Addressable Television: The Holy Grail of Personalization
But addressable changes that. Suddenly, TV isn’t just upper-funnel awareness. Now it can be used to target desirable buyers. That’s going to change the way marketers have been doing business since the dawn of television. Verizon Media is active in addressable television, reaching 4.6 million U.S. homes directly over its Fios network. And partnerships with Hulu, Roku, and other platforms give Verizon addressable access to 80 million more.
“I think as we see more and more television being viewed in ways that addressable advertising can be delivered to those televisions, the more we’re going to see the way marketers use television evolve. Because historically television as an upper funnel tactic made sense because you couldn’t measure it, you couldn’t precisely target it. It had to be upper funnel just by definition of what it was capable of doing,” Hurwitz says. “Now addressable is capable of performing some mid-funnel functions that digital media has been serving. So I think going forward, marketers are going to begin experimenting with new upper funnel tactics and moving TV to mid-funnel and really jostling around the order in which they’re exposing their target customers to their messaging. TV doesn’t just have to be this top of the funnel anymore.”
Taking that one step further, addressable provides data that traditional TV exposure doesn’t, and that data is useful for more than just campaign reporting. Advertisers are using addressable ads as a sort of large-scale A/B test. They run promising spots over connected platforms and survey the results, seeing which ads gave the biggest boost to whatever metric they’re focusing on. Then they take what they have learned to their linear campaigns. It’s an innovation no one saw coming, but that naturally grew out of addressable adoption.
“It didn’t start with the packaged good advertisers saying, ‘Hey, let’s try this to see if we can get some data insights,’” Hurwitz says. “It was the folks who were already focused on precision who started this trend and now, I suppose in part because of communication within agencies and maybe in part because of our communication, we’re seeing a real rise in that use of addressable TV.”
For customers interested in that type of reporting, Verizon Media likes to hype the value of its Fios network. Satellite platforms delivering to set-top boxes can’t return performance data as quickly as fiber can, Hurwitz notes, so he boasts that he can get data back to clients faster.
Project OAR Prepares to Go Live
Addressable is usually associated with OTT services and on-demand playback, but live linear is getting addressable ads as well. But first, the area needs a broadly supported industry standard, and that’s where Project OAR comes in. OAR stands for “open addressable ready,” and the project was started in early 2019 by TV maker Vizio and Inscape, a subsidiary Vizio acquired and renamed in 2015 that provides automatic content recognition (ACR) services.
Prior to Project OAR, multiple companies had tried and failed at creating streaming-like addressable advertising for linear because they didn’t understand the market, explains Zeev Neumeier (right), SVP of product at Inscape. His company sells data to the TV industry, so it had a front-row seat on the attempts and could see that the companies failed because they tried to impose a way of working on broadcasters and TV ad sales.
Project OAR will let the networks sell their addressable inventory directly. It started as a way to bring scale to the process of buying ads on connected TVs while simplifying transactions: Would it be possible to create a technology that worked across TVs from a variety of original equipment makers (OEMs)? And could it create a flexible system that didn’t force all the various stakeholders into one rigid way of working? Once Vizio started talking the idea up, it found that getting buy-in was surprisingly easy. The time was right, and the industry saw that having an open standard would help drive the area.
Project OAR made its debut announcement in March 2019, with nine companies on board: Disney, NBCUniversal, CBS, Discovery, Turner, Hearst, AMC, FreeWheel, and Xandr. Fox Corp. signed on in June. Note that Vizio is the only OEM in the group, a large omission, but perhaps one that won’t last for long. Once the OAR standard is launched, Neumeier expects others to jump on. It will be an open spec, and anyone will be allowed to freely use it. Project OAR is made up of two groups: a steering committee that focuses on the technical specs for the actual requirements and an agency advisory committee that focuses on what the measurement specs should look like and what measurement solutions it should offer. Publicis, Omnicom Group, GroupM, IPG/Magna, Dentsu Aegis Network, Havas, and Horizon Media are all part of the agency advisory committee.
Project OAR will bring addressable advertising to over-the-air broadcasters, as well as cable and satellite TV, but it requires an internet-connected TV to operate. It its workflow, advertisers select one version of their creative as the default that goes out to all viewers, but they can designate other versions that go out to selected households. So a carmaker might have one ad for a sedan that goes out to everyone, but households that are in the market for a pickup will see a different version. In that case, the internet-connected TV downloads the alternate ad ahead of time and runs it instead of the default ad at the appropriate break. Advertisers can have as many creatives as they want running in the same slot. They could even specify different ads for different regions, keeping pickup ads out of New York City, for example, where pickups rarely sell. ACR technology ensures that ads download ahead of time and play when they’re supposed to. The standard doesn’t require Inscape ACR, Neumeier points out.
Project OAR will also bring household-level frequency capping to linear. If a household has seen an ad the maximum number of times designated by the advertiser, the operator can put that ad slot on the market and show a different ad in the next commercial break. If an ad gets shown too many times, it starts to have negative value, Neumeier notes.
Sometime after its launch—likely 3–5 years after—the standard will grow to include a new option called “split avails.” This means that a 30-second spot could be sold as two 15-second spots, for example. Neumeier sees no rush to add this feature, as he wants the industry to have plenty of time to get used to the standard before it builds on it. Because the standard needs to be flexible, software installed on supported TVs will be able to be updated.
With this solution, TV isn’t quite the lower-funnel medium that it is with addressable streamed ads. The advertiser still reaches a broad national audience, but the creative can be tailored for greater relevancy.
The engineers behind Project OAR demoed a prototype of the offering to the full group in April 2019, and they’re on target to have a live linear offering ready to go by early 2020. At the start, it will only work with Vizio’s base of 10–12 million connected TVs in the U.S.
The Future of TV Advertising
Industry sources suggest that addressable is poised for hockey stick growth, meaning it’s about to take off in a big way, and Comscore’s Worthem says we’re nearly at that point. Besides the rise in activity his company sees in the area, he notes strong growth across addressable and premium video advertising products.
One reason for addressable’s growth is that the ability to run campaigns at scale is becoming greater, and scale is key. “There are more companies building device graphs to be able to identify connections more reliably to help ensure accuracy,” Worthem says. “More commonly, buyers want to see a source of truth such as a subscriber base behind a platform. Although PII [personally identifiable information] data is never revealed or used, a subscriber base allows for third-party data matching through trusted sources such as Experian or Neustar.”
The challenges are big but not insurmountable, and the rewards are worth it. As viewers stream more of their video, as standards take shape, and as new features bring flexibility and trust to the area, addressable TV’s growth is inevitable. The only question is how much of the TV ad market it will take over.
[This article appears in the September 2019 issue of Streaming Media Magazine as "Addressable Television: The Holy Grail of Personalization."]
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