You’re relaxing at home. The evening’s top prime time drama plays on TV.
Next door, your neighbor watches the same program until the show cuts to a break.
Displayed on your screen is an ad from a major auto manufacturer. Your interest peaks. In the market for a new car, you scrolled through the brand’s website only that morning. At the same time, your neighbor views a food delivery commercial on his own TV and decides to order dinner.
Behold, the power of addressable television—TV quite literally “addressed” to individual homes based on residents’ interests and characteristics.
How does addressable TV work?
Brands utilize big data to define specific target audiences and create a profile for households likely to appreciate their message. They share this information with cable providers who send that brand’s advertising to homes matching the profile. Consequently, you and your neighbor receive different advertising despite watching the same program simultaneously.
In a data-driven and digital-influenced world, addressable is a step towards highly accountable and targeted TV. Consumers receive relevant messaging, and advertisers thrill at opportunities to cut wasted ad spend and improve ROIs. Greater measurement capabilities ensure only top-quality campaigns move forward. Incredible, right?
But if this is all so perfect, why does addressable TV still comprise less than 4% of total TV spending?
Addressable TV is not for everyone.
Any brand considering addressable TV should know it’s far from flawless. The concept and technology are relatively new. In fact, over 70% of marketers using addressable TV have been buying it only the past couple of years. There’s still plenty to perfect.
The success of an addressable TV campaign hinges on the accuracy and precision of its data. A brand’s household profile can only be so predictive. How certain is the aforementioned auto manufacturer that your neighbor wouldn’t also take interest in their offering? Or perhaps you wanted your neighbor’s opinion on your future vehicle. Because your neighbor hasn’t seen the manufacturer’s ad, he is less likely to provide social proof in favor of their brand, potentially negatively impacting your own purchase decision.
Additionally, the myriad of complex formats and offerings from each provider make it difficult for brands to navigate the buying process. Add to that the hefty price of personalizing creative and purchasing targeted inventory, and the costs of addressable TV quickly stack up.
Should you use addressable TV?
Whether to use addressable advertising comes down to what’s right for your brand. Addressable is most effective in situations that require precise consumer targeting. Consider trying addressable TV if you’re attempting to communicate with an especially unique or fragmented audience that would otherwise be difficult to reach. Even so, think of it primarily as a complement to scaled national campaigns.
If your brand has an element of mass appeal, rely on traditional TV advertising. TV’s broad reach provides a chance to share messaging that resonates with multiple market segments or even to connect with audiences you didn’t know you had. That’s not an opportunity you want to miss.