Addressable is poised for massive growth in 2020. To keep you in the know, TV[R]EV will be coming at you every week with a series of new profiles and videos to shine a spotlight on this trend, continuing with this Q&A with Nielsen‘s Kelly Abcarian.
This interview is part of our new Special Report on Addressable TV Advertising. Written by Mike Shields and Alan Wolk, with an assist from Tom Morgan, the report offers 50 pages of deep dive insight into how addressable TV advertising is bought, sold and measured, who is doing it, and where it’s headed.
“This year about 36 billion hours a month are watched via linear TV — approximately 80% of all TV minutes. The industry sees real value in being able to connect with consumers one-to-one–not just in the 2 minutes that is available every hour, across all 16 minutes of broadcast and cable network inventory,” says Kelly Abcarian, who, as general manager of Nielsen’s Advanced Video Advertising Group, is frequently the face of Nielsen’s addressable efforts.
Her background as a research and adtech executive for Nielsen is what fuels Abcarian’s (and Nielsen’s) belief that smart TVs are the key to unlocking what she refers to as “this enormous pool of high value impressions.”
Alan Wolk (AW): What do you think is the biggest challenge right now to get brands and agencies to adopt addressable advertising and what can the industry do to get them to overcome those hurdles?
Kelly Abcarian (KA): Addressable TV holds great promise for improving advertising and the consumer’s experience, but its biggest challenge is scale.
Linear addressable TV specifically has demonstrated some positive growth in the last five years and has clearly proven that it drives increased value; however, it is currently confined to the two minutes of cable network commercial time (with rare exception) the addressable-capable operators can sell to advertisers available from their negotiations with content owners and, to some extent, in the OTT environment.
There are other questions we must address to help drive further adoption of addressable, such as: who is the actual seller and buyer, how can we simplify the transaction process, and where does the budget come from—TV, digital, a new category, a new type of advertiser or a mixture of all?
There are also legitimate challenges in identifying, understanding, creating and matching the right target to the right audience on all screens, not to mention developing the right creative to actually speak to the desired target in order to achieve impact.
While the challenges with addressable linear TV advertising are many, Nielsen believes that by working collaboratively with the industry we can overcome these challenges. But first, we must work together to reach scale technically.
AW: What does the future of TV measurement look like and what will Nielsen’s role be in creating it?
KA: At Nielsen, we take our role as the trusted and transparent currency for the ecosystem very seriously. We admit we have not moved as fast as many would like and certainly not as fast as the consumer, but our vision is to continue to be the stewards of the currency that underpins the economics of the TV industry.
In order to continue to underpin the economics of the TV industry, we must adapt.
To do this we must expand our measurement to as many consumer touch points as possible, providing the marketplace with a full view of the consumer and their ever changing total cross-platform media consumption.
In addition, a new challenge to meeting the needs of the emerging addressable TV marketplace is that we must reconcile impressions within the current C3/C7 ecosystem with impressions that are inserted over the original ad (i.e., the underlying ad).
As stewards of the TV currency, we believe we are best equipped to develop a common measurement across all impressions providing a transparent understanding of reach and frequency across all platforms and distribution channels. This work is fundamental and it is already underway in collaboration with the key research professionals from both the buy- and sell-sides. We envision this will provide all players the ability to forecast, plan, manage and activate linear addressable inventory alongside traditional linear and digital inventory.
An additional complexity in unlocking scale is that not all addressable devices are household matchable, not to mention people-based.
Smart TV devices, for instance, are IP-based. IP matching is complex and lacks transparency and uniformity. That is why we envision leveraging our panel-based methodology to identify unmatched, and therefore lower-valued homes, and apply household characteristics and person-level demographics.In essence, we are transforming low signal homes into high quality signals, dramatically increasing the volume of higher value addressable impressions and bringing confidence for buyers to reach these more valued consumers.
AW: How much do you think the Flixcopalypse (e.g. the launch of new ad-supported services from NBCU, HBO Max, VCBS) is going to change the addressable TV landscape?
KA: We see this as an encouraging sign. History has shown that consumers appreciate the subsidizing mechanism of advertising. It has value. Just look at Hulu’s offering of ad-free vs. ad-supported. Two-thirds of consumers select ad supported for a small discount in subscription fees.
We firmly believe the ad experience needs to change, but consumers do not hate ads—they hate irrelevant, redundant, or too frequent advertising. We believe we can play the part of improving the experience for consumers, the ROI for advertisers and the monetization of content owners to better invest in quality content. With new tech capabilities we can help content owners offer a more flexible business model. We can take a brand new stream of content and play it ad free or we can introduce relevant ads based on the consumer’s decision whether to have advertisers subsidize the content or not.
AW: Looking five or ten years down the road, do you think that most TV advertising is going to be sold on an addressable basis? What do you think happens to the Upfronts in that time frame?
KA: I believe that within the next five to 10 years a significant portion of linear TV inventory will be sold as addressable. However, the exact number of addressable impressions will depend on many factors including price, but also the value of targeting data and the systems that plan, execute and measure all forms of the media investment.
Nevertheless, I believe that Upfronts will continue to play a vital role, but sellers will expand and improve their offerings to advertisers. Today, the Upfronts is a futures market that serves a vital role in the financing of content and the securing of the marketer’s business plan (including price protection). When we reach scaled delivery of addressable ads and the reconciliation of the underlying C3/C7 ad currency, the premium TV sellers will be expanding their offering to add addressable as a premium option for buyers as part of the continuing and vibrant Upfronts.
AW: What has you most excited about the future of addressable TV advertising?
KA: The potential to truly scale all premium TV inventory and the positive impact that this will have for consumers, advertisers, and content owners, creating a healthier media environment for all.