"On TV And Video" is a column exploring opportunities and challenges in programmatic TV and video.
Today’s column is written by Jennifer Pelino, vice president of omnichannel media at 84.51°.
Consumers are finally beginning to benefit from the increased connectivity and big data research that companies have been undertaking for the last several years. Personalization is actually becoming a reality.
We know there is a strong correlation between higher consumer loyalty and higher brand sales. Loyalty rates are driven by relevant messages and experiences directly available to consumers. It’s a pretty simple formula: The consumer says, “Make my life easier and in return I’ll reward you with purchasing your product or service.”
If it’s so simple, why do so many brands drag their feet? We increasingly hear the statistics of the volume of messages that consumers are bombarded with every single day and that nearly two-thirds of that information is irrelevant to each individual. But marketers have new media sources to reach the target consumer.
But like all up-and-coming technologies, addressable TV faces its own set of challenges.
The first is scale. Addressable is still just a small fraction of the overall TV market, and while companies are working to evolve and the infrastructure is improving, cable companies still need to put key structure initiatives in place to standardize items, such as insertion orders and ad units.
Programmatic integration is also tricky. Like the scale of addressable, automated buying requires more standardization and governance across inventory for both buying and selling.
There is also the issue of awareness. With a plethora of choices for both targeting and measurement, the industry needs to increase its coverage of addressable TV’s benefits. It offers transparency, for example, so brands can optimize their campaigns. Most marketers know that they have the ability to more precisely drill down on the demographic and geography attributes within addressable TV, but few are aware that they can also link their owned assets and purchase behavior to really pinpoint the exact consumer.
As for measurement, this medium can be viewed alongside other platforms, such as digital and mobile, to address ROI. Since it isn’t as accessible as single-channel measurement, finding the right measurement partner is critical.
A Promising Tool
While still in its infancy, there is a great opportunity to get in early and test the benefits. Addressable TV should be considered by new brands or a brand with news to share if they have a specific category or consumer-focused segment that needs to quickly maximize its potential.
Marketers should look to addressable TV if they have a very specific audience to target or a semi-niche product. A linear TV marketing approach still makes sense for more ubiquitous products today.
Addressable TV may also be a good fit if marketers have the right data that allows them to know their audience target or there are enough addressable TV-enabled households that match to their target.
Other candidates for addressable TV include brands that don’t normally advertise on TV due to budget or efficiency constraints, or those who have a budget both for working and nonworking spend. Addressable TV CPM rates are higher because marketers can reach specific targets, however, and their resources may need to be increased if they are testing different creative messages to different types of audiences.
Finally, those interested in optimized impressions and want to make sure their message is getting to the right target audience should look into addressable TV.
In addressable TV, target audiences can be defined on first-, second- and third-party data, including in-store purchases, shopping behavior, income, lifestyle interests and family composition. Since addressable TV is about the person and not the program, the power of the data can be harnessed and merged with a brand’s target objectives.
Let’s say a brand selling dog treats wants to speak to three different consumer groups, including those with pets who buy dog treats but not this brand, those who purchase pet food but don’t buy dog treats and those who switch between this and other brands. Those consumer groups can be identified through the use of purchase-based targeting, which is based on consumers’ in-store purchasing behavior and is extremely precise, guaranteeing brands will hit their bull’s-eye target.
The good news is that brands can run tests with the combination of purchase-based targeting and addressable TV to understand how they have increased their overall media efficiency.
Purchase-based targeting has proven benefits for the advertiser with the likes of twice-improved lift and four times greater ROI than non-purchase-based targeting campaigns. Addressable TV has shown those households receiving it tune out 38% less often [PDF] than those receiving nonaddressable advertising.
While there are still several growth opportunities in the industry such as gaining additional addressable households, learning early will show benefits in the long run. You will be better prepared in all aspects of digital media and your consumers will benefit from the most relevant content. Your reward will be stronger loyalty and greater sales over time.