Parks Associates Blog

Friday, February 19, 2010

Coming to a TV Near You: Addressable TV Advertising?

I firmly believe once household-level addressability is available on a meaningful scale, advertisers and media agencies will quickly shift traditional broadcast and cable TV media budgets to the advanced advertising solution. This opinion comes from both a research and practical perspective (based on my current work and previous experience as a media planner/buyer).

And, yes, I remain bullish in spite of the technical and planning/buying challenges…but that’s a whole other discussion.

It’s a no brainer. If given a choice, why would an advertiser continue to buy a mass TV audience (albeit targeted based on Nielsen demographics) when they can address a specific TV audience who is more likely to purchase a product/service and less likely to avoid the commercial? More importantly, why would an advertiser turn down the opportunity to improve the cost efficiency of a TV advertising campaign?

I've been following Starcom MediaVest and Comcast's addressability trials. The findings of their second addressable TV trial include:

· Homes receiving addressable TV ads tuned away 32% less of the time than non-targeted TV households
· Addressable TV campaigns were 65% more cost efficient than traditional TV ad campaigns

These recent findings echo their 2006 addressability trial results, which found:
· Homes receiving addressable advertising tuned away 38% less of the time than non-addressable households
· Addressable TV campaigns were 56% more cost efficient than non-addressable TV ads

Our survey of top-level U.S. ad and media executives, Advertising Outlook: Shifting Dollars, found a majority would pay a premium for addressable TV ads, with almost 40% willing to pay upwards of 20% more over traditional TV ad costs.

While I take an optimistic position, do I think 2010 or even 2011 will be the year of household-level addressability? No, I don’t. At this time, key advanced TV advertising investors are still in the technology roll out and testing phase. However, once household-level addressability scales to at least one major digital TV service provider, I predict addressable TV ad dollars will instantly cannibalize traditional broadcast and cable TV ad expenditures.

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