As More Digital Media Run Video, Addressable TV Is Nearer Than Ever to Being a Reality. But There Are Still Hurdles
By Brian Steinberg
Published: February 15, 2010
NEW YORK (AdAge.com) -- Marketers have long dreamed of a day when they can stop blasting ads out to the world at large, and instead send TV commercials for Pampers, Chevrolet and Barbie dolls only to those people in the market for diapers, a new car or a child's toy.
Though so-called addressable advertising has been proclaimed for years as their holy grail, advertisers have continued to face a host of technology issues and resistance against moving away from older ways of doing business. Now, however, as more digital media are able to run video, there's a lot more impetus for the TV industry to push the process. By providing a method to beam ads to smaller groups of consumers who are more likely to be interested in the product or service being promoted, TV networks and cable operators hope to bring back dollars to the medium that have begun drifting away from it.
"Pieces are starting to fall into place," said Tracey Scheppach, senior VP-innovations director at Starcom MediaVest's SMGX unit.
Results of some recent tests are promising, despite the hurdles. And there are many: Companies are wary of making consumers feel they are giving up private data about themselves; current technology uses data from set-top boxes and demographic information to make sure the right ads get to the proper households. Creating a uniform process that would allow these ads to be distributed nationally remains a work in process, owing to the fact that the cable, satellite and telecommunications concerns whose content-distribution pipes make the technology function often have very individual ways of making things work. And there's still no set way for advertisers to purchase this new format from TV networks.
"If the long-term goal is reinventing broadcast advertising, then that can't be done instantaneously," said Michael Kubin, exec VP, Invidi Technologies, one of the companies that offers technology for creating addressable advertising. He compared the timeline of making addressable advertising market-ready to being in the early days of the U.S. space program. Indeed, Comcast, one of the concerns conducting tests of the technology, doesn't see it becoming available in widespread fashion for another two to three years.
The future
Comcast Spotlight, the ad-sales unit owned by Comcast Corp., and Starcom MediaVest Group, the media-buying unit of France's Publicis Groupe, have completed a second test of technology that delivers different ads to different households, and they say the ads in both cases have proved to be about one-third more effective in keeping audiences from tuning them out. They also believe the time is drawing nigh for discussions about creating a business model around the new ad format.
"We definitely believe that a hyper-targeted approach is going to be a big part of the future of television," said Michael Bologna, director-emerging communications at Group M, the media-buying operation whose parent, WPP, has stakes in technology concerns that are helping to develop addressable technology. "There are many different definitions in the industry of what addressable is and how it should work, and there are a bunch of trial initiatives that are going on, and there are some other initiatives that will become available within the current year." WPP has a stake in Invidi Technologies Corp., which assisted Comcast and Starcom MediaVest.
The Comcast test, performed in Baltimore, sent different ads -- all during th
e same commercial break on specific cable networks -- to different groups of households, all based on demographic data and a particular advertiser's desired audience. About 60,000 households were reached, and Walgreen's and Walmart, two SMG clients, took part in the trial.
The parties determined that viewers who see ads directed to a specific group of households were less likely to change channels. Homes that received these addressable ads tuned away 32% less than homes that saw a normal group of commercials. The parties also say that sending ads only to relevant groups of consumers is 65% more efficient in terms of eliminating undesirable audience than sending ads en masse, citing their analysis of costs for purchasing both addressable and non-addressable ad inventory.
The Baltimore test follows one Comcast and SMG conducted that began in Huntsville, Ala. In that trial, homes receiving addressable advertising tuned away 38% less of the time available than homes that received non-addressable advertising. Comcast and SMG say the test also demonstrated that sending ads only to relevant groups was 56% mo
re efficient than sending regular ads out to the whole population, based on the costs per spot for addressable and non-addressable ads.
Lessons learned
The trials have helped their backers learn a great deal of information about making the ads palatable to consumers. In order to get viewers to respond, said Andrew Ward, VP-president of strategic initiatives, Comcast Spotlight, "You need to have a well-defined segment of audience and you need a creative unit that matches up to that well-defined segment." With consumers concerned about privacy -- after all, set-top box data and location-based demographic information play a role in this technology -- Comcast notified all consumers in the trial area in advance and offered multiple ways to opt out, including mailing a form in a self-addressed, stamped envelope; calling a dedicated, toll-free hotline; or completing an online form.
When it comes to consumer privacy, "we need to proceed cautiously," Mr. Ward said, adding that approximately 6% of subscribers in Baltimore notified of the trial asked to opt out of it.
And while addressable ads can be used by say, Ford, to reach a person when they are in the market for a car, it's not actually being done yet. "The technology is designed to be able to overlay any database, proprietary or public, onto a market and target accordingly, much in the same way as it's done by direct-mail advertisers," said Mr. Kubin. "So if a database lists households whose auto leases will expire in the next six months, automotive advertisers can target those. But remember, and this is very important, that this capability is not currently being deployed anywhere."
Nor is another widely discussed capability of addressable ads yet being employed: the ability to target spots to individual household members. "The technology is designed to 'infer' or 'guess' who is interacting with an individual set-top box. These inferences can then be used to send the appropriate TV spots to each set-top box," said Mr. Kubin. "So if a male is watching football in the living room and a female is watching the same game in the bedroom, and the inference engine does its job properly, the male will see a truck ad while the woman will see one for perfume."
