Television has always drawn in big audiences, but that’s often meant general marketing, with big demographics guiding ad sales—toys and cereal on Saturday mornings, for instance, or beer and cars during football games. Addressable advertising advances are breaking down those large categories, using consumer data from the waves of connected televisions and other digital sources.
Nielsen predicts that spending on addressable ads will reach $4.7 billion this year. It’s still a wild field, but several companies have teamed up to establish industry-wide standards for the format, becoming an organization known as Project OAR.
The specificity with which addressable advertising can target consumers has raised some concerns about privacy. Given these concerns, marketers pursue the promise of aiming television ads toward specific viewers, they must also take tact, privacy and data security into consideration.
Traditional television advertising means that everyone watching the same show gets the same ads for the same products: if you and your neighbor were both watching “CSI” at 10 p.m. on the same day in December, the second commercial break would have showed you both the same ad, such as the where Hershey’s Kisses play “Jingle Bells.” With addressable advertising, however, if you also watched “Game of Thrones” regularly, you might get an advertisement for a fantasy video game, whereas your neighbor, whose kids always tune in to “Dora the Explorer,” could end up seeing a spot for a local amusement park.
Project OAR’s Zeev Neumeier, who’s also SVP of Product at Inscape, elaborates:
“Some categories are more addressable for targeting than others, but the value of addressable advertising goes way beyond targeting. Targeting is one use case. Reach frequency optimization is another.
For example, a brand that is advertising pickup trucks would be especially relevant to targeting capabilities because they are going to be more relevant to specific segments and audiences.
But addressable is also suitable for brands like McDonalds, which is a product that could be marketed to everyone but given the fact that they have other options like fish sandwiches and salads, the brand can present different options for different segments. In this case, reach frequency optimization is important (what segment of the population saw the ad and how many times the ad was presented).”
Like many other aspects of the digital world, addressable advertising has raised concerns among some consumers and privacy advocates. Jeremy Gillula, tech projects director at the Electronic Frontier Foundation, says that most people are unaware of addressable TV and most would be concerned if they did. Many users have come to accept some amount of surveillance online, he says, because that’s been the case for so long, but they don’t expect their TVs to keep track of them the same way -- and smart TVs lack the tracking protection options that companies such as Mozilla are increasingly adding to browsers.
Gillula explains that major concerns include television’s potential as a tool for manipulating vulnerable populations, an issue which is becoming more prominent in general, as news about Facebook’s role in the 2016 elections comes out. Another potential problem is data breaches, as well as the sale of data to unethical brokers. Viewers may not want information about their television-watching habits to be widely available, and the makers of smart TVs, which are harder to update than software, don’t have as much reason to invest in fixing security vulnerabilities.
Responsible use of addressable TV, Gillula says, means making “no” the default, because it is what consumers expect the normal state of their televisions to be. Smart TVs should offer viewers the chance to opt-in to addressable ads, as the first thing they see when they plug the TVs in, and should remain “dumb” unless a viewer says yes, he adds.
Neumeier agrees. “It is all about providing a clear opt-in,” he says, and adds that this approach would actually put smart televisions above internet programs in terms of consumer advantages, because digital systems “bury their opt-ins and serve up ads that are not relevant, highly repetitive and often, for the items you have never been interested in.”
Addressable advertising could create a landscape beneficial to both marketers, who’d have a greater chance of drawing real interest in their products, and viewers, who would get to see more ads for things they might buy. Marketers and television manufacturers that take a privacy-aware, data-secure approach and provide viewers with the choice to opt in up front could find real potential for developing relationships with their audiences.
Isabel Kunkle is SmartBrief's telecommunications editor.