Addressable Advertising: A Primer

[Looking for the TV[R]EV Special Report on Addressable? Download it here.]

While addressable TV advertising had been getting a goodly amount of buzz lately, it’s still largely misunderstood by many in the industry. And with good reason: the ecosystem is still confusing AF.

While new initiatives like Project OAR are trying to make it less confusing and more standardized, we thought it was worth a quick TVREV-style primer.

What Is Addressable Advertising

Addressable means you and I are watching the same TV show at the same time and we see different ads based on our location, demographics or previous buying habits. It’s what happens on digital all the time, but hardly ever on TV.

Linear vs VOD

This is where it starts to get confusing. There are two ways you can deliver addressable ads. One is via VOD (video on demand) which is any type of time-shifted viewing. This is easier in many ways, as you removing the “watching the same show at the same time” factor and thus you can put the ad in front of your desired audiences when they tune in. Addressable is more logical in this case.

Linear, or live TV, OTOH, is tougher. Brands traditionally used linear as a way to reach AMPAP (as many people as possible) and there’s still a lot of heart for buying entire audiences. That said, there’s also a host of good reasons to reach specific audience segments.

How Does Linear Work?

Linear addressable has been more of a technological challenge, since the ads have to be served up in real time. To date, the only way to make this happen was via more advanced MVPD set top boxes during the two to three minutes the networks gave the MVPDs. Companies like AT&T (DirecTV), Dish and Altice had built the first round of linear addressable and should be credited for turning it into a viable business.

Two Ways To Buy Linear Addressable

There are two ways brands can buy linear addressable. The first is easier for the seller: the brand buys the entire spot and slices up insertions among its sub-brands.

So, for instance, Ford would buy a thirty-second spot during Modern Family and send a truck ad to some households, a minivan ad to others and a sports car ad to a third demo. Easy peasy, nothing left over.

The second way is a bit messier but can be more lucrative. The network or MVPD sells off a piece of their audience, say women 18-34 who are in the market for a car, to Audi. Then they try and sell off other slices—cruise intenders 45 and up to Royal Caribbean. They can try and sell off third and fourth slices as well.

And If They Don’t?

The unsold inventory is then sold programmatically. While many still freak out that this means “race to the bottom” (because digital advertising), TV is very different than digital. There are an almost infinite number of websites, and so it’s easy to find the audience you want at an increasingly lower CPM. But there are a finite number of TV shows. So prices will never hit rock bottom.

Most VOD addressable inventory is already sold on an addressable basis, either via walled gardens like Roku and Amazon or via DSPs and SSPs like The Trade Desk, dataxu, SpotX and Telaria.

Why Does Everyone Keep Talking About “Publishers”? I Thought This Was TV

We heard this a lot while doing our special report on ad-supported OTT (buy yours here.) It’s just digital companies using digital terms. What they’re really talking about are what the TV industry calls “networks” or “platforms.”

What Is Project OAR?

Project OAR is an initiative that is being steered by Vizio, the second largest seller of smart TV sets in the US. (Samsung is number one.) 

There are two key things you need to know about Project OAR (Open Addressable Ready):

1. It provides a way for broadcast and cable networks to sell addressable directly, without going through the MVPDs. OAR members make use of Inscape, Vizio’s ACR (automatic content recognition) arm to identify the (over 10 million opted-in) households that are watching the show. The targeted ads are then inserted as overlays using Inscape ACR, no MVPDs involved. (NB: Nielsen recently bought a company called Sorenson that can do similar overlays via Nielsen’s Gracenote ACR technology on LG TVs.)

2. Members will try and set standards for linear addressable advertising, which is key because there really aren’t any. Different networks and platforms have different definitions for various segments; verification (verifying that the audiences the brand paid for are the audiences that actually saw the ad) is all over the place and measurement is completely FUBAR.

Measurement Is FUBAR?

Pretty much. There’s no single agreed upon method for measuring linear addressable and (especially) VOD addressable. There’s a lot of “grading our own homework”, a lot of taking it on faith and a lot of different systems competing to be The One.

In a nutshell, there are several competing methodologies: panels, set top box data and ACR, and while just about everyone agrees that they should all be used in tandem, how that should actually work is still up in the air. 

Similarly, there’s no agreement on what the measurement units should be: GRPs, impressions or something called “business outcomes” which is based on multitouch attribution metrics that track a user’s journey through the sales funnel using lookalike audiences, big data and lots and lots of algorithms.

What’s Next?

Project OAR will soon launch in earnest and the notion of network addressable will start to take hold and brands will become more comfortable with it. Other players (Nielsen?) will hopefully join forces with Project OAR and help create more universally accepted industry standards. At the same time, case studies on the efficacy of addressable TV offer proof that it works.

At the same time, the Flixcopalypse will happen and new ad-supported services from Warner (probably) and NBCU (or so they’re saying) will launch, greatly increasing the amount of high quality OTT addressable inventory, which will make brands more comfortable making it part of their media plans.

Which is exactly why you'll need to know about it.

And now you can, with TV[R]EV's latest special report on Addressable TV Advertising. Available right now at this link, it's 49 pages of insights and explanations, written in our trademark readable TV[R]EV style that says just because you're reading about business, doesn't mean you have to be bored. Get your copy before your competitor does.