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InContext / An inside look at the business of digital content

Why advertisers are embracing addressable TV

April 18, 2022 | By Amy Bornong, Content Marketing Manager – Smart AdServer @SmartAdServerEN
foreground table with popcorn and remote background tv with cars on screen

TV has long been a staple in the American household. Last year, it was estimated that there were 122 million TV households in the U.S. Despite all of the fragmentation in the market, TV remains an effective advertising channel. In fact, TV was the second most profitable advertising medium in the U.S. in 2021, accounting for 25% of total media ad revenue.

TV is still the most influential screen in the house, but changing consumption habits require evolving targeting strategies. Connected television (CTV) is currently the fastest-growing digital channel. Compared to Gen X, Millennials watch 25% less TV and Gen Z watches 54% less TV, but both groups stream a significantly higher percentage of CTV daily. Twenty-nine percent of Gen X streams over three hours of TV per day, compared to 44% of Millennials and 44% of Gen Z.

Historically, content was created to appeal to the largest audience and broadcast targeting options were limited to daypart, program type, and other general categories. However, CTV offers access to advanced demographic and geo-targeting options that broadcast doesn’t. Similar to other digital channels, viewers can be targeted through first- and third-party data segments, lookalike audiences, and retargeting. But, while one-to-one targeting is a very effective digital or mobile strategy, a more strategic approach is required in order to capture the full value of every TV audience.

Bridging the gap through narrowcasting

Successful strategies consider the best and highest use of each solution. Broadcasting and one-to-one targeting both have their place in the mix. But, it’s important to advertisers to not overlook the audience in the middle. As the additional layer in between broadcast and one-to-one messaging, addressable TV offers a narrowcasting solution to effectively target at the point of need.

Rather than identifying an audience based on data signals, it allows the delivery of ads to targeted households during scheduled linear TV programming. This offers a powerful approach to reaching qualified, refined audience segments in a specific context.

Let’s use the example of sports fans watching an event in a stadium. This audience has gathered to watch a very specific activity. They may represent very different demographics, but have similar needs in this setting. Fans are likely to consume food during the course of the event. Leveraging the audience’s attention and presence in the stadium, marketers can confidently target these fans with ads for hot dogs. In the end, the overarching emotional triggers still apply, but the message does more work when it’s placed in the right time and setting.

Best of all worlds

The true power of addressable TV is the ability to connect transactional messages. It allows advertisers to reach very specific and qualified households and customer types while increasing efficiency. It combines the scale of attention and engagement of linear TV with more effective targeting. The additional reach and frequency can activate additional spend from existing advertiser relationships and may also open new categories.

Addressable TV also makes creative optimization easier and offers the ability to A/B test at scale. Expensive production costs have historically made this process quite difficult. But, with addressable TV, advertisers can easily create four or five versions tailored to major audience categories. This allows them to quickly test what resonates best by changing a simple element, like the voiceover or the music. 

Despite all its evolution, TV remains a crucial advertising medium. In a fragmented environment, the best results are achieved by embracing a strategy that incorporates a range of targeting solutions to meet long- and short-term goals. Addressable TV serves as the bridge between an either-or strategy and helps advertisers achieve the best of all worlds. 

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