Imagine you work with a pharmaceutical company and you’re helping it market a new drug for psoriasis. You know your target audience. You have the demographic down cold. You have a TV spot ready to run, its message fine-tuned to this specific set of consumers. What if you could broadcast that TV spot only to households where your unique audience lives?

That’s the future. It’s here. And it’s called Addressable TV.

What it does.

This extraordinary technology lets marketers reach specific TV audiences by selecting only them for their broadcast commercials. The service can segment audiences by geography, demographics, habits, even self-selection. And it’s now available through traditional cable TV, satellite service, set-top boxes, and IPTV (short for Internet Protocol Television). It can help you target your audience precisely by criteria like these:

  • A family planning to move within six months.
  • A family whose children start school next fall.
  • A single professional who just bought a house.
  • Empty nesters who just moved to Florida.
How it works.

Service providers know a lot about their customers these days. And they’re increasingly capable of translating that knowledge into action for marketing. For instance, DISH and DIRECTV services deliver targeted ads through select customers’ set-top boxes. Cable providers like Comcast can serve up ads by way of their video-on-demand feature.

The pros and cons.

So far, Addressable TV sounds like all sunshine and rainbows, eh? And it’s true, there are some major advantages for marketers to enjoy here:

  • It puts the right message in front of the right consumer with a relatively laser focus.
  • When your ad is way more targeted, response rates typically jump.
  • Addressable TV is ideal for products and services that relate to life stages, from car insurance for recent grads to baby products for young families.

But there’s a downside, too:

  • Some cable providers aren’t up to speed yet with this technology, because their infrastructure is too old to adopt it, so scalability can be an issue.
  • You might pay a significant premium for the privilege of specific targeting, because providers consider the focused reach a greater value compared to traditional placement. And they’re right—but how much of an increased cost is fair? Stay tuned.
There’s reason for excitement, but keep these points in mind.

Addressable TV holds great promise for marketers in the coming year and beyond, but remember: it’s still just one tactic. No single tactic can do it all. Especially when you shrink your TV audience universe down to a unique segment. To reach your target audience, you’ll still need to complement Addressable TV with other mass channels that reach lots of people efficiently—such as radio, Brand TV, print, or out-of-home.

Speaking of smaller, more targeted audiences, consider the size of your geography. For instance, advertising across the Buffalo, Rochester, and Syracuse markets delivers millions of TV viewers. But if you’re only targeting families who have just moved to the area in the past year or professionals who just completed a college degree, you might only be reaching hundreds or thousands. So you might need to reach multiple markets in order to reach a meaningful number of viewers. Otherwise, the market in one population or region may not be big enough to be worthwhile.

The bottom line.

Addressable TV is part of the evolution of mass media into channels that make it easier for marketers to reach specific audiences. And that’s exciting, because it means more relevance, less waste, and higher response. Still, it’s important to keep in mind the types of products and services that can best be served by this technology. What are you selling? Does it relate well to things like life stages—the types of segmentation that Addressable TV can help with? And how big is your audience within a single geography? How many markets will you need to reach in order to hit a meaningful number of prospects?

When you start with these big questions, there’s a lot that this technology can do for your brand (with the expertise of a capable media partner, of course!)

Jill Currie
Jill Currie

Associate Media Director, DR
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