Advertising has come a long way since the FCC first started issuing commercial television licenses in the 1940’s. Back then, and for decades after, viewers would see the same exact ads as everyone else during commercial breaks. Although businesses were reaching mass audiences, there was also certain inefficiency in the system as brands could not target their ads.

Addressing Your Audience with Addressable TV AdvertisingThen came around the Internet, changing the landscape of advertising with its ability to target viewers and optimize ad dollars. No longer would the TV industry be just a mass medium. Rather, television would also have to learn how to pursue those customers most likely to buy particular products. Although many think television advertising is dead, TV ads can also target audiences using new strategies and technologies. In the terms of marketing, television advertising is still very much alive and kicking.

Addressable TV Advertising Offers Focused and Targeted Ads

For a long time marketing executives have looked for a way to target TV commercials for specific populations, rather than broadcasting ads to the entire television universe. Targeted commercials would means only cat owners would see cat food ads and hypertension drugs would only be shown to those with high blood pressure. Addressable television ads would allow TV to combine its mass appeal while targeting niche customer groups.

Fortunately this has been made possible with new technologies implanted in digital set-top boxes. Such technology has the added benefit of not requiring consumers to change their behaviour in any way, but rather calling on cable operators and media salespeople to adjust. However, a few hurdles continue to hinder addressable advertising’s inevitable popularity. For example, privacy issues, business model changes, and cost concerns have all combined to slow the roll-out of TV’s targeted ads.

The Marketer’s Perspective: Addressability is All About Targeting

A marketer’s first concern is to develop clearly defined and distinct consumer profiles that can be targeted with specific ads. A cable multiservice operator (MSO) or satellite provider will then use special software to identify the set-top boxes owned by each profile. The numbers for these boxes are sent to a trusted third party company, such as Experian or Axciom, which has files on the household data and demographics. This data is then matched with data from a marketing or transactions database.

In this way advertisers can start an addressable TV ad campaign by overlaying various types of data to ensure advertisements are targeted to specific consumer profiles. Each household is given a unique identifying number that can be targeted with customized ads. Advertisers can then create targeted messages for each profile segment. Each segment usually gets two to five messages – as bandwith issues prevent sending more.

Inventory and Logistics: A Cable Operator’s Approach to Addressability

In traditional TV advertising a cable operator has just two minutes each hour to sell local ads (as compared to national advertisements). The cable operator knows it’s time to use a local ad when a special cue is picked up by his equipment. The cue is inserted by the cable network, however it is the cable operator’s equipment that registers when and what ad should be played. If a general market ad is to be played the cable operator’s equipment goes on to an ad server and picks an ad from the inventory to play. However, if the cable operator decides to play an addressable ad, a more complicated scheme is followed.

If an addressable ad is to be played, special software developed by Visible World or INVIDI cuts into the video stream once it’s time to play the advertisement. The viewer is then switched from one stream of content, the show they were watching, to a new stream – the advertisement. After the ad the viewer is switched back to the old stream without noticing a thing – it is a seamless process.