Addressable ads are becoming all the more important to advertisers as web and mobile technologies become easier to for marketers to track from initial push to an actual purchase. "We do need to get smarter about how we use TV, because, at least for me, it is still the majority of my media spend," said Jeanne Hanahan, senior media director at Mattel. "There's an awful lot of room for us to get better at how we spend that money. Addressable is very attractive to me. If I can specifically get to households with moms with children, that's a huge win."
Costs and savings
Advertisers are starting to come up with ways to solve some of the issues raised by this new technology. Ms. Hanahan believes addressable ads may require marketers to pay a premium, but thinks there could still be a cost savings as advertisers spend less overall, knowing their commercials are reaching more likely purchasers of their goods. She also sees a need for increased production; advertisers will likely have to create a range of spots for the different audiences they will be pitching.
Look for addressable-advertising proponents to work with bigger swaths of consumers and larger content distributors in the days ahead, as well as talk to TV networks about what sort of business will form around this new format. "Once we cover that base, I think you'll see a more rapid deployment," said Comcast's Mr. Ward.
Another factor at play: Comcast's coming purchase of a majority stake in NBC Universal. Owning both a means of distributing the addressable ads as well as the networks that would run them could "accelerate rapidly" the ability to deploy them, Mr. Ward said. But the deal faces months of regulatory approval. Until the deal's completion, he added, the focus will likely be on making certain the technology's functions and getting consumers to accept it.
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Second Starcom, Comcast Spotlight test with INVIDI's Advatar technology shows 32% less tune-away
By David Tanklefsky -- Broadcasting & Cable, 2/17/2010 10:42:04 AM
Analysis of the second Starcom MediaVest and Comcast Spotlight addressable advertising trial in Baltimore shows that addressability by household improves ad relevance and tune-in, according to the companies.
Information from anonymous set-top box data from the 60,000 households found that, overall, homes receiving addressable advertising tuned away 32% less of the time than homes receiving non-addressable advertising. Based on per-spot costs of both addressable and non-addressable ads, the trial showed a 65% greater efficiency from sending ads only to relevant groupings the advertiser wanted to reach. The trial delivered ads through INVIDI's Advatar addressable technology.
"Our partnership with Comcast Spotlight over the past three years has proven to be invaluable as we seek to shape and advance the future of TV advertising to be more accountable and measurable," said Tracey Scheppach, senior VP and innovations director at SMGX, a unit of Starcom MediaVest. "The more experience we gain with addressable advertising, the more excited we are regarding its potential to transform TV."
In addition to the Baltimore trial, completed in 2009, Comcast Spotlight and Starcom held a technical trial of 8,000 households in Huntsville, Ala., from 2006-2008. The two trials delivered thousands of ads across participating cable networks. Comcast worked with Experian Marketing Service and Kantar Media (formerly TNS Media Research) in connection with the trial. Major marketers participating included Walgreen's and Walmart.
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Feb 18, 2010
-By Steve McClellan, Adweek
Publicis Group’s Starcom MediaVest Group (SMG) and Comcast Spotlight, the advertising sales division of Comcast Cable, disclosed some key findings from their most recent market trial of addressable advertising technology, completed in Baltimore in 2009.
The trial used technology from Invidi to deliver different ads within the same commercial breaks on selected cable networks to different household groupings, based on segmentation data provided by data-management firm Experian.
The addressable TV ads reduced ad skipping by almost a third (32 percent) compared to homes that didn’t receive the targeted spots during the trial, the trial participants said.
Five advertisers participated in the trial, two of whom were identified: Walmart and Walgreen’s.
While viewers zapped fewer ads, advertisers gained 65 percent efficiency from the addressable spot buys compared to the traditional spot purchases, per those conducting the test. According to Michael Kubin, evp, Invidi, “It was 65 percent more efficient to buy an addressable spot to reach the advertiser's true audience, even factoring into the calculation a premium for the seller.” And that efficiency, he said, “on a national basis creates billions of dollars in the TV marketplace per year.”
Commenting on the results, Rex Conklin, senior director of media at Walmart, said the company “remains committed to challenging the marketplace to improve our ability to deliver the right message at the right time and place to our shoppers. Our addressability work with the Comcast and SMG trials today will result in more effective and efficient advertising tomorrow."
Comcast Spotlight and Starcom executives also said they were pleased with the results.
The Baltimore trial was the second test of household addressability conducted by Comcast Spotlight and SMG. A technical trial involving approximately 8,000 households was conducted in Huntsville, Ala., from 2006-08, with addressable technology from OpenTV. The Baltimore test, which included 60,000 households, ran from January 2009 to June 2009.
“In our view,” said Kubin, “this is a ‘proof of technology’ stage, meaning that it takes our software out of the lab and into the real marketplace with sixty thousand households. So now we know that works.” Next steps, he said, include pitching the technology to additional distributors such as satellite and telecommunications providers, as well as “continuing to add features that make broadcast advertising more targeted, more precise and more effective.”
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