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Programmatic and addressable both aim to help advertisers target the right audience.

Addressable Advertising: A Potential Tool for Driving Programmatic to the Household

January 28th, 2016   ||    by Monta Monaco Hernon

The terms “addressable advertising” and “programmatic buying” are used interchangeably as ways to target a specific audience. While it’s true both concepts utilize data analysis to deliver ads to receptive viewers, addressable advertising and programmatic buying are not one and the same. However, they do have the potential to be intertwined and complement one another.

Traditionally, television spots are purchased based on the presumed age and gender of those watching a particular piece of programming, as presumed by data collected from Nielsen panels. However, according to Michael Kubin, executive vice president at INVIDI Technologies, there was a lack of access to more detailed information about the viewing audience and an inability to send an advertisement to a specific group without waste, even if specific characteristics could be identified.

Targeting and Automation

Programmatic technology emerged in the digital realm because it made it easy to collect and analyze data to target an individual user with a message. The ability to do the same for television was once considered the holy grail, but the adaptation of programmatic in the TV market has moved the industry closer to this goal.

When boiled down, programmatic is defined by two main components: the use of methodologies to drive targeted purchasing and the automation of certain components of the buying process. Pooling data from different sources helps to more precisely select programming based on key details about the desired audience. Wasted reach is thus reduced, and workflow from ordering to performance reporting is automated in programmatic TV. However, there remains a human component (unlike with digital programmatic) that uses oft-discussed forward-reserve or real-time bidding methods depending on the platform.

Honing in on the Target Audience

Programmatic algorithms can narrow down the audience. Kubin poses an example in which instead of defining the target as women ages 25–34, the advertiser can look for families primed for auto buying, with an income above $75,000 and at least one child. Addressable advertising, on the other hand, can drill down to the household or set-top box. Wasted reach is reduced even more significantly because the system analyzes who is actually watching.

The difficulty lies in the fact that addressable technology at a household level depends on cable operators. They must be willing and able to serve advertisements to specific set-top boxes. The number of addressable households is relatively small but growing, with operators continuing to make announcements about advancements in this arena. Even still, while programmatic reaches 95 million households, addressable advertising is only at 30 million, according to Magna Global. Dynamic ad insertion, particularly into linear television, adds another layer of complexity, as do complications over carriage rights.

In the end, however, programmatic brings automation and audience targeting to advertisers today. Addressable technology could be the icing on the cake, honing in on the market down to the household level.

To find out more about what programmatic offers media buyers, contact Videa.

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