Three Big Misconceptions About Addressable TV Advertising

TV, that large screen in the living room, will always be a powerful medium for marketers, but the delivery mechanism for how TV gets to that large screen has started to change. In the beginning it was broadcast over airwaves, followed by the move to cable. The new frontier is addressable TV, connected TV, and OTT offerings. And as we see more TV being delivered over IP, TV advertising will become more addressable.

Traditional TV ads still deliver massive reach, outstanding viewability and an advertising environment free of fraud. However, TV advertising has historically been a one-to-many channel, limiting marketers’ ability to precisely target their audiences. This has meant advertisers wind up paying for impressions that are viewed by people outside of their target. Moreover, the growth of cord-cutters and cord-nevers has led to a decline in the number of viewers watching linear cable TV. And the new platforms delivering high-quality video are increasing each year. Eventually, we’ll get to a point where this notion of one-to-many TV advertising will become something that fades into the background, giving way to an increase in addressable “TV” for marketers.

As awareness of addressable TV grows, there are a few myths on successful adoption. Here are three of the most common.

1. Addressable only makes sense for marketers with small target populations.  

I hear this a lot—addressable is better for marketers that have products that appeal to a narrow segment of the population. It’s a misconception. Ultimately, addressable makes sense for most advertisers. But the value can differ depending on your customer and your category.

Take CPG advertisers and others who target very broad audiences, for example. The value is still there, but the use case changes. Many of these advertisers use addressable to gain audience insights that can be applied to linear TV buying.

For example, an advertiser can put five percent of their TV dollars into addressable and run a campaign targeting the people they’re most interested in. Campaign reporting shows them which networks, dayparts, times, days of the week, etc. their target population can be found watching TV. From there, those insights can be used to guide the rest of their TV advertising spend to make it more effective. Additionally, through measurement studies after a campaign, an advertiser can see these metrics based on conversion and not just ad exposure. Creative A/B testing tied to conversion and other studies can also be performed.

2. Addressable TV CPM premium doesn’t make sense to advertisers with broad targets

If you’re simply comparing CPMs, addressable is more expensive than linear TV. But this is for good reason, given addressables targeting opportunities as well as the waste endemic in traditional TV advertising.

If, for example, you know your target is 25 percent of the viewing population and you buy a regular TV ad for a $20 CPM, but because you only want and value 25% of the impressions you’re buying, your effective CPM is actually $80.

So if you were able to only deliver and pay for your ad to reach the 25% of people you want to reach, your marketing dollars will go further as long as you pay less than an $80 CPM for household addressable

Paying a premium price is justified by the greater efficiency of the buy. This rationale applies to many marketers, depending on how much value they attribute to TV ad waste (the other 75 percent in my example above). CPG marketers, for example, might see significant value in reaching targets and non targets. But as I explained in the previous misconception, these advertisers are increasingly using household addressable to garner insights to apply to their broader TV ad spending.

3. Addressable TV is bought by broadcast buyers, not digital buyers

Addressable TV offers many of the same capabilities as digital video with the added benefit of being fraud free, with long average viewing times and high levels of recall. With OTT and CTV inventory still scaling, Addressable TV is a logical addition to premium digital video buys.

Traditional TV advertising uses metrics, terms and methods that are very different than digital video. By contrast, addressable TV is far more similar to buying premium digital video through a direct sales channel, and post-campaign studies allow for precise attribution. In all, buying addressable TV is easy for digital buyers and can greatly expand their premium video reach and quality.

Ultimately, the future of TV advertising lies in greater precision, in part, due to changes in the way TV is delivered. As more and more TV is delivered over IP, it will become increasingly addressable. Addressable TV advertising is a valuable part of this new, emerging TV and premium video advertising landscape. Those who haven’t taken a hard look at it are likely missing a useful tactic for their marketing strategy.

Brett Hurwitz leads the advanced TV business at Oath. He’s responsible for sales, strategy and client services for FiOS Addressable advertising within Oath. Brett brings over 20 years of TV advertising expertise spanning across media companies and agencies.