable? No surprises here.
Challenge No. 1: Traditional TV measurement must expand to include addressable ads delivered via any service and screen.
“Until unified measurement is widespread, advertisers will need to wrestle with one set of viewing data for broadcast and digital video recorder (DVR) views and a separate set for on-demand views, including those from broadcasters’ online offerings, as well as additional sets of viewing metrics from social media with TV apps and TV set vendors,” they sum up.
This, of course, means that advertisers can’t determine precisely who or how many people see an ad — viewers are double-counted if they see the same ad on broadcast and on-demand, for example.
“This could be a deal killer for major campaigns — such as the launch of a major new car model or food brand — where accurately quantifying aggregate reach is of paramount importance,” sums up the analysis.
And while progress will continue, such unified measurement is not in the cards for 2022, say the Deloitte soothsayers.
Then there’s the challenge of aggregating addressable TV ad inventory to streamline buying. Advertisers’ access to this inventory must be “rationalized” to minimize the number of negotiations needed to place ads across a rapidly growing number of platforms capable of offering addressable.
“This will most likely occur via aggregators that act as intermediaries for the growing number of content suppliers,” in Deloitte’s view.
Finally, the cost of creating a TV probably needs to fall to allow more advertisers to get into the game.
Addressable technology enables companies to experiment with smaller campaigns reaching selected audiences—an approach well-suited to smaller advertisers and larger companies new to advertising,” observe the analysts. “But besides buying space, advertisers need to pay to create the content.”
Like others, Deloitte notes that one possible way to put TV ads in reach of small advertisers is for ad agencies to offer a library of not-copyrighted video content clips that can be used generically in some ads. (Or in their words, for “less discerning daytime viewers”... a frank but rather condescending comment that could inspire quite a debate not just among the advertising community, but the population in general, I would imagine.)
Good report, Karlene. I happen to think that "addressable TV" needs to better position itself, as part of an easily identifiable competitive set---like along with CTV and AVOD---and say so in a new article we have prepared for for our newly retitled ---and greatly revamped---"Total TV Dimensions 2022" report due out in January. Right now, addressable TV is a special case consideration---easily shunted to the sidelines--- while CTV/AVOD are becoming considerations for "regular TV" in media planning and time buying. Also, its far past time for the various addressable TV sellers to standardize their metrics and ad scheduling operations and the closer to "linear TV" the better. Why make it so hard? As for "linear TV's reach, most national brands are never going to attain an 80% weekly reach---or come close to it. Sixty-five percent in four weeks is a more typical reach goal and this is using inflated Nielsen stats that do not discount absentee or totally distracted viewers.