Should Addressable TV Be Part of Your Media Plan?

Last week the Interactive Advertising Bureau (IAB) reported that for the first time ever, digital ad revenue – up 17 percent year-over-year to a record $42.8 billion – surpassed that of broadcast TV. A trend getting less notice these days, however, is the fact that a growing portion of television advertising is itself starting to behave more like digital.

As my fellow ClickZ contributor and group vice president at Acxiom Dana Hayes recently wrote, “TV will become the next medium to be transformed by data-driven marketing. The wealth of digitally enabled data becomes relevant in the delivery of specific ads to specific households for TV advertising.”

Television has traditionally served as a reach play, driving mass-market awareness for brands. While brands might serve ads only to particular DMAs (or even Zip codes), or only during select dayparts, tailoring creative by region – let alone by user – has been prohibitively expensive and time-consuming.

Now, with the advent of connected TVs – Internet-enabled smart TVs or televisions connected to streaming devices like a Roku or Apple TVs – marketers have the opportunity to segment their television audiences to an impressively granular level, and drive greater return on investment (ROI).

The audience intelligence available through set-top box and broadcast carriers, data service companies, and ad technology providers offers the potential for marketers to have one-to-one conversations with consumers at scale. The added benefit of interactivity within most connected TVs makes the prospect even more alluring.

One-to-one marketing is effective, but can it scale in the broadcast environment?

All signs point to yes. According to BI Intelligence, by 2016, 43 percent of all TVs will be connected TV. For marketers new to television, 43 percent represents a critical mass that makes addressable TV worth experimenting with. For longtime television marketers, the nascent connected TV market provides an opportunity to test new creative formats and targeting strategies alongside existing campaigns.

To determine if an addressable TV ad campaign is right for your media plan, here are some questions you should ask:

Who Is Your Target?

Addressable TV advertising works especially well for products with niche audiences. Addressable TV campaigns let you build custom targeting profiles of households based on data ranging from household income, ethnicity, age, or presence of children to specific brand-relevant latitudes/longitudes (e.g., near a retail location, in a particular neighborhood, or on a college campus).

Allstate, for example, worked with Dish Network and DirecTV last year to deliver renter’s insurance ads only to those consumers who rent their homes. Such a campaign would have been unthinkably wasteful if delivered nationwide; with addressable TV ads, it’s a compelling marketing channel.

For the moment, addressable TV ads also work well for products targeted at tech enthusiasts, since these early adopters are the ones most likely to have purchased and use connected TVs. One of my firm’s clients, a leader in the cross-screen targeting space, helped a large tech retailer achieve outsized conversions by retargeting site visitors within connected TV environments.

What’s Your Call-to-Action?

One advantage of addressable TV ads is that viewers can interact with your creative, turning TV into a “lean-forward” medium. If your product is low consideration, or can be easily purchased or downloaded with a few clicks of the remote, addressable TV ads can enable the entire sales cycle.

For higher-cost items (e.g., autos or enterprise solutions), addressable TV ads can help drive a sale, but the time frame will likely be longer than what you’re used to online: Remember, most viewers are watching TV for entertainment, not to research high-consideration items. In this case, use addressable TV ads to reach the right audience, and drive viewers to learn more about your offering within the connected TV experience or online.

Do You Have the Budget?

Making TV ads is more expensive than making digital banners, and tailored campaigns require tailored creative. You’ll need to set aside additional budget to develop tailored creative, either in-house or by partnering with a dynamic creative vendor, if you want to get the most out of your campaign.

How Will You Measure Success?

Before you begin any campaign – especially one with a new pool of inventory – work with your media partners to determine how success will be measured. Are you tracking reach? Frequency? Engagements? Post-view behaviors such as site or in-store visits? Different operators have different measurement capabilities, so make sure you’re clear on what they can deliver ahead of time.

Do you have more tips on who should use addressable TV ads? Tweet them to me @kristinkovner.

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