The Addressable TV Innovation Opportunity Is Greater Than Many Think

jeffpuzenski_tv"On TV And Video" is a column exploring opportunities and challenges in advanced TV and video. 

Today’s column is written by Jeff Puzenski, an executive at Infinitive.

If you’re looking for tangible signs of convergence, addressable TV is one of the most frequently cited. After all, addressable TV is about using digital data and targeting techniques in linear channels – pretty clear evidence that the lines are officially blurring.

But, like many of the buzzwords du jour in digital media and advertising, there is some confusion about what addressable TV actually means. Or, to put it another way, addressable TV seems to mean different things to different stakeholder groups.

Some marketers define it as the use of first- and third-party data to do either digital or linear targeting. Some networks view addressable TV as delivering ads through smart or IP-enabled set-top boxes, whether or not external data sets are applied to target ads. There is also an “all of the above” quality to many discussions of addressable TV. Anything digital + anything linear = addressable TV.

The lack of clarity mirrors the lack of market consensus on measuring video ad performance. Nielsen’s delayed release of its total content rating suggests that the confusion will linger for some time to come. In the meantime, I believe the best definition is the use of personal set-top box data, including location and income level, to target linear TV buys.

So how important is addressable TV, and what sort of urgency should buy- and sell-side stakeholders feel about it?

Context is critical here. Today, addressable TV is a small sliver of the overall video market; current revenue opportunities and the number of digital media properties ready to offer such buys at scale remain limited. From that perspective, addressable TV looks far from urgent.

Take the longer-term view and it’s clear that addressable TV is a powerful catalyst for the long-term evolution toward linear and digital convergence.

The Whole Point Of Convergence For Advertisers

For advertisers, addressable TV is critical to leaping over one of the most formidable barriers to 360-degree customer views and true omnichannel capabilities. By providing much richer data about households watching television, advertisers can begin to map those viewers back to the profiles of visitors to their websites, social channels or retail outlets.

These timely, accurate and complete data-driven customer profiles are the whole point of convergence for advertisers. When they can map linear and digital data, advertisers can stop wasting money on sending the wrong ads to the wrong user at the wrong time.

On the sell side, addressable TV, like dynamic ad insertion, offers a way for linear and digital teams to bridge the organizational and technology gaps between the two sides of the business. By sharing data and insights about customer behaviors, linear and digital teams can form the next-generation value proposition to advertisers that convergence represents.

To linear teams, the addressable TV opportunity may seem minor, but it can address longstanding challenges around attribution and provide much better analytics. It can help linear teams explain their results more persuasively. Addressable TV even lays the groundwork for the application of direct-response techniques in the linear world. This would be a good thing, but it will involve considerable organizational effort.

It’s easy to view issues like addressable TV mainly in terms of technology, but that narrow view misses out on the strategic importance. This is not simply about patching together a few systems or data streams, but rather speaks to the highest-order objectives on both the buy and sell sides. That’s why the issue must be on the radars of both senior executives on the sell side and CMOs on the buy side.

Yes, linear still has nearly all the revenue, but digital offers far superior attribution and insights, which is what the market is demanding – and will continue to demand.

The Future Destination Of Addressable TV

When trying to figure out the best next steps for addressable TV, it’s best to remember that the near-term value lies primarily in accelerating the long-term convergence journey by marrying the linear and digital sides of the business. Clearly there is alignment with advertisers’ need for more targeting and consumers’ interest in more relevant ads.

In some sense, the future is now, given that one day the meaning of addressable TV won’t matter very much as the distinctions between linear and digital will blur to the point of disappearing. When all TV is digital, there will be no such thing as addressable TV. The question will be whether or not the industry used the strategic opportunity presented by addressable TV to drive convergence more efficiently and rationally.

Follow Infinitive (@InfinitiveRocks) and AdExchanger (@adexchanger) on Twitter.

 

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