The demise of traditional network television has been predicted for a while now. As an advertising medium for the delivery of targeted ads, the Internet has zoomed ahead of TV, leading some to question the long-term viability of the venerable broadcast format. However, the advent of addressable advertising comes as a shot in the arm to television, allowing advertisers to take advantage of customer data to send their messages directly to those viewers who are most likely to buy their products.
The way it works is that companies choose what kind of demographic group they want to target based upon income levels, family size, neighborhood and other criteria. In some cases, they can even access information about cellphone subscriptions and automobile ownership. Once the desired metrics are chosen, the firm then beams commercials to only those households that fit the selected profiles. This capability is enabled by the proliferation of set-top boxes, which can be configured to display variable ads depending on the needs of the advertisers. Corporations that lack the wherewithal to do the necessary data-crunching in-house can take advantage of the services of tech partners.
Modern Target Marketing
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By focusing their efforts on TV watchers who are probably interested in their products, organizations can improve the ROI of their marketing dollars. Car commercials can be sent to those clients with older vehicles or those whose leases are about to expire. Acura and Volvo have already seen a measure of success with their addressable TV marketing activities. Couples with newborn babies can be shown information about diapers, formula and other related products. Retailers and producers can thus eliminate the waste involved in showing spots to individuals who have no reason to purchase the goods in question.
This is true not just in the marketplace for merchandise and services but in politics as well. Partly because of the gerrymandering tendencies of our stalwart public servants, election districts are often weirdly sized and shaped. It’s almost impossible, using traditional advertising methods, for candidates running for certain positions to communicate effectively via television with exactly the right voters.
Addressable advertising can make this problem go away. It will also allow candidates to address specific concerns, like the environment, unemployment insurance and health care, based upon the issues that are most important to individual constituents. For instance, satellite giants Dish Network and DirectTV have joined forces to create a platform that will allow candidates to use addressable advertising to better reach out to citizens, targeting them with only the ads that will most effectively engage specific concerns a household is thought to have. This growing type of advertising will probably be employed on a regular basis by campaign managers to swing elections that are hotly contested.
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Although there are now new mediums for advertising, television remains the most popular by a wide margin. Addressable ads represent a tiny fraction of current TV advertising spend, but they’re expected to grow by leaps and bounds in the coming years. This will allow companies to hit market segments that may eschew the Internet or other types of new media. The elderly in particular tend not to use online resources as frequently as society as a whole does, so the vendors of retirement planning services, hearing aids and other goods sought by seniors may do better to use addressable television commercials rather than online ads.
While many in the corporate world are plunging headlong into this new paradigm, others are worried about consumer privacy. It’s important to note, though, that in most cases, companies are specifying the market they’re trying to reach, and the cable or satellite TV providers are doing the actual matching to households. Individual data isn’t being transferred to third parties, or it shouldn’t be if everyone is following the appropriate protocols.
Commercial television broadcasts have been with us for around 75 years now, and they show no signs of going away anytime soon. By incorporating the best practices of Internet advertising into the addressable model, marketing entities are changing the old way of doing things to better compete in a multifaceted media environment. We’ll surely see addressable advertising increase until it becomes a mainstream tool in the marketing landscape.