About 42% of US homes are now able to receive 'addressable advertising' – TV ads custom-targeted at individual homes thanks to one of a variety of return-path TV systems.
But how much of the multi-billion-dollar TV advertising industry could be funneled through that channel in the years ahead.
It’s early days, but ad agency GroupM’s UK managing director, Jakob Nielsen, told Beet.tv in London recently that his group is taking the leap.
“You are changing how you are thinking from the past – therefore, it will take some time,” he cautioned. “But, if you look across all our clients, we think 30% to 50% of all TV could eventually – not tomorrow – be addressable TV.
“You will have some clients having 60% of their total mix, in five or 10 years, being addressable, other clients being 20%," he continued.
Nielsen notes that addressability is reaching a certain audience, where programmatic is trying to create the efficiencies around it and the process is evolving quickly. Additionally, Nielsen asserts that advertisers are increasingly interested in engaging in the addressable TV space with clients - with the automobile industry as a good example - as clients are beginning to understand how relevant this is.
"We are quite far away from reaching each households and in the household there are many different people and we can not target individuals in the home as yet," Nielsen said. "But, It is crucial that creative agencies and the creative world are able to follow that audience or in future companies may budget with more nimble partners."
Nielsen says Europe is farther behind the US on roll-out, but dominant UK pay-TV provider Sky is already an early leader with its so-called AdSmart technology, pushing multiple alternative ads to consumers’ set-top boxes for potential decisioning and play-out during standard ad moments.
“You have the top of the funnel, but all of a sudden TV can start going in to the mid and lower parts of the funnel, that they weren’t part of in the past,” he added.
“AdSmart, in the beginning, 70 to 80% of their advertisers came from non-traditional TV advertisers.
The beauty of the idea is two-fold. First, it is opening up TV advertising to smaller, new advertisers. Second, it means those advertisers can target people close to the point of purchase, not just spend money on raising initial awareness.
“They were able to reach a BMW dealership which wanted to sell a BMW in Edinburgh. That puts a completely new perspective on what you can do with TV.”