When to use addressable TV
Addressable TV is a fantastic innovation in the broadcast space, allowing advertisers to serve a more personalised advert to the right person, at the right time, no matter what channel or platform they are viewing on.
Sky were trail blazers in the ad tech space, creating Sky AdSmart in 2014 which was the first addressable product available in the UK, and they have continued to improve the linear addressable product ever since, allowing advertisers to overlay their ads on top of the linear feed when specific households were watching. Since then, there have been numerous products released across the broadcast space which allow advertisers to serve addressable adverts to households in the UK, whether the viewer is watching on ITVX, Channel 4 Streaming, Sky On Demand or platforms such as Amazon and Netflix.
One major selling point for using addressable products is to hit “light TV viewers” - those who don’t watch much linear TV. Talking to these viewers is very important to drive incremental reach, and when done correctly, can improve cost efficiencies for advertisers, ensuring that they are speaking to as many of their target audience as possible, for the lowest cost possible.
At Media Agency Group, we have a fantastic array of clients ranging from multi national tech businesses, through to local advertisers and everything in between, and this gave us the perfect opportunity to understand exactly when addressable products should be activated to maximise overall campaign effectiveness.
What we found when working with our clients was eye opening, and a far cry from what many of the major broadcasters are pushing out to the market. Whilst we know that c. 30% of eye balls are migrating to consuming TV predominantly via streaming services, that certainly does not mean that it is cost effective to push 30% of your TV budget onto BVOD services - unless you are hitting the point of diminishing returns (60-80% reach) for your target audience, addressable and VOD will actually be 3-5x more expensive per cover point when compared to a continued investment into linear.
In the measurement studies that we conducted, once an advertiser had hit 60% cover, channels such as AdSmart and/or broadcaster VOD come into their own and deliver cost effective reach - but it is worth remembering that most brands would need to spend far north £500,000 in a 6-12 week period to achieve that level of cover. With any brands achieving less than 60% reach, it proved to be an extremely expensive exercise to add incremental reach using AdSmart/VOD and we found that these brands would be better served continuing to invest in linear TV.
At this point, it is worth remembering that VOD and addressable services are bought on an impression-level basis, meaning you get exactly what you pay for; where as on linear TV, you only pay for the people within your buying audience who see your advert, meaning everyone else who watches is essentially free! This is important when weighing up whether linear or addressable is right for you. Yes, linear viewing is slowly declining, meaning that the integration of streaming and addressable services is necessary, but certainly not to the extent that the broadcasters are oftentimes pushing out to the market. You can still reach 80% of all adults through linear TV, and at a very low cost per cover point!
Both VOD and addressable are fantastic propositions in their own right, and allow advertisers to make use of a wealth of data to target specific households with specific messages with minimal wastage. When used correctly, these products are a massive value-add. If you have a regionalised business, they are extremely useful. If you want to speak to only the uber wealthy, they are extremely useful. And if you want to use dynamic creative, they are extremely useful. But if maximising reach is your end goal, and your target audience isn’t super niche, caution is advised due to substantially higher costs than linear TV.
So what should advertisers take away from this? How can marketeers know whether using addressable and VOD is right for them? Use this handy check list below:
Is my target audience so niche that any wastage would actually be a waste of ad-spend? If so, use VOD and addressable. If not, start with linear!
Has my campaign achieved 60% cover for my target audience? If so, use VOD and addressable. If not, continue to invest in linear!
Has my agency invested my ad spend into VOD and addressable before my brand has achieved 60% cover? If yes, speak to Media Agency Group today!