Waiting For Addressable: Why It’s Taking So Long For The Industry To Get Its Act Together

Two or three years ago, when I’d talk to network executives about addressable advertising, it was like talking to the Three Little Pigs about the Big Bad Wolf. 

They were scared, wanted it to go away and were doing everything in their power to ignore it.

Most of them, anyway.

It wasn’t all that hard to understand why: for years, they’d had what was arguably one of the best jobs in America, especially if they worked for one of the bigger networks.

Brands all wanted/needed to advertise on TV, and it wasn’t like Pepsi or Ford were going to decide not to run TV commercials on shows like Friends or Seinfeld back in the 90s. 

And then suddenly there was the internet, which was going to be a threat, but then got tripped up by the Four Horsemen of the Digital Advertising Apocalypse: Brand Safety, Viewability, Fraud and Ad Blocking Software, and everything seemed okay for a New York minute, only now people were telling them they needed to sell advertising by audience segments and not day parts, which meant they'd actually, you know, have to do math.

So understandably, they were not all that enthusiastic about it.

There were other, more rational reasons to fear addressable too, like the fact that much of the leftover inventory would need to be sold via programmatic exchanges and they knew that “programmatic” meant “race to the bottom” on digital and didn’t yet understand why that wasn't going to be an issue on TV.

Issues, We've Got Issues

The good news is that today, there is much more of an appetite for addressable as everyone (more or less) acknowledges that it is inevitable. That said, there are still many items that need to be ironed out, many of which are quite critical.

Take segmentation, for example.There are no standard definitions for who actually gets included various target audiences (e.g., “new moms” “travel enthusiasts”). It’s whatever the people selling the ad want it to be, which makes planning addressable across the entire TV ecosystem very difficult for marketers and their agencies

Ditto measurement and verification and optimization and attribution and business outcomes and all those other digital type words that people buying and selling TV advertising never had to deal with.

There’s also the fragmentation of the audience itself, both in terms of where they’re watching TV, when and how.

Time Shifting Changes Everything

The “when” part is what really complicates things, because the entire premise of TV advertising has always been that it gives the advertiser the ability to reach millions of people all at the same time, only now those same people aren’t all watching at the same time, they’re watching an hour, or a day, or a week later.

Which, as you probably guessed, creates even more issues.

If you want to buy time-shifted addressable, aka VOD addressable, well, that’s pretty easy. The people you’re buying it from know who is watching (e.g., they usually have their credit card number or email or both) and so they can sell you specific audiences and deliver ads to those audiences much in the way websites do, via the magic of dynamic ad insertion (DAI) which (to simplify things) identifies who is watching the show and which ads they should get and then delivers those ads in something very close to real time.

Not complicated enough? Then let me throw this in: some VOD addressable is sold on a “household” basis, since TV is often a group activity and no one really knows who in the household is actually watching. Others sell individuals within the household, which is great, only they do it on a probabilistic rather than deterministic basis, which may not be.

(Those two terms mean exactly what you think they mean: given that it is Sunday afternoon, the system figures that the 55 year old male in the household is probably one of the people watching the NFL game, but it has not officially determined that is in fact the case.)

Linear VOD, or inserting addressable ads onto live TV in real time is as complicated as it sounds. To begin with, the broadcast and cable networks have no direct access to, or data about, their own viewers who are either connecting via an antenna or (more likely) an MVPD set top box.

So right now, the only people who are running linear addressable are the MVPDs, who sell linear addressable in the two to three minutes per hour they get from the networks as part of their carriage deals.

The recently launched Project OAR, which gives networks the ability to use ACR data to insert targeted ads onto VIZIO smart TVs is an attempt to work around this and allow networks to directly sell their own inventory on an addressable basis. It has support from most all the major networks and ad agency groups, but it’s still in its very early stages.

Still Really Scary

The problem with linear addressable, from a network ad sales POV, is that they are no longer selling off the entire audience for that particular 15 or 30 seconds, and, as such, have to try and resell the remaining audience to another advertiser or offer it up via a programmatic exchange. This is scary because they worry that they may lose money on the deal if no one wants those leftover segments.

But as advertiser’s desire to reach targeted audiences grows and as everyone realizes that unlike the relatively infinite internet, TV inventory is fairly finite and thus still fetches a high CPM, those worries have simmered down.

Some.

The "Why" Factor?

There’s one more issue about addressable that hasn’t been settled yet either, and that’s “just because you can, should you?” e.g., does reaching a targeted audience make sense for a brand like Nike or Coke when the audience they want to target is “pretty much anyone who will sit through our commercial.” 

And while the answer to that starts with looking at the intent of the ad (what do you want viewers to do after seeing it) and deciding what makes the most sense in that particular instance, how to actually make those decisions is still very much up in the air.

So a whole lot of confusion.

Which is why one of our next TV[R]EV Special Reports is going to be all about Addressable advertising, a guide that will take you through all these issues and much, much more (this is just the tip of the iceberg) as the industry attempts to figure out how to handle yet another massive shift without going broke. (We’ve also got reports on Measurement and ATSC 3.0/HbbTV coming out too. Busy summer on our end.)

Stay tuned.