Wednesday, April 8, 2015

What is Addressable TV Advertising?

Targeted ads online have become the norm, and internet users expect to view ads that have been selected for them based on their previous web history and demographics. The same concept is now being applied to television. 

Addressable TV is a technology and marketing practice in which ads seen by TV viewers are segmented, letting groups of people watching the same programming see different, more relevant ads- regardless of their physical distance from one another.

The formula to determine which ads are the most relevant uses nuanced, data-driven household profiles, based on information like income, family composition, and even car leases and mobile contracts. However, the actual set-up for addressable TV is relatively simple: set top boxes have their own IP addresses, which allows a TV's Nielsen Data to be integrated with the data from other devices and databases.

The benefits of addressable TV advertisements are clear. Television currently has the largest audience reach of any media today at 96%, and TV draws more than $70 billion annually in ad spending. Research has also shown that households receiving addressable advertising tuned away 38% less often than households receiving standard advertising. The same study also found that targeting ads to the most relevant groups increased efficiency by as much as 56%.

In 2014, addressable TV only represented $200-300 million of the $70 billion ad spend on TV. However, within the next three years, industry experts believe that one-quarter of TV ad budgets will be spent on addressable TV. 

While change will happen over several years, now is the time to change your television advertising strategy to focus on the quality of targeted ads rather than the quantity.

Tate Handy
Guest Author

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