The potential of addressable TV advertising

Are your rivals going to let viewers respond immediately to TV ads on their iPads, while your ads just hope to be remembered?  

Second-screening, where consumers use mobile devices while watching TV, presents great opportunities for brands, retailers and financial services, and is on the increase.

Second screening: the stats

It has always been perfectly natural for people to flick through magazines, answer phone calls and decide on purchases in a mail order magazine while watching TV.

Transposing familiar behaviours to mobile devices drives successful second screen experiences and this is reflected in the high proportion (86%) of the audience using second screens while they watch television: surfing the web, answering mobile calls, texting, instant messaging, emailing and making purchases online.

The behaviour is even more pronounced in younger generations, with 46% of 18 to 24 year olds commenting on shows via the second screen compared to 14% of 55 to 64 year olds, and the trend is one of growth.

Second screen experiences can be monetised through commercial transactions or via non-transactional models and my previous blog illustrated some successful examples of both. Non-transactional models generally enhance the existing TV advertising model through a range of options:

• Interactive advertising.
• T-commerce.
• Dynamic ad insertion into video on demand (VOD).
• Targeted or addressable advertising.

Interactive advertising can be executed by adding a graphic overlay or inserting an interactive prompt into a commercial spot on TV.

The second screen can then be used very effectively for telescoping, which gives the viewer the option to engage with a branded long-form video, for submitting requests for information (RFI) or requests for samples, or for taking part in surveys, competitions, polls or trivia. 

T-commerce exploits the connected features of Smart TVs, providing the opportunity to take advantage of the purchase impulse through the TV without recourse to other devices, but there are second screen opportunities to enhance the experience. 

Dynamic ad insertion into video on demand (VOD) allows ads to be inserted into VOD services delivered over connected devices, ranging from set-top boxes to smartphones.

Targeted or addressable advertising

Targeted or addressable advertising allows adverts to be targeted to specific households based on their demographic or behavioural data fed back from a connected set top box.

Multiple ads can be shown in a 30-second spot, households only seeing the ad specifically aimed at them. This requires anonymising household data to address privacy issues. Interactive advertising integrated with the second screen can enhance this approach. 

Advertising can also be targeted at the individual through online VOD services where registration is required to access the service. Combining targeted advertising with second screen interaction where the individual is known provides powerful direct marketing opportunities and could be a catalyst for innovation and customisation. 

Though Deloitte estimated that addressable advertising represented less than one tenth of a percent of global television advertising revenues in 2012, it looks set to grow.

Following tests in 68,000 homes in the US, Comcast has decided to take addressable TV advertising to all its markets by the end of 2014 through a deal with Invidi Technologies.

Invidi already has deals for its addressable ad system with DirecTV, Dish Network and Verizon FiOS. Separately, Cablevision Systems successfully tested the effectiveness of addressable advertising and is using the addressable ad system of New York-based Visible World.

It is claimed that Comcast's rollout will expand the number of US homes enabled for addressable advertising to 60m. 

A trial conducted by Comcast Spotlight and Starcom MediaVest (SMG) for data-driven audience targeting, revealed homes receiving addressable advertising tuned away 38% less than homes that received  non-addressable advertising.

Rovi's 2012 survey results - Connected TV Advertising Field Study U.K. Phase 2 - showed 27% of UK connected TV owners purchased a product, while 68% recalled a connected TV interactive banner ad.

But despite the benefits UK advertisers, creative agencies, media agencies and broadcasters' ad sales teams have been very slow to realise the potential of these advanced advertising approaches. 

This looks set to change in 2013. In the UK, both BSkyB and Channel 4 are planning to use their data with planned releases of addressable advertising products.

BSkyB's product will use household level data from their set top boxes to launch the first phase of their addressable advertising product, AdSmart, to 7 million homes in August 2013.

Channel 4's viewer relationship management programme is driving the exploitation of Channel 4's online registration data to deliver targeted adverts to individuals in their VOD service, 4oD, with selected clients in 2013. 4oD currently has 7m registered users and accounts for an increasing proportion of total viewing, particularly for younger demographics, i.e. VOD made up 38% of all viewing for 'Made in Chelsea'.

Sarah Rose, C4's Commercial & Business Development Director, asserted that VOD is generally additive at this year's Digital TV Group summit, so the incremental revenues from VOD advertising will be significant for the channel. 

There are barriers to developing second screen applications to fulfil the full potential of advanced advertising which our white paper explores in detail, and also solutions. So if your media agency isn't discussing second screen monetisation with you, maybe it's time you asked them why.