The CMO’s Guide To Addressable TV Advertising

It sounds like a marketer’s dream: Send a specific TV commercial to an individual household. But it’s actually real — just with plenty of caveats. You’ve surely heard of addressable advertising, but here’s what you need to know.THE BASICSReach: Addressable ads are currently available in up to 42 million households through live TV and video-on-demand. The pool is expected to reach 50 million households by the end of this year.

How it works: Marketers pinpoint their target audiences and create a household profile using data such as income, ethnicity, children in the household and car leases set to expire. They then work with cable operators to determine the number of addressable-enabled households that fit their target and serve commercials to just those homes.

Inventory available: Two minutes per hour of local commercial time in cable programming sold by the pay-TV provider.

Measurement: Nielsen is not the currency. Operators typically use Rentrak or Kantar Media for audience measurement.

Cost: Operators charge a premium because the ads target a specific consumer. The scarcer or more desirable the target — say, households with income of $300,000 or more — the higher the premium.

WHO’S DOING WHAT Cablevision: About 3 million households can be targeted.

DirecTV: About 12 million households can be targeted.

Dish Network: About 8 million households can be targeted.

Comcast: Does not offer addressability in live TV, but marketers can insert ads on a household basis through video-on-demand, a capability available across about 20 million households. Comcast is currently testing linear household addressability with plans to start rollout in 2014.

Time Warner Cable: Does not offer household addressability. Currently, marketers can reach audiences with ZIP code targeting and other data-driven planning. Time Warner is preparing to launch household addressability on VOD and in live streaming and on-demand content on mobile devices. Comcast’s planned acquisition of Time Warner Cable is poised to accelerate the expansion of addressable ads as the two companies’ systems are eventually integrated.

AT&T U-Verse: Does not offer household addressability. Its audience-targeting solution, AdWorks Blueprint, lets marketers determine what their target audience is watching and predict what they will watch in the future. Advertisers can build a media plan around those patterns. AT&T plans to introduce household addressability over the next two years.

THE CHALLENGES No standardization: It’s complicated and time consuming to run an addressable campaign across multiple operators because the technology can vary by company. Cablevision uses Visible World technology, for example, while Comcast uses BlackArrow. Marketers need to collect potential reach from each operator, determine the optimum frequency and then combine it all. DirecTV and Dish Networks are working to simplify the process by combining their sales efforts for addressable TV advertising for political campaigns.

Rollout: Cable operators need to deploy technology on a market-by-market basis to enable addressability. Satellite operators and Cablevision can change the technology at one master facility.

Inventory: Adding more addressable-enabled inventory requires networks to work with operators to slice up inventory. For example, NBC Universal and Comcast are partnering to make NBC-controlled inventory addressable-enabled on Comcast VOD.

IS IT RIGHT FOR MY BRAND? For brands selling products used by a broad audience, like toilet paper, there’s still value in mass marketing. But if you’re targeting a very specific consumer, addressable may be a good option. Ask yourself: Are there enough addressable-enabled households that match your target to make it worthwhile? Are there other options that can more efficiently deliver? In general, addressable is most exciting for marketers that don’t normally advertise on TV due to budget constraints or because there’s no efficient way to reach their niche audience, said Michael Bologna, head of GroupM’s Modi, a division created last month to focus on addressable advertising. Allstate, for example, ran an addressable campaign for its renters insurance, a product it had never promoted on TV because the universe of renters was too small to make a mass campaign worth the cost.

CMO TO-DO LIST Determine who you really want to reach. This is harder than it sounds because marketers have spent years limited by Nielsen’s age and gender demographics, said Tracey Scheppach, exec VP-innovations at Publicis Groupe’s SMGX. “”You’d be surprised that many brands don’t know or understand their true target.”” Get your data in order. This includes organizing internal customer databases and matching that with data from third-party providers like Experian and Acxiom. Change the creative process. Mr. Bologna predicts in the back half of the year more marketers will start creating specific ads tailored to target households. But that will require budgeting for additional creative.

Political Ads Will Soon Be Pinpointed To Individual Voters’ Homes

WASHINGTON (AP) — The days when political campaigns would try to make inroads with demographic groups such as soccer moms or white working-class voters are gone. Now, the operatives are targeting specific individuals.

And, in some places, they can reach those individuals directly through their televisions.

