Targeted, or addressable advertising has its roots in the www, and started around 10 years ago. The benefits are known and it can secure an average of 2.7 times as much revenue per ad as non-targeted advertising, and is twice as effective at converting users clicking on the ads into buyers.
A 2012 Stanford and Yahoo co-authored study (ref1) shows that for an Internet based targeted advertising campaign, for a niche product (where only uniquely interested consumer clicks were required), it would cost a third the price to run than a non targeted one. The same study shows that a brand name organization trying to elicit someone to search for a particular brand (via a particular search engine) would need to pay over 9 times more for a non targeted ad campaign compared to a targeted one.
Other studies confirm, and so it’s without doubt that such targeting works
With the launch of Sky AdSmart (ref2), Sky has brought targeted advertising into millions of UK TV households. Now the local car dealership, for example, can stand along side the big brand names with ads directly into the living room. Clearly this is a win-win enterprise. The smaller organizations can now advertise, perhaps within limited geographics, and the larger ones too can advertise with more accuracy with the benefit of demographics and psychographics. On top of this Sky have a long list of what they call ‘AdSmartable’ programs. Thus the advertiser can even gauge which types of programs he/she would like to target with their adverts. And of course Sky can increase their revenues.
Win win for the consumer too?
Of course the consumer can opt out, but surely it’s a good thing for them too. To get more suitable advertising, or ads that they’re more likely to be interested in, has to be a positive thing. Possibly the broadcaster could also increase investment in more prime content programming in order to suitably place these ads. Of course the accuracy of the targeting at the early stages of this industry will fall a little short just using the known demographics, but no doubt this will increase as more consumer information is known and used in the process.
Addressable advertising on linear TV started up in the US with Cablevision (now at 3m households), DirectTV (now at 12m households), Dish networks (now at 8m households), with Comcast, testing since 2008, and deploying very soon. (refs 3 and 4). Certainly this shows that it can and does work.
Future within the UK?
So are we likely to see other UK broadcasters getting into this business? Maybe a better question is; can they afford not to? If the same content is transmitted by a number of broadcasters and if one of these has targeted ads (which we assume has consumer added value) won’t the consumer prefer to watch the targeted ads programming? If a targeted ads broadcaster is able to improve ROI, and create more revenue won’t they then have more funds to perhaps purchase exclusive content for their targeted ads? Couldn’t it be a runaway problem for the broadcaster happy to keep with the existing model?
ref1, ref2, ref3 , ref4
Mark Massel – BCi digital
LinkedIn group on this subject here
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