Video Marketing

Addressable TV: What It Is and How It Works

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By Enric Llonch, on 26 October 2023

Addressable TV is a relatively new form of television advertising where advertisers are able to target video ads to specific households during regularly scheduled TV programs. Households are selectively segmented by geography, behavior, or demographics. They are then shown relevant ads while they are watching TV via on-demand, live-streaming, or linear viewing environments.

Put simply, this means that marketers can now deliver specific TV ads to specific people based on their interests, habits, and demographics. By blending granular data and panel-based research, brands can potentially reach more relevant audiences directly in their own living rooms, all through professionally produced TV content.

Because data is monitored in real-time, campaigns are easier to measure, so advertisers can adapt and optimize their campaigns according to results. Addressable TV advertising was responsible for 17% (56 billion dollars) of global TV ad revenue in 2022, and is expected to increase to 87 billion dollars by 2027.

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How Does Addressable TV Work?

Addressable TV works very differently from traditional TV advertising. Instead of selecting a network or program to advertise on, you select the household that you want to see your ads. You can choose your audience based on geographic location, demographics, or viewing habits. Your ads are then broadcast to your chosen households whenever they watch TV.

The key element behind the concept of addressable TV is data. Consumer data such as watched programs, owned devices, visited websites, and cross-device behavior is collected by marketers and used to build household profiles. These profiles are then shared with cable operators, OTT providers, and advertisers so that households can be addressed with specific ads according to their profile.

How Does Addressable TV Change Advertising?

Most advertisers agree that addressable TV is here to stay. What’s more, it seems likely that the trend will continue to grow, changing the face of TV advertising. The key reason for this is that addressable TV caters to increasing demand for personalized content. It is also growing in popularity because it helps advertisers reduce ad waste and improve performance by only showing ads to targeted, relevant households.

This advertising method isn’t set to replace traditional TV advertising any time soon, but it is being used as an advanced way to buy target audiences across the linear TV and OTT/CTV landscape. And the number of platforms that could house addressable ads is predicted to rise steadily over the next few years. This will further expand the reach of addressable TV and help marketers improve brand relevance and targeting strategies.

The Benefits of Addressable TV Advertising

Addressable TV advertising offers several advantages for advertisers looking to reach their target audience more effectively. First and foremost, it allows for precise audience targeting, which allows brands to deliver tailored messages to specific demographics in specific geographic areas. This results in a higher ROI as ad spend is focused on viewers who are more likely to convert.

Additionally, addressable TV advertising provides detailed data, which offers insights into ad performance and viewer engagement. This data-driven approach helps advertisers make more informed decisions and optimize campaigns in real-time for better results.

Addressable TV advertising allows brands to use their marketing budgets more efficiently. By delivering personalized ads to the right viewers at the right time, brands can reduce ad fatigue, improve overall viewing experience, and build connection with their audience.

How to Successfully Advertise on Addressable TV

If you are considering advertising on addressable TV, then the first step is making sure you build a solid strategy. You also need to make sure the format is a good fit for your brand. Consider the following.

Establish Your Objectives

The first step is analyzing your goals and objectives. This will help you determine if addressable TV is the best solution for your brand.

What will be the goal of your addressable TV ads? To attract potential leads, cross-sell, or upsell? What’s your maximum cost per acquisition?

Define Your Target Audience

The next step is defining your target audience.

Do you already know the specific demographics of your typical viewer? Do you have the names and addresses of the audience you're trying to reach? Are you aware of what your target audience watches and the devices they typically use? Consider third-party data providers if you don't have a defined, sizeable audience to target.

Define Your Creative Assets

The next thing to consider is your creative assets. In other words, the content you will be using in your addressable TV ads to convey your message.

There are a number of aspects to consider here:

  • Your ads should have a widescreen aspect ratio of 16:9
  • Your videos must have a bitrate of at least 5,000 kbps
  • You should create both 15 and 30-second ads
  • Make sure you include a CTA in your ads

Plan Your Campaign

The campaign you create will depend on the size of your audience, and the frequency and duration of your ads. It will also depend on the parameters of the platform you choose. For example, many DSPs offer incredibly detailed targeting, including geography, browser type, device, operating system, and demographic data.

Communicate with MSOs

The next step is sending your creative assets to the MSOs for targeting. This is the cable operator you will be broadcasting your content through. This will usually be done through your data provider.

The current addressable TV ecosystem is made up of multiple-system operators (MSOs), including Cablevision, Charter, Comcast, DirecTV/AT&T Adworks, and Dish. Collectively, they make up an estimated 50 million households that are available for targeting.

Measure Your Performance

Once your addressable TV campaigns are up and running, you need to measure the performance of your ads. This will help you determine how effective your campaign has been so that you can make adjustments before broadcasting your next ad. It’s best to wait at least 30 days after a campaign has ended to give viewers enough time to act.

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Enric Llonch