As Addressable TV Advertising Grows, Challenges Remain

Addressable TV advertising has been talked about within the advertising community for decades. Since then, industry adoption has been slow but steady with marketers investing a larger amount of their ad budget on addressable advertising. The promise of addressable advertising is the ability of using first-party (i.e., Personal Identifiable Information) and third-party data to target a specific viewer with a specific ad message. With marketers paying a premium, content distributors have been upgrading their addressable capabilities.

Advertiser Acceptance: eMarketer estimates in 2023 the ad spending for linear addressable advertising in the U.S. will total $3.96 billion increasing to $4.2 billion in 2024, doubling the estimated total from 2020. Next year, eMarketer projects addressable will account for 6.1% of total TV ad spend. In another projection, ad agency Magna forecasts in 2022 addressable TV advertising had generated $7.9 billion in the U.S., an increase of 373% over the past five years.

Kevin Arrix, SVP, DISH Media says, “TV Addressable Advertising continues to build momentum as we evolve towards an impression-based, converged TV landscape. Addressability has helped make television advertising effective at every stage of the sales funnel.”

Furthermore, earlier this month DirecTV released a survey by Advertiser Perceptions among 350 advertising executives. The survey found the use of addressable by marketers to be an important element of their overall media strategy.

· 86% of advertisers say addressable played an important role in 2022 upfront negotiations.

· 80% of advertisers are satisfied with results from their addressable TV initiatives.

· 83% say buying addressable ads has increased their ability to meet campaign objectives.

· 64% say economic conditions will have the greatest impact on media spend over the next two years.

· 55% say inconsistent measurement and lack of reliable third-party measurement validation will impact their media spend over the next two years.

No Standardization: Despite its promise of superior targeting combined with an increase in addressable ad spend, issues remain; the lack of a unified standard among distributors resulting in fragmentation and limiting reach. Also, current audience measurement providers have been unable to distinguish linear from addressable ads and are presently incapable of capturing individual viewing.

The term has become expansively shaped since it arrived on the television scene in the early-1990s, when the industry’s mandarins prophesied that in the near future, the close of 1996, the majority of U.S. TV households would be addressably capable via set-top boxes of multiple systems operators (MSO’s) and satcasters through local linear cable network commercial inventory, roughly two minutes an hour, that could be replaced, overlayed and/or served dynamically.

The beginnings of addressable TV advertising were in 2012, when cable operator Cablevision and direct broadcast satellite entities DirecTV and Dish launched addressable capabilities, starting with geo-targeting households. Soon other cable operators, satellite and telco companies followed. The targeting capabilities produced better results for marketers while generating a new revenue stream for MVPDs with cord-cutting was beginning. Since then, addressably delivered ads have remained at the forefront of the media community’s imagination – scale, targetability and ad campaign outcomes. Although adoption has been slowed by the different capabilities of set top boxes as well cable operators and satcasters unwillingness to be transparent.

Fast forward to a few years ago. With much fanfare, Project OAR (Open, Addressable, Ready), which sprung from the head of Vizio (parent of Inscape) and Nielsen Advanced Video Advertising (AVA) conceptually entered the realm promising to expand the number of addressable capable households. In the tens of millions, they boasted. Project OAR isn’t much talked about these days and Nielsen’s AVA sputtered at take-off, was sold to Roku, who in fall 2022 discontinued its addressable beta. Roughly around the same time, connected TV devices along with Original Equipment Manufacturers (OEMs) entered the addressable realm and actually delivered on their promise to provide addressable video targeting capabilities through internet delivered protocol.

The emergence of smart TVs and vMVPDs with their ability to stream programming directly from the Internet offered new addressable opportunities for marketers, with virtually all commercial inventory available to be interchanged. However, the various OEMs, the makers of smart TVs, such as Samsung, LG and Vizio all use a different set of standards for switching ads addressable advertising. Hence, addressable advertising has become even more fragmented, than just linear and streaming. This lack of standardization has, for now, limited the reach capabilities of addressable.

