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The number of US addressable households has reached a tipping point

Addressable Households Reach Tipping Point in 2019

September 19th, 2019   ||    by Susan Kuchinskas

The number of addressable households in the United States continues to grow. The Video Advertising Bureau (VAB) estimated that 54 percent of all TV homes are now addressable households, out of a total of 119.9 million total homes with television, according to MediaPost.

Broadcasters are waking up to this opportunity. With the 2020 Olympics in Tokyo just a year away, NBC Universal, exclusive holder of broadcast rights to the Olympics, is pushing advertisers to look beyond live TV ratings and to package ad buys to target individuals across platforms, The Drum said.

That NBCU would make this play on one of the most lucrative live broadcasts in the world shows how far addressable television advertising has come, and how much potential NBCU sees in it.

The VAB projected total addressable TV viewing to rise 25 percent by 2022, with 14 percent of all ad viewing going to online video addressable TV, 9 percent to time-shifted addressable TV, and 7 percent to addressable linear TV.

The reason for this growth is simple: ReportLinker expected the smart TV market to grow at a compound annual growth rate (CAGR) of 21 percent through 2023. When consumers upgrade, they tend to choose the most advanced electronics, and smart TVs mean smarter, addressable advertising.

It’s no wonder that addressable is at the forefront of the targeting conversation.

Leaders in Addressable

In addition to NBCU, Comcast is working with Cox and Charter to increase inventory reaching addressable households, Ad Age reported. The three partnered with NCC Media, a national cable sales group, to create an advanced TV ad group.

Comcast made a big push at Cannes Lions in June, urging the industry to not only open up more addressable inventory but also to create definitions and standards for this medium.

Meanwhile, CBS partnered with Nielsen to expand addressable capabilities. And many broadcasters, including Sinclair, are investing in over-the-top targeting as a path toward truly reaching addressable households while they’re watching linear TV.

Dollars Flow

Some $2.54 billion will be spent on targeted, addressable TV ads in the US in 2019, according to eMarketer, growing to $3.37 billion in 2020. Compare that to its value of less than $800 million in 2016.

But even $2.54 billion will account for only 3.7 percent of total TV ad spending—leaving plenty of room to grow.

At the same time, eMarketer forecasted that, in 2019, digital ad spending in the US will exceed traditional ad spending. By 2023, digital will surpass two-thirds of total media spending.

As digital and television converge, advertisers soon will not have to choose between targeted, measurable digital advertising and television. TV is becoming targetable to addressable households.

Advertisers Address Addressable

The biggest hurdle these days, according to Digiday, is that there is simply not enough addressable inventory to fill advertisers’ and agencies’ needs. Advertisers were excited about this new opportunity, but arranging a national addressable campaign required them to stitch together inventory from multiple pay-TV providers.

Definitions and standards are crucial. With the number of addressable households steadily rising, the challenges are marketplace fragmentation and the lack of standards for defining and measuring an addressable TV ad.

One of the biggest challenges, according to TV(R)EV, is that providers have differing definitions of audience segments. One broadcaster’s “new mom” may be defined as having a child under six months old, while another defines her as having a child under two years old. One broadcaster’s “travel enthusiast” may take two trips a year, while another’s may spend more time with travel-related content without actually purchasing trips.

In addition, the TV ad delivery infrastructure needs an overhaul, eMarketer said. Ad delivery should be centralized and aggregated at a national scale and then packaged with other products that use data to combine linear TV with over-the-top video inventory.

Now is the time for station groups and broadcasters to do the hard work of collaborating to move this valuable medium forward. Local stations can play a role, too, by evaluating their own data to make it usable to national advertisers that want to take advantage of some of these major initiatives.

The age of addressable TV is here.

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