Addressing Addressable TV

by Maria Ramos, Guest Contributor, All-len-All –

The demise of broadcast TV has been eagerly predicted by starry-eyed pundits for a couple of decades now. After all, so the argument goes, time-shifting technology and streaming, online content seem poised to deliver a death-blow to the traditional advertising model of television. What these prognostications fail to take into account is that TV networks and other entities with a vested interest in the success of the medium will take active measures to promote its well-being. By leveraging the best practices of online marketing firms and Internet-based developments, the television industry has created a new model called addressable advertising.

addressable advertisingThe way it works is that ads are targeted towards specific groups or individuals, just as online ads currently are. Consumers of most products tend to fall within certain demographic categories. After all, the people who enjoy frequenting fast-food restaurants may not be the same individuals who tend to purchase luxury automobiles. By using data gathered by cable and satellite TV providers, marketing companies and their clients can determine which households are likely to be interested in buying whatever product or service is being advertised. Relevant commercials can then be broadcast to only those viewers instead of sending them indiscriminately to everyone who’s watching a particular channel at any given time.

These advances are made possible by the growing sophistication of TV set-top boxes. It would have been unfeasible, back in the days of I Love Lucy and The Andy Griffith Show, to beam advertisements to particular TV sets. Today, however, most of U.S. homes contain the necessary equipment to allow advertisers to tailor their messages to the viewing and purchasing habits of the residents, and this fraction is expected to grow significantly in the upcoming years. Early studies indicate that addressable advertising has a better ROI than traditional television advertising.

addressable advertising 2There’s a lot to consider when trying to craft personally relevant commercials to capture the imaginations of particular types of viewers. Specialized companies, such as Eyeview, offer to help their clients make the most of the new capabilities of addressable television advertising. In some cases, information about families can be collected from independent sources and then integrated with the data available from TV providers to enhance the precision of marketing efforts. For example, Apple filed a patent earlier this year for a system that would correlate people’s bank balances with the products they could afford to buy and deliver ads accordingly.

This type of operation raises privacy concerns because data-gathering enterprises would be able to collect and leverage an unprecedented amount of personal details from TV viewers. As addressable ads become more prevalent, we can expect a growing demand for regulations and laws to safeguard individuals from possible security breaches and unauthorized selling of their data. Lobbying efforts by big corporations may render any such political activity ineffective or counterproductive though.

Speaking of politics, it is a realm that may see growing usage of addressable advertising. Much money and effort is currently spent on trying to convince voters who are on the fence to lean one way or the other in upcoming elections. By focusing on the different issues that are important to each citizen, campaign managers can increase the impact of their advertising dollars. Satellite providers, including Dish Network and DirecTV, have in fact already created a new platform to allow Republican and Democratic candidates to effectively send addressable advertising to potential voters’ houses.

Despite the growth of new forms of media consumption, television still remains the gold standard in terms of the breadth of its appeal and the number of people who watch it. By harnessing the power of addressable advertising, vendors and retailers can drive demand for their products in a way that was not hitherto possible. The market for this type of advertising is small but expanding rapidly, and in a decade or so, most commercials might be produced and delivered using this new paradigm.

 

maria ramos

Maria is a freelance writer currently living in Chicago. She has a Bachelor of Arts degree in English from the University of Illinois at Chicago with a minor in Communication. She blogs about environmentally friendly tips, technological advancements, and healthy active lifestyles. You can follow her on Twitter @MariaRamos1889