• by Michael Kubin , Op-Ed Contributor, July 16, 2024

Marketers have long favored electronic media -- particularly television and radio -- for their ability to efficiently reach large audiences.

But this broad reach often results in wasted impressions. For instance, only 3% of Americans are in the market for a new car at any given time, meaning most automotive TV ads are seen by uninterested viewers.

The landscape changed dramatically around 2008 when addressable advertising technology transformed television from a "one to many" medium into a "one to one" targeting tool. This innovation, combining technology with data, allows car commercials to be shown only to those intending to buy a car in the coming months, or dog food ads to be targeted exclusively to dog owners.

INVIDI pioneered addressable advertising for cable, satellite and telco providers. Others joined in once IP-streamed video became the standard for cable. The addressable business evolved into a duopoly, with INVIDI serving satellite and telco distributors (DirecTV, Dish, and Verizon) and FreeWheel deploying through Comcast, Charter, and Cox.

Addressability is the rare technology that benefits every aspect of the ecosystem, creating a virtuous circle. Marketers can reach their target audiences more efficiently with minimal wasted impressions. Distributors see increased value in their ad inventory. Ad agencies' campaigns perform better and are more optimizable. Television viewers receive more relevant commercials. As one media agency head aptly described it, "It's television, only better."

However, the linear television industry faces a significant challenge: cord-cutting. Forecasts predict that by 2027, only one-third of US households will receive programming via traditional satellite/cable/telco services compared to the 2012 peak. This shift has dramatically impacted ad revenues across the industry, affecting distributors, cable and broadcast networks, and local television stations.

Recognizing addressability's benefits, cable and broadcast networks began offering it on their national inventory a few years ago, a trend that continues today. The final frontier of un-addressable inventory is local television stations.

Major television station groups have begun exploring addressable technology, recognizing its potential to revolutionize their business model.

Implementing addressability will allow local stations to sell ads to a much larger group of advertisers based on location and target audiences: think car dealerships, restaurants, and retailers. This technology provides a powerful tool to compete against digital media and, most importantly, opens up a new and significant source of advertising revenue.

Unlike national addressability's functioning duopoly, the local station addressable business requires all distributors to work together to form a unified distribution footprint.

This cooperation is crucial because the television marketplace will not tolerate a bifurcated distribution system, which would make media buying hopelessly complicated. All parties must recognize the need to cooperate to make this a substantial business opportunity. Lack of cooperation from any stakeholder could derail the entire initiative.

Encouragingly, major television station groups have already responded positively to this concept. However, as with any new business model, important questions remain: How will revenue be split? Who will sell the inventory? What happens to unsold time?

Local television stations are at risk of losing their business to alternative distribution and program sources, primarily digital. Addressable technology puts a powerful weapon in their arsenal, and the time to implement it is now.

This technology offers local stations the ability to attract a broader range of advertisers, targeting them based on location and specific audience characteristics. It levels the playing field with digital media and opens significant new revenue opportunities.

By embracing addressable technology and fostering cooperation among all players, local stations can not only survive but thrive in the evolving media landscape.

The future of local television advertising lies in addressability. It's time for all stakeholders to recognize its potential and work together to make it a reality.

The success of this initiative could well determine the future viability of local television stations in an increasingly digital world.