What marketers need to know about addressable TV and OLV

Today, billions of dollars are spent on TV advertising, and at the end of the day, for many demographics, there are still very valuable eyeballs worth targeting through traditional TV advertising.

But buying power is shifting toward the digital natives who access content when and how they want it. For example, the #1 show, “The Big Bang Theory,” has a median age of 55, while ratings for the 18-49 demographic dropped by 11 percent YoY, according to a recent article in The New York Times. That is a big drop-off of a key audience demographic.

As digital-first consumers age, their buying power increases and the balance of power begins to shift. Many of those now in the most coveted demographics identify as digital-first media consumers. Traditional TV is often not at the top of their list. While many big brands still utilize traditional TV as their primary means of driving awareness, it is important for marketers to understand the reach and opportunity presenting itself through Online Video (OLV) and addressable TV and how that aligns with their target audiences.

Is addressable TV the future?

One of the most intriguing ways brands can get in front of target audiences is through addressable TV. While not completely at scale yet, this approach provides advertisers with more targeting capabilities and the ability to more easily calculate ROI.

Through addressable TV, marketers can place their ads within certain segments of TV shows, even if they’re watched on-demand rather than live. Some cable companies allow for commercial slots usually held by local advertisers also to be purchased in this manner.

According to the Video Advertising Bureau (PDF), which cites Starcom MediaVest figures, Addressable TV reached nearly 50 million households in mid-2016.

Addressable TV also allows advertisers to overlay sophisticated targeting parameters such as household income, ethnicity, if the home owner has children, and if they lease a car. This level of targeting is sold at a premium, but it ensures advertisers are getting in front of the right people, instead of the general demographic targeting typically available to TV advertisers.

So why hasn’t addressable TV taken off? With cable companies advancing their technology at different speeds, there are no set standards across the industry. While many large buying agencies are taking the lead in setting standards, each cable company has different abilities based on their technology. As mentioned before, scale is also important, and addressable TV is something that can still only reach 12 percent of the US population.

How will online video shape video buying in the future?

If you fast forward 10 years, there is no doubt that OLV will consume a significant portion of advertising budgets. But if you ask many marketers today, they would tell you the adoption of OLV by advertisers has been slower than many expected. Budgets still sit with traditional TV.

If you look at one of the biggest players in the OLV market, YouTube, you will see it boasts better reach than most cable networks. In fact, according to YouTube (and even just YouTube on mobile), it reaches more 18- to 34-year-olds and 18- to 49-year-olds than any cable network.

Similar to Addressable TV, OLV offers marketers the ability to target users more finely, ensuring their money is being well spent. Many of the same elements marketers are accustomed to using to target display advertising can be applied to OLV. Today, many brands leverage YouTube’s advertising platform to deliver their brand message to vast audiences. But if you happen to be a brand spending tens of millions of dollars on TV advertising, why switch to buying OLV?

The first answer involves your audience. A large portion of key affluent demographics are digital natives. If you are pushing a product meant for a set of DINKs (dual income, no kids), TV may not be your starting point. Places like Hulu or YouTube may be. Many of these partners have advanced sets of analytical data available to help you understand not only if they can target your audience, but also give you information about their viewing habits that can help guide your advertising creative. From browsing history to credit profiles, you can ensure your high-end avocado toast startup is getting in front of 24-year-olds with disposable income.

One other often overlooked factor is that OLV ads are clickable. If you target the right audience and deliver the right message, your ad can be clicked, and the conversion process can start instantaneously. It seems trivial, but TV often depends on message recall, and most recently, a user picking up their phone and looking for more information. But OLV connects the dots to conversion more quickly.

OLV doesn’t just exist on platforms like YouTube and Hulu, though. Providing, rich, valuable video content on your website and social profiles is also a great tactic to utilize. It is also important to note that as your search strategy evolves and you begin looking to take up more real estate on search engine results pages (SERPs), video can play a large role in SERP domination.

What does the immediate future hold?

Traditional TV buying does and will keep hold of large budgets over the next few years, but as consumers shift toward on-demand viewing and the buying power shifts toward the current younger generations, brands and media buyers will have to adapt. While no medium can scale the way TV can, brands are getting smarter, and scale is not the only thing that matters.

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