TV Advertising Comes Out of the Dark
New technology allows for more targeted DRTV spots
It seems ridiculous that a printed medium—direct mail—has been targeting consumers for decades, while television has been stuck with non-targeted advertising, airing the same ad to everyone.
Thanks to a new concept called addressable TV advertising, it’s now possible for advertisers to deliver customized messages to TV viewers. Addressable TV advertising brings the direct mail practice of targeting to a TV audience. You now can deliver TV ads tailored to consumers based on geographic, demographic or behavioral components. This advance has been made possible by new technology that inserts different versions of the commercials at the cable head-end, or where the local signal originates.
The most widely-deployed targeted TV advertising solutions are Adtag and Adcopy, now available from cable operators’ ad sales divisions, such as Comcast Spotlight (which represents most of the top 25 markets), and market interconnects (which represent multiple cable operators, such as the New York Interconnect and Adlink in Los Angeles). Altogether, these capabilities already are available to reach nearly 30 million cable households. Major advertisers, such as 1-800-FLOWERS.COM, Ford and United, have begun to take advantage of these targeting solutions.
TV ad targeting simply involves the delivery of specific content to a specific audience. TV ads aired on a national basis often rely on some degree of targeting based on the program, network or day-part demographics. It also is relatively common for major advertisers to use geographic targeting to deal with market opportunities, preferences or competitive environments at the designated market area (DMA) level.
Local advertisers have long been able to buy local cable zones, which are roughly the population of a city neighborhood or small town. The good news is that solutions like Adtag and Adcopy now make it possible for larger advertisers to automate delivery of targeted commercials to individual cable zones—all with one buy. This enables more granular targeting for advertisers who want to reach all or just part of a DMA with specific messages.
Although not widely deployed, the delivery of household-level targeted TV ads already is technically feasible. As digital cable and satellite set-top boxes become increasingly widespread, deployment of household-level ad targeting will become more broadly available.
Some advertisers deal with diverse consumer segments by using multiple versions of the same commercial. For example, automotive and retail advertisers sometimes version their TV ads based on specific DMA segments and competitive requirements. But most advertisers still rely on few, if any, versions of their ads. This isn’t because it can’t be done; versions can be created for different audience demographics, product uses, day parts or DMAs in which a commercial airs. Again, the trouble is that conventional, mostly manual processes make it expensive and difficult to manage.
Technology is changing this situation. Adtag, for example, allows advertisers to run the same basic version of a commercial throughout a market, but finish the spot with customized “tags” that feature specific information for, say, a location within the market or that are based on a day part or a special event, such as a grand opening. These tags include addresses of stores, different promotions and offers, etc. Adcopy allows advertisers to simultaneously run different commercials or portions of a spot to distinct audiences within a market, such as ads in Spanish versus English or ads that feature different products and pricing for specific demographics.
To help advertisers decide which audience segment sees which commercial, cable ad sales organizations can provide advertisers with sophisticated research to maximize the effectiveness of targeted TV advertising solutions like Adtag and Adcopy, as well as to target their audience based on aggregate geographic, demographic or psychographic data for consumers residing within specific areas.
Adtag and Adcopy leverage technology from Visible World, a New York City-based developer of targeted TV advertising tools, to enable the dynamic generation of versions of spots based on specific advertiser criteria regarding when and where a particular execution airs. These automatic changes are driven by contextual business rules associated with scenario-based creative development and enhance the efficiency of the related post-production process to make it possible to create dozens or even hundreds of versions in a fraction of the time and cost previously required.
And since content production represents a small percentage of costs relative to the larger media expenditures, in most cases incremental production costs can be readily justified based on the improved return on the media investments.
Customization also can increase the relevance of TV spots, which can reduce the minimum number of times a commercial must air to be effective. At the same time, context or exposure-based customization can help reduce TV ad wear-out, thus extending an ad’s maximum effective frequency.
TV ad customization will become even more critical as targeting becomes more prevalent, because the value of a customized message increases as the profile of a viewer segment and the context of the message narrow. The bottom line is that effective targeting will necessitate efficient customization.
New Technology Requires a New Mind-set
To best leverage targeted TV advertising, it takes a shift in the way we currently measure media and advertising effectiveness, as shown in the chart below.
Of course, there needs to be some proof before we embrace these new metrics.
Early trials for testing TV ad customization and targeting have shown positive responses. In one test, 1-800-FLOWERS.COM used Adtag and Adcopy to air different types of Mother’s Day offers to several different income-level cable zones. A generic offer was established as the control group to run against low-, average- and high-priced offers targeted to appropriate income zones. In addition, dynamic updating was used to generate an automated, day-to-day countdown via titling and voice-overs. According to a Forrester Research report, the results were impressive: Response for the targeted offers and dynamic countdown was nearly twice that of the control group and the average order value was lifted 10 percent, for a net result of more than double the total sales.
Overall, the benefits associated with targeted and customized TV advertising outweigh the related incremental costs.
To leverage addressable TV advertising, it takes imagination and business rules to determine which variables (internal or external) will drive dynamic changes and which ad elements (music, video, titling, etc.) will be changed. For targeted message customization, during the storyboard process you should think about the different targets and what ad elements you will need to support differentiated messages. In some cases, you might need to invest in extra footage. Most major advertisers that incur incremental production costs have found these costs remain small relative to overall TV ad media expenditures, with enhanced return on the related media investments more than likely to exceed the incremental costs.
Current Outlook: Progress Happens Slowly
In the advertising industry, a sector made up of agencies that pride themselves on innovative and cutting-edge commercials, it’s rather ironic that new technology that changes the way things traditionally work is met with resistance. More ironically, it’s often the clients themselves who drive innovation in this industry with their demand to see a strong, measurable return on their advertising investment. Perhaps the new field of targeted TV advertising will be the elixir that drives change uniformly for agencies, clients and television networks. Either way, it will be interesting.
Karen Gold is a veteran of launching new TV technology. She reluctantly admits to launching the Casio videophone and Gemstar’s Electronic Program Guide, as well as creating Wink’s interactive advertising division. She currently is consulting for Visible World technology. Gold can be reached at firstname.lastname@example.org.