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.
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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.)