Connected TVs Alter Face and Path of Addressable Advertising

04/03/2015 03:41 pm ET | Updated Jun 01, 2015

TV ad addressability has proven elusive over the years, despite its obvious potential to increase TV advertising's impact, efficiency and effectiveness. Now a 10+ year conversation, addressable ads offer advertisers a way to target households that are theoretically in the market for the products they sell, to fully optimize their TV media spend. It's been a long and winding road, for sure.

Addressability's potential lies in the ability to successfully map cable and satellite TV companies' subscriber household databases to a particular brand's ideal audience segment. Viewer data is collected from the household's set top box, and allows advertisers to select homes that match and target them with their brand or product ads (e.g., cars, life insurance, dog food) thereby, eliminating waste. The main challenge has been finding a turnkey approach, that can be delivered on a national scale, across cable and satellite systems.

The technology platforms that have led the way in bringing addressability to brands - i.e., Visible World and Invidi - have worked hard over the years to stitch together a national solution, but they've been challenged by the technical complexity of integrating their technologies across cable and satellite systems in order to create a nationwide platform. As such, scalability has been a significant stumbling block, as have limits to the level of audience targeting current platforms can achieve and how far brands can therefore go to optimize TV media spends, even in a single geography.

Major developments in both TV viewing and TV technologies over the past 12 months, though, could change all that. There are strong signs that TV ad targeting is about to really heat up. First, is the heavy adoption and growing use of IP-enabled (READ: "connected") TVs - like, Samsung, Philips; over-the-top ("OTT") devices - like, Roku, Amazon FireTV; and gaming consoles - like, PlayStation and Xbox - to watch premium video content on a TV screen. Per eMarketer, 113 million Americans streamed TV shows regularly on a connected TV in 2014, and according to FreeWheel the average broadband home spent 22% of their total hourly viewing per week streaming digital video to a connected TV.

In addition, right alongside the observed change in consumer viewing behavior, premium video channels like HBO, ESPN, CBS and others are leaving the cable "bundle" to strike out on their own, and web TV providers like Hulu, Netflix and Amazon are expanding their video offerings, all to take full advantage of the opportunity that connected TV provides to grow their user/subscriber base.

Put simply, the growing popularity of IP-delivered video content watched on the TV screen, along with growth in the type and amount of video that can be streamed on a connected device, is creating a whole new context for ad targeting, too. Now, in addition to the addressable ad opportunities that traditional cable and satellite TV service providers offer, brands can take advantage of the real-time data collection and matching capabilities that come with other digital platforms - e.g., desktop and mobile - to target TV audiences.

TV as both a medium and a platform for delivering high quality video content will no doubt remain (and perhaps become even more) fragmented. Regardless, the trend toward IP-delivered TV means that a growing portion of viewers can be targeted in a more precise, simple and scalable way, and that bodes well for the future of ad targeting.

Ad serving platforms like FreeWheel are already serving video ads across all screens including TVs. Streamed video viewing on a connected television can be delivered across any IP-enabled platform regardless of the pay TV service, and provides the ability to collect real time behavior, and quickly turn dynamic data into targeted, differentiated messaging across homes. This is in stark contrast with what addressable TV advertising technologies have been able to accomplish thus far - which unfortunately require that a brand strike separate deals with each cable and satellite provider in order to achieve national reach.

An advertising strategy that includes the additional targeting capabilities of connected TV means brands are finally in a position to jump well beyond the benefits of current addressability options, to a new level of optimization and the higher efficiency that they seek. Now, that's exciting.