Addressable Television Advertising: Don’t forget about CPG

By Greg DePalma

When I talk to people about the future of television, I always use digital as an example. When you surf the web, you see different ads than someone else who is visiting the same website. TV is based on a completely different advertising model, with all viewers seeing the same commercials during a TV program. While people in New York City see different local TV ads than those in Atlanta or Akron, everyone in the same market sees the same commercial at the same time.

But this is changing. TV is evolving from a true broadcast medium, where every viewer in a given market sees the same content, to one resembling the 1:1 experience of online viewing. TV networks realize their medium has to become more targeted and measurable to keep advertising dollars from moving to digital.

While U.S. adults spend more time viewing digital video than TV content (5 hours 16 minutes for digital compared to 4 hours 31 minutes for TV in 2013), TV ad spending continues to dwarf that of digital video (forecast to be $68.34 billion this year for TV versus $5.96 billion for digital)

The potential upside for TV advertisers and agencies once they get it right is staggering. How amazing would it be to deliver TV ads for products to households that have those types of items in their weekly shopping cart?  

TV is on its way. A few years ago, personalized television advertising was launched on satellite TV and a few cable operators. The concept and execution relies on serving a single ad to a single household based on the characteristics of that household. 

An automotive manufacturer used addressable TV advertising to deliver an SUV ad to one household while showing a convertible car ad to a different household watching the same program. Financial services companies have leveraged proprietary client and prospect lists to serve customized TV commercials to their high value households. The idea of removing a less desirable target audience (for example, people with poor credit), and directing ads to more relevant prospects was well received and viewed as much more valuable.

What about CPG?  In the past, the ability to serve ads to specific brand or product purchasers was not available at scale. Today, IRI has built a propensity model for all 116 million TV households based on years of measuring who purchases what products at which retailer. Now imagine serving a personalized ad for potato chips just to the top 20 percent of households that purchase that brand or category of salty snacks.  

The future of television advertising is customized, targeted and relevant. It will mean the end of poorly targeted commercials and wasted ad dollars. Sounds like a boon for consumers, manufacturers and TV networks alike.

1eMarketer, U.S. TV Ad Market Still Growing More than Digital Video, June 12, 2014; and eMarketer, Digital Set to Surpass TV in Time Spent with US. Media, August 1, 2013.

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