There's a reason why the majority of advertisers that use addressable television in their media plans repeat the strategy for future campaigns: It works.
The promise of addressable TV—delivering relevant ads to individual households—has been here for a while. The biggest challenge the marketplace faces now is identifying what's truly possible with the medium. Like the early days of digital, there is a lot of confusion.
Many discuss addressable without a full understanding of the opportunities this new medium brings. My advice to marketers: Don't let this opportunity pass you by because you don't understand the full range of possibilities that addressable presents.
Addressable TV myths in the marketplace:
There isn't scale. There are 120 million TV homes in the U.S., according to Nielsen, and by our count, more than 65 million of those households have the technology to receive an addressable ad. The largest addressable multichannel video programming distributor (MVPD) delivers only 16 percent coverage against U.S. TV households. By aggregating inventory, we give advertisers access to the full footprint: more than half of total U.S. TV households—more than enough to reach relevant audiences at scale.
Addressable is not an efficient medium. Addressable TV does have a higher CPM than traditional television. While a more targeted approach warrants an increased CPM, many advertisers get sticker shock and assume addressable is too expensive. A little math can help brands determine the most efficient way to reach relevant audiences. If the national household CPM is $5, and the brand is only targeting 10 percent of households, the brand is really paying a $50 household eCPM (effective cost per thousand impressions) to reach that specific audience, once you factor out the waste. As long as the addressable CPM is below the $50 eCPM, it delivers higher ROI in reaching the specified audience. The ability to close the loop on television effectiveness delivers immeasurable incremental value.
Addressable TV exposure cannot be directly linked to business outcomes. In fact, addressable TV is the only environment in television that we can control for exposure. Under a test vs. control methodology, all households are in target, and the only variance is incremental message frequency. Many people assume marketers can't cleanly measure an addressable campaign's impact on driving consumer purchase activities. This is false. Postcampaign, we are able to isolate the incremental impact of addressable TV against a brand's KPI, such as return on advertising spend (ROAS), lift in penetration, share shift, web traffic, foot traffic, etc.
Cross-screen targeting and attribution is not yet possible. Data has been used for targeting in the digital space for decades. With the addition of addressable TV, marketers now can deliver unified targeting at scale, across all screens, including linear, VOD, OTT and mobile. As audience viewing behavior moves across screens, data and technology have created the opportunity for unified reach. The linkage created by identity graphs creates visibility into whether a consumer saw an ad on a digital screen, television or both. With unified targeting and measurement, future campaigns can be optimized to maximize ROI once we understand the channel allocation.
Addressable is a test. The truth is that addressable TV offers brands the opportunity to reach high-value audiences at scale and connect ad exposure to business outcomes. It's a proven media plan component that gives marketers the ability to understand the effectiveness of their campaigns by providing data to optimize future campaigns. Addressable is not a test. The data and technology that drive addressable campaigns get the messages in front of the right audiences. While addressable has not been perfected, it presents a real opportunity for advertisers to reach and develop an enduring relationship with audiences relevant to them.
The fact is, if your brand is not yet using addressable TV, you're missing out.