According to Adobe Digital Insights’ Advertising Report, 74 percent of Americans believe the TV commercials they see aren’t relevant to them.
That number, which is seen as a clear indication of the the amount of waste a traditional ad buy represents, are the crux of the argument for why TV networks should be looking at creating addressable ad buys for their clients. With addressable, ads are only seen by people who might be interested in the product or service, thus greatly reducing the amount of waste.
Addressable vs. Indexed
TV networks had long resisted the move to addressable as they were afraid that they would be stuck with vast amounts of unsold inventory. That’s why their initial reaction to the need to move beyond traditional “Nielsen segments” (e.g. age and gender) was to introduce so-called “indexed buys.”
Open AP is the best example of indexed buying, as it looks to standardize the segments that marketers are looking to target against. That’s a smart move, but one that stops short of true addressable, as it only allows buyers to identify the shows that index best against those segments rather than buy against them. So that if say, beer-drinking dads who were into ice hockey indexed high against “The Simpsons”, that advertiser would be able to buy ads on “The Simpsons” but the audience would not be segmented—the ads would hit everyone watching the show and the network’s ad sales team would not need to sell off the remaining audience segments.
OTT Changes Everything
The rapid growth of ad-supported OTT is helping to boost TV networks’ acceptance of addressable advertising. Part of this has to do with technology: it used to be that the only way to deliver addressable ads—where two viewers watching the same show at the same time saw different commercials, depending on their demographics—was via an MVPD set top box. The geographic limitations involved in working with individual MVPDs were an issue, as was the fact that networks were leery of allowing MVPDs to serve up their ads for them.
As a result, linear addressable was limited to the MVPDs, during the two minutes per hour the MVPDs were allotted to sell ad space, and even further limited to Dish and DirecTV, as the satellite companies were able to provide a national audience, thus removing the hassle of geographic limitations. (Altice also built a strong addressable business as they were able to target the desirable NYC region.)
OTT, on the other hand, is digitally delivered on a national basis, and so the ability to serve up addressable ads is baked into the product. Add in the fact that the business models of many of the newer ad-supported OTT networks are designed around selling linear addressable and you have a situation where advertisers are realizing that they can achieve actionable scale on these platforms. As such, they’re looking at how to create segments they can buy off of, by combining their first party data with third party data in order to identify those viewers they want to target. It’s a way of looking at the market that originated in digital, but is now being imported to TV.
A number of recent deals in the ad tech world highlight the impact that ad-supported OTT is having.
The ability to correctly identify segments in order to make more informed TV buys is the impetus behind the recent announcement of a deal between Inscape, an ACR data company that uses glass-level insights from Vizio smart TVs and LiveRamp, an identity unification platform. The stitching together of digital audiences with TV audiences opens up the market to become more fluid for marketers looking to target consumers beyond the typical Nielsen age, sex demos.
Addressability is the promise coming from the recent deal between Adobe and LiveRamp that will see Adobe’s Advertising Cloud using data from LiveRamp’s IdentityLink for TV to enable buys. IdentityLink will provide Adobe with the first and third party data needed to ensure that advertisers’ messages wind up in front of the right audiences.
One of the more interesting pieces of the deal is that LiveRamp is also able to translate insights gleaned from online audiences.
“Hypothetically, if an Adobe client had a bunch of data housed on Adobe’s Audience Manager, they would be able to send that to us,” says Allison Metcalfe, general manager of TV at LiveRamp. “Then we’d have to model it, in order to be privacy compliant, but we would be able to move that online audience segment into the television space, which is really, really cool. It’s a unique value proposition that Adobe is able to offer their customers here thanks to LiveRamp’s data.”
The final piece, as I recently outlined here at Forbes, is verification, which was the driving force for a deal between Beachfront, a supply side platform that sells OTT ads, and TruOptik, which (among other things) provides verification that the segments Beachfront is selling are indeed targeted at the right viewers.
Slowly but surely, an entire ecosystem is taking place.
TV Measurement For The Digital Era
One more company working with networks and advertisers with segmentation data is iSpot. The company, which tracks advertising across the entire TV ecosystem, has developed a custom segments feature. iSpot has taken the billions of data points they’ve been tracking over the years and used them to develop TV segments. Advertisers can then take their digital segments and match them against iSpot’s TV segments. This kind of information, when paired with measurement data, allows brands to optimize spending based on the actions and behaviors of consumers rather than heavily modeled equations. Brands that have identified “car intenders” on digital can now use iSpot to see what shows those car intenders watch. This is good news for brands as the data can help them to identify less expensive options for reaching their desired audience.
“The addition of segments allows customers to bring together two data sets that have been traditionally stuck in silos,” says iSpot’s CEO Sean Muller about the new offering, which gives brands the ability to make decisions using audience segments from both digital and TV. “The bridges are now in place for brands to move more fluidly between TV and digital and really optimize their spending based on what is moving the sales needle.”
Segments Don’t Need To Be Slivers
One common misunderstanding is that audience segments need to be overly narrow. Depending on the purpose of the campaign, they can be as broad or as narrow as an advertiser would like. On traditional TV, buying segments larger than 30% made little sense, as there was no real cost savings over buying the full audience.
But OTT platforms, which sell all their audiences on an exclusively addressable basis are different than traditional TV networks which tend to sell entire entire show (or entire daypart) based on traditional Nielsen segments. With OTT, the question isn’t whether you want a slice or the whole pie, but rather, how many slices you’d like.
Pepperoni, of course, is still extra.