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, features, and videos to shine a spotlight on this trend.
This piece 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.
It’s easy to make the seemingly logical leap: The more that TV is delivered via the internet, the more TV advertising will work just like digital advertising. As in, every time somebody starts streaming their favorite show, they get a distinct, uber-targeted at that is different than the ads everybody else watching that show gets.
But TV has continually proven resistant to this dynamic (or lack of dynamic, to be more specific). There’s a reason that despite all of the hype surrounding more data-driven TV advertising, addressable TV advertising’s growth appears to be slowing, while CTV ad spending is surging.
In fact, the growth in CTV ad spending is reminiscent of the explosion in programmatic advertising a decade ago, when forecasts had to continually keep changing their forecasts upward as the market exploded.
That’s because, as has been proven again and again in the ad world, advertising marketers are driven by ease. National TV has been long easy to buy. And increasingly, digital media has been incredibly easy to scale thanks to programmatic plumbing, advanced data, and self-serve buying. It’s a big reason why Facebook boasts of 7 million advertisers (also, Facebook ads work really well. There’s that).
Addressable TV is anything but easy to execute. While things are becoming more streamlined, it’s often a region-by-region, cable system by cable system proposition. And even today, advertisers wrestle with whether all that extra work pays off – when it’s much simpler to just run national TV campaigns.
Plus, as much as advertisers talk about wanting to target consumers with hundreds, if not thousands, of ad creative variations in TV like they do in social media, that simply isn’t feasible in TV. For starters, digital production budgets are often minuscule compared to what most advertisers are prepared to spend on TV ad space (i.e. media). Brands aren’t equipped or prepared to up their output. And even if they do, the trafficking logistics are far more cumbersome than digital media, where different ads can be zapped to individuals with a few clicks.
Ad buyers are dying for someone to come along and turn the addressable TV ad market into a true universal digital platform—and so far, industry attempts at that have seemingly gone nowhere.
Meanwhile, the push to increase addressable advertising via set top boxes seems to ignore the 800 pound elephant/gorilla/rhino in the room—linear TV ratings are cratering. By the time the industry gets its act together on universal addressability (the myth that we’re all going to get unique ads through our TV sets)—nobody under 60 is going to be watching live TV.
Of course, you’re asking, doesn’t CTV solve for all of this? Can we just turn OTT into addressable at scale overnight?
But right now, the ad targeting options in CTV are highly fragmented, and more limited than you might think. Advertisers complain that it’s hard to match up their unique data sets with TV set IP addresses (this is not a cookie-based world). And they have to target consumers one way on Roku devices, another way on an Amazon device, a third way on Samsung TVs… and so on.
That’s if they are doing any real OTT ad targeting at all. It’s a misnomer right now to synonymize “OTT” with “addressable.” For starters, so much of premium OTT ad space—think Hulu, CBS All Access, and network TV apps—is sold directly to national advertisers. All you have to do is watch Hulu (far and away the leader in CTV advertising) and you’ll see how many of the ads are for broad national advertisers like movie studios and wireless companies. You’ve seen the same thing at play when Amazon streams events like Thursday Night Football. Why bother carving up your ad inventory and making life complicated when you can make plenty of money selling deals to big brands.
And the CTV advertising that is purchased ‘programmatically’ through ad tech middlemen is typically a random hodgepodge of live linear inventory from skinny bundles like Sling TV as well as free services like Pluto and Crackle. At this point, there’s not enough scale, data or tech to turn this opportunity into true ‘one-to-one’ advertising.
In the meantime, there is plenty of interest among brands to use CTV to advertise to many, not one-on-one. They need to replace their declining linear TV reach somehow. And right now, OTT does the trick—while universal addressable advertising seems well off into the future.