Prior to people ever hearing about COVID-19, many large powerful trends and forces had emerged that were pushing the industry towards addressable television. To be clear, the technology to power addressable television has existed for at least 20 years—and some might argue even longer than that. With the rise of the two-way cable infrastructure and start-ups like VisibleWorld, Invidi, and ACTV, technology hasn’t been the blocker. Addressable television takes more than ad-switching technology to succeed, it takes cooperation between the different layers of the TV advertising ecosystem. Could the current pandemic accelerate this cooperation and help push addressable television over the tipping point?
Arguably already the fastest-evolving space in advertising, TV has faced drastic changes in just the last few months. eMarketer forecasts that U.S. consumers will spend an additional 229 minutes of TV watching per day this year in light of shelter-in-place, forecasting digital video alone to grow nearly 20%. Yet despite this massive surge supply, TV ad spend will decline by up to 29% year-over-year in the first half of 2020 due to a massive drop in advertiser demand. The Upfronts, which are now split into two negotiation sessions happening later this year, may place another $1.5 billion in ad spend at risk by the third quarter.
It often takes a crisis or threat to push an industry to make dramatic changes. Will the economic shift caused by the pandemic finally be enough to make the entire TV ecosystem cooperate and embrace addressable TV?
Approaching the tipping point
While COVID-19 has placed new financial pressure on the TV industry, other large forces were already at play and had brought the industry to the precipice of the tipping point.
The rise of the advertising heavyweights of Google, Facebook, and Amazon were already putting large pressures onto TV advertising. Marketers have embraced the ability of these platforms to target and even retarget advertising with incredible precision and measure the ROI of marketers’ spend. Even before COVID-19 arrived, TV was already investing in new and more complete viewing sets, richer targeting data than A18-49, and attribution platforms and metrics. TV knew it had to up its game to compete with the data-rich digital giants.
The rapid growth of streaming platforms, MVPDs, and CTV applications were also putting enormous pressures on the MVPDs’ video subscription revenue. With new alternatives to a cable subscription available, the industry was seeing consumers cancel or decrease their video subscriptions (cord-cutters and cord-shavers) and for young adults it was becoming increasingly hard to get them to subscribe at all (cord-nevers). While this pressure hits the MVPDs, it also affects their ad-supported cable network partners. For these cable networks, losing subscribers is a double whammy—less subscription revenue and also less ad impressions to sell. Put simply, this severe economic pressure meant that the old ways of doing business weren’t future-proof. The MVPDs and the cable networks needed to find ways to work together to drive revenue growth.
MVPDs had also begun cooperating amongst themselves to drive innovation in TV advertising. In 2019, Comcast, Charter, and Cox launched an “On Addressability” initiative aimed at driving addressable TV from local cable avails into national media sold by the programmers. NCC Media, a long-time cooperation between the MVPDs, was renamed and reimagined as Ampersand, a media sales and technology platform with a primary focus on addressable TV. Xandr had been folded into WarnerMedia, bringing it’s addressable TV platform even closer to WarnerMedia’s national inventory.
Smart TV manufacturers like VIZIO also entered the addressable game. VIZIO launched its Project OAR initiative which provides a fully open technical standard for implementing addressable video advertising. With Project OAR, we’re seeing cooperation amongst OEMs, MVPDs, programmers, and broadcast stations, driving addressable TV standards forward faster.
The other area that has recently changed which is driving addressability forward is the availability of large linear TV viewing data sets from both the smart TV-makers and the MVPDs. For the market to fully embrace addressable TV, it has to be properly measured in the context of the marketer’s complete TV buy. For this to happen, new and richer data sets are vital, so the reach and frequency of TV can be measured regardless of the delivery path to the consumer. With the right data, buyers and sellers can measure how addressable TV complements non-addressable linear TV. Small measurement sample approaches and ratings points need to make way for much larger data sets that can measure the new TV landscape, which includes a mix of linear TV, addressable linear, VOD, and streaming across a multitude of devices.
All of these initiatives are showing that the industry is ready to embrace cooperation—the vital and missing ingredient that traditionally held up the growth of addressable TV. Is the massive economic pressure of COVID-19 enough to push these efforts forward even faster, and push addressable TV over the tipping point?
Why we need addressable TV now
In a recession, every marketing dollar will get heightened scrutiny. This will drive even more TV advertisers to transact on data-driven audiences and proving ROI will be critical. Marketers would be smart to follow in the footsteps of forward-thinking companies like Burger King, and reset with accountable measurement and targeting. Through addressable, buyers can be selective in a cautious time, and most importantly, make a strong, data-based case for ROI in making buys. Sellers who embrace addressability will be providing buyers with the flexibility, targeting, and measurement that will be table stakes in the new reality we’re living in. Despite all the challenges TV faces, the fact remains that television advertising works, and sellers can. make it work even harder by combining the inherent strengths of TV with targeting and measurement on par with the digital giants.
Here are some ideas for both buyers and sellers as we prepare for marketers to reenter or ramp up TV spend:
- Prepare for reentry with precision—Many brands paused advertising this spring and reevaluated their strategy. Be adequately prepared to return to the market with precision by onboarding first-party data and getting match counts from addressable TV platforms to seize your audience.
- Use measurement to find audiences—As brands ramp marketing back up, we’ll be in an economic slowdown. Addressable measurement will be the key to finding audiences as viewer habits change and budgets remain tight.
- Improve accountability for sellers—Addressable provides accountability by measuring how campaigns are driving business outcomes. By leveraging addressable’s ability to measure lift between exposed and unexposed households, the sell-side can boost advertiser confidence to return to the market and tout its capability to realize the buyer’s desired KPIs.
All of this becomes even higher stakes now that the country is partially reopening. As stay-at-home orders lift in some regions of the U.S., addressable TV brings the superior measurement and granular targeting capabilities needed to tailor messages that reflect this staggered patchwork.
Together we are stronger
My advice to all TV constituents is to embrace the cooperation necessary to launch addressable TV at scale across streaming, VOD, and especially linear TV. The industry needs to lock arms and finally figure this out—together. Whether this moment in time truly enables addressable TV to cross the tipping point, the next generation of addressable TV advertising is happening now. What we do know however is that when the industry works together towards universal addressable adoption, everyone wins.