Welcome to Addressable TV, an emerging technology that allows advertisers — Senate hopefuls and insurance companies alike — to pay some broadcasters to pinpoint specific homes.

Advertisers have long bought ads knowing that only a fraction of the audience was likely to respond to them. Allowing campaigns — political or not — to finely hone their TV pitches to individuals could let them more efficiently spend their advertising dollars.

“With a traditional TV buy you can end up paying for a lot of eyeballs you don’t care about,” said Chauncey McLean, chief operating officer of the Analytics Media Group, an ad and data firm. “Addressable TV is a powerful tool for those that are equipped to use it. If you know who you want to talk to and what you want to say, you can be much more precise.”

Data geeks look at everything from voting histories to demographics, magazine subscriptions to credit scores, all in the hopes of identifying their target audience. The advertiser then hands over a list of targets and, without the viewer necessarily realizing it, the ads pop on when viewers sit down to watch a program if their broadcaster has the technology.

“This is the power of a 30-second television commercial with the precision of a piece of direct mail targeted to the individual household level,” said Paul Guyardo, chief revenue officer at DirecTV. “Never before have advertisers had that level of precision when it came to a 30-second commercial.”

The level of precision on televisions has long been a dream for political campaigns, which are decided by relatively small groups of voters. President Barack Obama’s campaign in 2012 experimented with it on a small scale, but too few homes were in broadcasting systems equipped to handle house-by-house decisions.

But earlier this year, DirecTV and Dish Network announced a partnership that would allow political clients to reach into about 20 million households by matching up customers’ identities with their satellite receiver, much like a telephone number rings at a specific handset.

At the same time, NBC and parent company Comcast are opening the door for advertisers to target specific households using video-on-demand services in 20 million more households. The communications giant is not yet ready to implement the targeting during live broadcasts, though.

And GroupM, which handles about one-third of the world’s ad buys, recently formed a division to handle such addressable advertising.

“We can send different commercials to different households based on what we know about these people. Instead of one message per state, it could be 12 messages per state,” said Michael Bologna, GroupM’s director of emerging communications and president of the newly formed Modi Media.

The broadcast companies are expected to be able to charge more per viewer than for other ad orders, but in exchange advertisers get a greater confidence that their message is finding its target. For instance, Allstate has used such an approach to weed out homeowners when it is pitching rental insurance on some broadcast systems.

Such specific political outreach has been possible for years as strategists buy, build and scour detailed data on each home to determine whether it is worth the time to knock on a door, to register a voter or to phone them to remind them to cast a ballot.

In recent years, Democrats have built an advantage on that data front.

The Republican National Committee has made catching up a priority, saying it would focus on data this year and leave advertising to outside groups. The RNC has announced one effort, branded Para Bellum Labs, to help the party build its list of likely supporters for races up and down the ballot.

The RNC has a lot of catching up to do. Obama’s two presidential campaigns had a better grasp of the data.

Last year, Democrats built on those abilities in Virginia’s gubernatorial contest. Strategists there used technology that pointed to specific individuals for a knock on the door, a call on the phone or an ad on their social networks.

It wasn’t immediately clear to those Virginia voters that they were getting more attention than their neighbors. But behind the scenes, Democratic candidate Terry McAuliffe’s advisers were going after just a few thousand voters. For instance, his strategists pinpointed 494,000 voters and flooded them with Facebook messages criticizing McAuliffe’s rival, Ken Cuccinelli.

“It’s a shift from identifying groups to identifying people,” said Andrew Bleeker, president and CEO of Bully Pulpit Interactive, the main firm advising McAuliffe on digital strategy.

But there are limits. Fewer than half of all households have a cable box or satellite receiver that allows the broadcasters to splice in ads on some televisions and not others.

The providers are limited to selling about two minutes of addressable advertising per hour. An hour-long show on a broadcast network has about 14 minutes of commercials. Cable varies, but they generally have about 17 minutes of commercials in a 60-minute slot.

Building the list of targeted voters is tough and sometimes costly.

And there’s no way of telling that the targeted viewer is the one who sees the ad. All that can be known is that it made its way into the households; federal laws prohibit the provider from telling the campaigns any details about specific viewers or their individual habits.

Yet this option, reaching maturity in time for November’s elections, could help campaigns and candidates more efficiently spend the hundreds of millions of dollars that are already being raised.