TV has long been a powerful force in advertising with significant reach and scale, but it's no secret that TV's share of ad spend has been on the decline; in fact, 2017 is the first year in which digital ad spend is expected to surpass TV spending. The reason for this is simple: Targeting. Digital advertising has offered targeting of audiences where TV traditionally has not.
The TV advertising ecosystem needs to evolve to compete with these digital alternatives. The beginning of this evolution is the birth of data-driven audience targeting and addressable advertising. These targeted TV advertising methods are rising in popularity yet there still remains a great deal of confusion around what they actually mean and how they work.
To address that confusion, here are some straightforward definitions:
Data-Driven TV Advertising: Using different data sets including demographics, interests and viewing behavior to target TV advertising into specific program networks and dayparts to reach the desired target audience.
Addressable TV Advertising: The process of serving household-specific TV advertising based on an advertiser defined target – regardless of programming or time of day in both live and playback modes.
These targeted TV advertising methods are sometimes confused with the term "programmatic." While programmatic allows advertisers to target a particular audience, it is a tool, not a form, of targeted advertising. Programmatic is a fully automated, end-to-end technology by which various types of audience-based advertising can be bought and sold in real time, often involving an auction or bidding process.Traditionally, TV advertising required marketers to rely solely on contextual placements to determine desirable audiences for their ads. As TV advertising evolves, marketers are increasingly able to use data to identify and serve ads to more specific and relevant target audiences.
Addressable advertising provides the opportunity for advertisers to buy audiences instead of programs by pinpointing their target audiences and creating household profiles. They then determine which of the addressable-enabled households fit their target and serve tailored commercials to just those homes, reaching the target household regardless of what is being watched, when, and whether it is being watched live or in playback.
Marketers did not start moving their ad budgets to digital because they believed their brands were safer or more effective in digital display, search or long-tail video. They accepted those realities to achieve better targeting. But the evolving TV advertising ecosystem is starting to offer marketers a way of having it all – the medium of rich, premium, brand-safe, transparent, third-party validated content with TV, and incredibly sophisticated data-driven targeting. In fact, the greatest example that targeted TV is the next "big thing" for advertisers is the substantial increase in ad spending against targeted TV. According to eMarketer, more than half of marketing executives now buy TV ads based on target audience.