More precise on screen: Addressable TV

Classic, linear television is still the highest-revenue advertising channel around today. To keep it that way, however, TV stations are going to have to make a move. This is documented by current figures from the Zenith report entitled “Advertising Expenditure Forecast,” which found that growth in expenditures for TV advertising, at 2.2 percent a year in the next two years, is considerably lower than for other media forms. The big winners at the moment are search and social media ads, which will account for around two-thirds of total growth by 2020.

The reasons for this are easy to explain: In the case of advertising on search engines and social media, advertisers are making increasing use of intelligent technologies to improve targeting and conversion. Essentially, the digital platforms are continuing to evolve dynamically, offering advertisers ever-new opportunities. Linear television, by contrast, is considerably more static and less innovative. The optimal advertising block for a campaign is still often determined manually and requires several days’ lead time. With mechanisms such as these, precise, data-driven targeting – or, for that matter, personalization – is impossible. In digital advertising, by contrast, it is automated and occurs in real time.

And then there is also the question of general shifts in consumer behavior. The omnipresent availability of moving images on all devices, and particularly streaming services such as Netflix, with all its benefits for users, are creating a loss in range and viewership on classical TV. Today’s consumers, particularly those in the sought-after, younger target groups, want to decide for themselves what they will watch, on which devices and in which location.

Anyone who nevertheless remains loyal to linear TV, however, is highly likely to have a smartphone within reach, as a Facebook study on the “second screen” phenomenon shows. This development is also relevant for advertisers, because viewers are only too happy to reach for the mobile device of their choice during advertising blocks. Non-personalized advertising can be expected to amplify this behavior further.

Addressable TV: programmatic for the living room

The pressure on classic TV stations will continue to mount, that much seems clear. If they want to remain the address of choice for advertisers’ budgets, they have to continue to evolve. In addition to content-related aspects, the main emphasis is on the transfer of modern AdTech of the kind used in programmatic advertising.

The first steps have already been taken, but the road ahead is still a long one. Although TV ads can already be booked automatically on linear television, genuine programmatic advertising still lacks a key ingredient in this simple combination of Sell- Side Platform (SSP) and Demand-Side Platform (DSP): data.

Only the data provided by AGF Arbeitsgemeinschaft Videoforschung (a working group on video research) are available at the moment, but these data permit nothing more than a rough clustering. Enrichment with first-, second- and third-party data, on the other hand – which makes data-based marketing really interesting to begin with – is not yet possible on a broad basis. Given the technological limitations to linear television on classic TV sets, this hurdle is likely to continue to stand in the way for quite some time to come. These devices neither offer the option of data-based personalization, nor do they permit measurement vie return channel.

Waiting for the smart TV

TV advertisements specially tailored to individual persons does exist; to date, though, it has been confined to special devices: the so-called “smart TV”. This new generation of devices that can interact directly with the Internet is currently undergoing initial test campaigns in Germany. In this connection, SevenOne Media and Pilot have already broadcast the first addressable TV spots for brands such as Hochland, Schwartau and Vamos Schuhe. Technologically speaking, the solution is based on the Hybrid Broadcast Broadband TV (HbbTV) smart TV standard. In contrast to IPTV, HbbTV only downloads online content via the Internet connection, but not the television content itself.

In Germany, one in three households is said to already have an Internet-ready television set on hand. But there are other, competing technologies alongside HbbTV. In addition, the HbbTV standard itself is still undergoing further development. At the moment, the first devices fitted with HbbTV version 2.0 are now appearing on the market in Germany. These allow, among other things, UHD streaming, graphic animations and time-synchronized applications on tablets and smartphones. The apps in particular are turning once-isolated TV reception into an interactive, hands-on experience. This, in turn, is not only interesting for broadcasters and viewers, but it also brings a new data stream for Addressable TV.

The bottom line:

Mass-audience-compatible advertising for classical TV is becoming obsolete And Addressable TV is coming. This is why advertisers need to immediately begin thinking about the new form of TV spots. In the end, highly personalized advertising is a great opportunity only if it meets the requirements of the people it targets. That is why rethinking is needed now.