DRTV: Microtargeted TV
The most effective marketing delivery channels today are powered by real addressable targeting and measurement. Marketers using direct mail, telemarketing, email and online display ads are realizing improved campaign results as they put the customer and deep data at the center of their efforts. It's time to consider including addressable television in that list of individually targetable marketing channels.
Traditionally, all households watching the same TV program in the same region would see the same ads as their neighbors—the advertising was targeted by context, not household. Like direct mail, addressable TV advertising allows different households to receive different TV ads based on the attributes of that household.
Early tests of the effectiveness of addressable TV were very positive. A 2008 experiment by Comcast and Starcom Mediavest Group, for example, found addressable TV advertising was 56 percent more efficient and 38 percent more effective than mass TV advertising. The technique increased the effectiveness of those ads, reduced tune-away significantly and was considered highly successful.
Although the TV industry could see the potential of addressable advertising, it struggled to create the standard processes and platforms necessary to make it work at scale, in part due to the limitations of existing technology, available inventory and the sales process. As a result, the promise of addressable TV advertising remained in a "beta" state for years and some felt it might never arrive.
Household-level addressability is actually available today in TV advertising. While some cable providers are currently offering true addressable television targeting at the household level, it is limited to their specific geographies. However, national scale is available today via the satellite operators, where they have an existing national addressable footprint, and more advertisers are beginning to adopt the new capabilities as the channel evolves.
One example was reported in the September 2012 issue of Ad Age. Allstate ran a TV ad campaign for its renters insurance products on both Dish Network and DirecTV that only appeared in households that rented their homes. In fact, it was the first time Allstate had advertised renters insurance on TV, and it reached 15 million renters in the viewing area (homeowner households in the area mostly saw direct response ads, instead).
This evolution of a digital advertising channel from "contextual" to "addressable" has already been successfully demonstrated in the online display space. In order to help differentiate their inventory and capabilities from others, large online display ad publishers adopted addressable techniques to allow advertisers to segment and measure display ads using robust data against their known user/subscriber bases with the same degree of accuracy as traditional addressable marketing channels. It works, has been embraced by advertisers and is growing rapidly.
Cable and satellite companies have their own subscriber bases that can be further enhanced, segmented, shown more relevant ads and measured using the same techniques and leveraging highly accurate, validated offline data. This enables advertisers to make consistent ad buys across digital and non-digital channels, using consistent targeting models and consistent ROI-based metrics.
The new measurability of digital allows advertisers to make more efficient buys and more effective post-campaign decisions, given the consistency and accuracy of the data used to target and measure.
Today, most marketers still buy TV ads in programs that best fit their target audience based on their core demographics—very much like contextual display ad buys or print publication buys. For example, Cadillac might buy ads on Monday Night Football because the overall viewership of that program generally fits the audience profile it is trying to hit.
Addressable TV is more like direct mail. Although Monday Night Football might directionally hit the right demographics, where true addressable capabilities are enabled, each viewing household can be selected or deselected based on its individual properties. This makes for much more sophisticated targeting, more specific measurement opportunities and a more effective campaign.
What You'll Need
Unfortunately for the cable/satellite operators, it also makes for a more complex sales and ad serving process. What used to be a single buy for a single advertiser purchasing a 30-second spot in a program becomes one advertiser buying a spot that cherry-picks the upper income households watching that program and another advertiser purchasing the remaining households with an ad more aligned with their demography. Or a single advertiser might buy all households viewing a program, but version it so some households receive one spot featuring a higher-end product line while the remaining households receive a spot for an entry-level product.
The result is a campaign that is much more effective and efficient for the advertiser; but which, by definition, leads to significantly more complexity for the cable/satellite operator. This is a major dilemma facing the industry today that may not be solved until advertisers demand it and are willing to put their spend behind it.
Perhaps most importantly, addressable ad placement allows true addressable measurement. Marketers know which household received a particular ad, when it ran and how many times it was shown. They can also determine if that household made a purchase, even if that purchase was made via offline means, by using third-party data or doing a post-campaign CRM match to their own customer purchase database.
This level of quantifiable measurement allows much closer correlation of cause/effect, test and control options, and ROI-based campaign evaluation similar to other proven addressable marketing techniques.
To effectively incorporate addressable TV advertising into your marketing mix, you'll need to partner with companies that:
1. Are involved in the addressable TV movement. They need to be able to manage all the types of data involved (digital and offline, compiled, CRM data, consumer and transactional, etc.) and have strong relationships with the cable, satellite and TV measurement partners in the space.
2. Work directly with addressable TV measurement firms. These providers use a combination of TV set-top box data and third-party consumer data to provide advertisers with deeper understanding of who is viewing their ads in order to create more effective campaigns and insights.
3. Have the resources to maintain those relationships, targeting, data and compliance. It should be established, deeply resourced, stable and have a strong reputation for maintaining strict privacy and data security. All addressable marketing is about data, and no amount of advertising effectiveness is worth putting your data at risk.
4. Understand addressable marketing principles in other channels. Marketers who want to have the same level of targeting, measurement and consistency across their digital channels that they have in traditional channels should work with a marketing partner who is already doing so effectively, across all channels, both digital and offline.
Addressable television is slowly but surely moving toward wider adoption. With the right partners, you can incorporate addressable TV into your own campaign strategy and significantly increase the direct effectiveness of a very important advertising channel.
Brian Bradtke is the vice president of Digital Advertising Services for New York-based Experian Marketing Services. Reach him at email@example.com.