Three complications that arise from addressable TV and what to do about it.
The entire TV advertising industry is excited by the potential of addressable TV advertising, or the idea that we'll soon be able to buy only the households we want. The oft-used example goes something like this: if you're selling dog food, you don't want to talk to a household that has only cats. Lower waste and higher relevance should translate to more effective use of media dollars. You could actually, in theory, practically eliminate waste.
But as with most emerging media, it's not that simple. The complications are many, but here are three of them.
This stuff is hard. The big pay TV operators (who ultimately are the ones who need to enable this) are dealing with equipment that was never designed to do this. Take the cable guys, for example. They're commonly referred to as multi-system operators or MSOs. This is a literal term born out of the fact that the way many of the big guys gained scale is through acquisition, so rolling out an advanced technology like HH addressability across their entire footprint means solving the technology problem not just once, but several times - it must be implemented across each legacy system. It's an IT nightmare. The industry has been chasing this vision for a long, long time. We're getting closer, to be sure, as some of the operators can now do HH-level creative versioning (delivering spot A to HH A and spot B from the same advertiser to HH B) - and there are a few operators who are beginning to let advertisers buy only the HH they are interested in. As with many emerging channels, reach is somewhat limited, and for now the inventory is "local" avails.
Smart targeting on any platform naturally requires somewhat detailed knowledge of the consumer. People are still getting comfortable with the idea that they're being tracked and targeted in "traditional" digital environments like desktop and mobile web. Some are opting out. Others are deleting cookies. Litigation and government regulation threaten improvements in targeting like some kind of two-headed monster. Ultimately, addressability will require that certain HH attributes become known and we must find a way to make that acceptable to consumers.
So it's a concern, but I think that privacy may well be the easiest of these three problems to solve. The key, as we have learned with online, is being completely transparent with consumers and providing them absolute control over their data. This one will get solved.
The Nature of TV
The web and mobile are largely 1:1 channels. An individual device (laptop, smartphone, tablet) tends to be used primarily by one person at a time. A single TV set, on the other hand, often reaches multiple simultaneous viewers. So household-level addressability only gets you so far. And not every product, brand, or category is as cut-and-dry as the dog vs. cat segment that I began this column with. Take personal care products, for example. The other scenario that's often bandied about by addressability advocates is that we guys will never have to see ads for feminine products again. But when you're targeting at an HH level, how exactly does that work? Outside of frat houses and bachelor pads, most households in the U.S. have both men and women. I'm not interested in those products, but the women in my household may be. Daypart and program/genre targeting may help, but then we're pretty much back to today's targeting criteria.
So what do we do?
Realistically, none of these problems are insurmountable. The obvious answer to the provocative title here is "no, TV addressability is not DOA." We as an industry will get there, and it will make TV buying much more efficient and effective than the way things are done today. It will take time, though.
While we wait (and perhaps even after these problems are solved), let me propose something else: maybe the place for highly targeted and personalized messaging is not on the television set. Maybe the phone is a better place. People tend not to share their phones. Every member of the household often has her own, and it is their personal, individual device. Smartphones are reaching 50 percent penetration in the U.S., and various studies have indicated that the vast majority of mobile web users are on their phones while watching TV (look for a whole lot more detail on this multi-tasking behavior coming out this fall as part of a joint study by my company and Yahoo). Maybe TV should remain the mass reach vehicle and we should get more intimate and personalized on a device that's already viewed that way by consumers. There's potentially more value exchange and much deeper engagement there. Or, better yet, maybe there's a way to combine TV addressability with highly personalized marketing on the mobile device.
But I'm just thinking out loud. What do you think?
Jeremy Lockhorn leads the emerging media practice (EMP) at Razorfish. The team functions as a think-tank on new technologies and next-generation media, and operates as an extension of current client teams. EMP is focused on driving groundbreaking marketing solutions for clients. Jeremy is a filter, consultant, and catalyst for innovation - helping clients and internal teams to understand, evaluate, and roll out strategic pilot programs while reinventing marketing strategies to leverage the power of emerging media. Jeremy joined the agency in 1997 and is currently based in Seattle, WA. His Twitter handle is @newmediageek.
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