Now in 2023, the addressable MVPDs (cablers, satcasters and telcos) and their vMVPD siblings reach nearly 72 million television households. Still limited to the local allocation of commercial time, but on the horizon the cable networks are negotiating with the MVPD/vMVPDs to enable some of their national commercial linear inventory to be addressably deployed, which, in turn, will make available to marketers infinitely more addressable capable commercial insertions. In addition, connected TV penetration remains unstoppable approaching 90 million households. All good signs for the near-term growth of the burgeoning addressable TV arena – deployment, revenue generation and ROI.

Earlier this month, Ampersand announced it had added an automated addressable TV functionality to its ad platform streamlining workflow between buyers and sellers. The enhancement will quicken automation in the planning and buying of addressable campaigns with Ampersand’s supply partners Charter CommunicationsCHTR
, ComcastCMCSA
, Cox, Altice and Verizon. There are future plans to allow for clients to buy addressable directly.

Kevin Arrix, SVP, DISH Media notes, “Addressable is accessible; addressable technology can be used to target broad based segments as well as being hyper targeted to reach a specific target with zero waste. All MVPD’s have expanded their addressable use cases from hyper targeted to more demo/broad audience based. Many are offering reach extension capabilities that apply the precision of addressable to boost a linear TV buy.”

Lack of Measurement: In terms of challenges, certainly measurement is one of the priorities. Everyone agrees. However, before the media community can successfully tackle this issue, the industry must challenge itself to answer a not-so-simple question: What does one mean when one uses the term “addressable deployment?”

Over the past two years Nielsen, the primary audience measurement provider, has come under assault from the media and ad community for undercounting viewers and their inability to measure multi-platform audiences. Presently, Nielsen cannot distinguish (and measure) between a linear and addressable ad although that could change.

Another measurement issue is the inability to measure the actual viewer. While data is used to target the desired individual, there is no guarantee they are being exposed to the personalized ad message. With these measurement limitations it is impossible to gauge a campaign’s KPIs such as business outcomes or even provide such basic metrics as reach and frequency. As one marketing executive points out, the type of precision used to develop an addressable ad campaign has been lacking in measuring the results.

Measurement is expected to improve. Consultant Bill Harvey says, “Right now, Nielsen ONE is measuring homes and actual persons viewing addressable ads on CTV, desktop, and mobile, and is measuring the same things for non-addressable ads on linear. Nielsen ONE is adding linear addressable measurement later this year, including persons viewing measurement. Reach and frequency of addressable and non-addressable ads in the same campaign will come along somewhere in the sequence of releases of many other functions to Nielsen ONE.”

Mitch Oscar, Advanced TV Strategy, Ramp97 says, “However, before the media community supersizes its communal efforts to pick up the addressable measurement challenged gauntlet to create a “whiches” brew of third partied, first partied, CRM’d, attentioned, cleansed, incrementally reached, frequencied, outcomed, jiggered, MRC’d, wall-gardened, identity-graphed, cross-platformed and paneled universalized metrics, I have two areas that I would like to see churned before concentrating on measurement.

Mitch Oscar continues, “The first: the addressable community of MVPDs, vMVPDs, connected TVs and trade associations must work together to help shape a unified representation of the U.S. addressable universe that consists of overlapping households and devices and behavioral viewership between all addressable capable platforms. Secondly: an addressable industry-wide moratorium on the deployment of fee-based surveys of a myriad of ‘marketers.’ The published results obfuscate a true picture and understanding of ‘addressable video advertising’ aggregating ‘outsight’ perceptions rather than insights, and thereby presenting directionally unreliable information.”

Kevin Arrix, SVP, DISH Media concludes, “Addressable TV offers advertisers scale plus enhanced data targeting capabilities, giving them more control over audience reach and frequency. And post campaign, it offers unparalleled attribution capabilities for true ROI.”