Why Addressable TV and CTV Need to Coexist in a Cross-Screen World

The following is republished with the permission of the Association of National Advertisers. Find this and similar articles on ANA Newsstand.

By Elsa Blumberg, Charlotte Lipman

It is hardly a secret that the television advertising landscape is rapidly transforming as consumers’ viewing habits become less straightforward. Audiences can access their favorite shows on traditional pay TV or across any number of digital touchpoints, like streaming services or network apps.

With the rise of fragmentation and erosion of viewership across traditional channels, addressability emerged as a means to connect with precise audiences, not just demos or proxies, in a cross-screen world.

But while addressable TV used to refer more singularly to cable TV ads served to specific households via set-top-box technology, more recently, the definition has expanded to include ads targeted to a precise audience, played within TV programming on any screen, including connected TVs (CTV), and served via over-the-top (OTT) platforms or set-top-box technology.

The convergence of traditional television and digital video presents unique opportunities for advertisers but also adds a layer of complexity. To explore that dynamic, WarnerMedia Ad Sales partnered with Advertiser Perceptions on “Decoding Addressability,” a new research report based on responses from 200 U.S. video advertisers. Asked what comes to mind when hearing the word “addressable,” one marketing manager summed up a perennial problem for buyers: “Confusion. I can’t quite seem to remember the precise difference between OTT, CTV, addressable, and data-driven, to be honest.”

Few advertisers today define addressable TV as inherently linear or digital in nature. One in three agree that addressable TV ads are targeted and dynamically inserted into a content stream, effectively allowing for different ads to be served to relevant households within the same ad break. The ability to reach precise audiences with a message that will resonate is what makes addressable advertising appealing, especially as brands ramp up their data infrastructures.

Data Drives Media Decisions

A recent study from Forrester commissioned by a group of industry stakeholders, including WarnerMedia, found that, in order to pave a path forward for addressable TV, brands need to invest in data partnerships that help identify audiences accurately and compliantly. Having reliable, privacy-first data inputs to reach the right audience is table stakes. Nine in 10 advertisers surveyed by Advertiser Perceptions say they increased their investments in data within the last year and will do so again next year.

Whether they are putting money toward organizing and improving their own first-party data or partnering with vendors to access additional data sources for audience segmentation, advertisers agree that these actions are informing their media decision-making. Three in four say that, within the last 12 months, they have experimented with a new advertising channel or adjusted their budget allocations across media as a direct result of investing in new data capabilities. Nearly all advertisers surveyed said they will retain or increase their spend in both CTV and addressable as they continue to prioritize data enablement over the next 12 months.

The Addressable TV Opportunity

Advertisers are bullish on addressable TV’s ability to deliver both audiences and results. According to the Advertiser Perceptions/WarnerMedia Ad Sales report, 85 percent of advertisers say addressable TV is a reliable and effective way to reach their audiences. Three in four respondents say buying addressable has increased their ability to meet campaign objectives and they are satisfied with the results. In fact, 32 percent say they consider addressable a “must-buy,” compared to 25 percent in 2020.

Historically, advertisers perceived linear television to be lacking the true measurement and attribution capabilities they had become accustomed to with digital media. By transacting on traditional age and gender demographics, linear television’s legacy was in delivering large audience reach and brand-building. That perception shifted with the emergence of addressable. Addressable TV is part of an advertiser’s media mix because of its ability to serve relevant ads to the intended target and prove ROI. This is true for advertisers who cite linear TV as the ad channel most likely to achieve their goals, but also for those who cite CTV as the ad channel most likely to achieve their goals.

For advertisers with a linear TV focus, the value of addressability is clear. Two thirds are confident that addressable TV allows for the targeting and relevance commonly attributed to digital, or precision-based tactics. This is what makes addressable TV complementary to traditional TV strategies and, in turn, an important part of marketers’ media mix. Nine in 10 of these advertisers say they would increase their overall linear TV budget if they could more precisely target a television audience.

In fact, more than half of CTV-first advertisers say “precision targeting” is the leading factor for including addressable TV in their media mix.

Addressable and CTV: Better Together

The Advertiser Perceptions/WarnerMedia Ad Sales report also found that advertisers tend to perceive CTV and addressable TV as similar in their ability to deliver relevant advertising messages, offer reliable audience targeting, and to help accrue incremental reach. To be leveraged most effectively, addressable TV and CTV should not be viewed as either-or tactics but instead as supportive or complementary to one another.

For advertisers with a CTV-first approach, the leading benefit of addressable TV advertising is its ability to test and learn, indicating an appetite for understanding how these two ad channels work together. In fact, campaign insights from Kantar suggest that combining addressable TV and CTV will yield higher lifts in awareness than CTV campaigns alone.

Addressable TV advertising combines the scale of television with the targeting of digital. According to eMarketer, there are nearly 58 million U.S. households equipped with set-top-boxes that enable addressable delivery, equating to 78 percent of the total pay TV universe. This doesn’t include connected TV or OTT households, which provide additional addressable inventory since they also can be served one-to-one targeted advertising. Still, 38 percent of advertisers surveyed by Advertiser Perceptions cite “lack of scale” as an obstacle to working with addressable TV and 30 percent report the same challenge for CTV. This could indicate an overreliance on audience targeting, and it also conveys the need for advertisers to move from a mentality of “either-or” to “both” tactics used in concert to achieve desired scale with the combination of CTV and addressable.

WarnerMedia’s findings also showed advertiser interest in extending addressable TV campaigns to endpoints beyond the television screen. One in four advertisers say that addressable TV and digital cross-screen solutions would encourage increased investments in addressable.

The bottom line? Addressable TV, CTV, and OTT should all be part of the same conversations. The goal for advertisers today is to get away from siloed approaches when it comes to media selection. The current landscape affords the opportunity to reach audiences whenever and wherever they may be watching.

About Author: Elsa Blumberg is the VP of analytics and insights and Charlotte Lipman is senior manager of primary research, both at WarnerMedia Ad Sales, a partner in the ANA Thought Leadership Program.


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