The Addressable Future Starts Here

The Digital Video Recorder introduction and inadequate viewing measurement across cable networks makes it even more hard to know which part of your ad spend is working. The challenge was to better gauge how people view TV and help marketers reach their true customers. The market lacked the systems and partnerships to realise these opportunities – meaning we had to invent a measurement and buying infrastructure to benefit clients.

The opportunity was present to set up a marketplace where two homes watching the same show at the same time on digital television could see two different commercials relevant to their respective residents. A house with a dog could get a dog food ad, and a dog-less home would get a different ad.

Our strategy was to create that marketplace in partnership with cable and database companies, in a manner completely respectful of consumer privacy. Starcom MediaVest Group worked with cable company Comcast to launch a household addressability product that allowed clients the opportunity to surpass broad-based, demo-only targeting (based on program ratings) and send targeted ads to homes pre-identified as those that each advertiser wanted to reach.

In a test market, the system successfully split one commercial into four and delivered three addressable and one default ad to specific household TV viewers in 8,000 homes across eight TV channels, trafficking nearly 18,000 ads. Comcast projects addressable opportunities to be fully scaled across the U.S. by 2010. The model proved relevant ads were more effective, as measured by a drop in tune-away during targeted ads. Homes that received the addressable ads tuned away 38% less than homes that received the non-addressable ads.

Based on the per-spot costs of addressable and non-addressable ads ($31 and $15, respectively), the trial demonstrated a 56% greater efficiency from sending ads only to those homes that the advertiser wanted to reach. Projecting these savings out to the national US marketplace, we estimate the total value of addressability due to greater efficiency to be $3.6 to $6.2 billion.