For the last few years, addressable TV advertising has generated a lot more news coverage around its promise than reporting related to its actual practice or performance metrics. Dozens of articles, including these two on our blog, have highlighted the very real potential associated with addressable’s precision targeting capabilities but, to date, the format has garnered only a small share ($1.2 billion in 2017) of the $75 billion TV advertising market.
The issue hasn’t been lack of enthusiasm from advertisers. The addressable market grew by about 65% last year, following double-digit growth in 2016. But, as eMarketer noted in an addressable TV spending estimate, the relatively small amount of addressable inventory, combined with limits on measurement, have kept a lid on the scale of advertisers’ investments. Until now. Recent articles in Forbes, Adweek and Beet.TV are detailing how the expansion of automated content recognition (ACR) is helping to position the addressable format for prime-time play. Here’s some background on ACR that may help advertisers as they consider making greater investments in addressable TV advertising.
A Deeper View into TV Viewing Habits
ACR is an opt-in identification technology embedded in smart TVs that allows content to be recognized by video, audio or watermark cues and matched back to a source database for reference and verification. This includes what content is being watched, whether that programming is a linear broadcast or DVR, VOD or digital app view, how it’s being delivered (antenna, set-top or streaming), behaviors associated with what’s being watched (ad-skipping, binge-watching), and what the viewer’s IP address is so as to know (in anonymized fashion) household location and the websites and apps regularly visited.
Because it measures all TV viewing, and does it in second-by-second increments rather than 15-minute blocks, ACR offers a wider lens into viewer behavior than the set-top box data and self-reported, panel-based analysis sources like Nielsen can currently deliver on their own. As Adweek described it, “Whereas an addressable ad buy tells brands who they’re paying to reach, ACR data tells them whether those folks actually viewed their ad. Previously, the multiple system operators (MSOs) or multichannel video programming distributors (MVPDs) which ran the addressable campaign were the only source of activation data. ACR data provides the first independent verifiable source.”
ACR Advances Measurement and Helps Advertisers to Understand ROI
ACR can do a lot more than just telling brands if consumers actually viewed their ad, but how much more depends on the analysis software wrapped around the TV manufacturer’s ACR tech. Vizio, one of the biggest manufacturers of internet-connected TVs, works with a couple of ACR analytic clients (Inscape and iSpot) to parse the TV viewing data and create attribution ratings designed to help advertisers understand if and how their ads and placements move consumers to action. With IP address information of those consumers that opt in to the TV monitoring, these analytics companies can track how consumers move through the sales funnel, from Googling for additional information to an actual sale. Such data has the potential to provide brands with the additional information they need to better measure the efficacy of specific ads and campaign strategies and get a better sense of the overall return on their advertising investments. The industry has long viewed addressable as combining the reach of TV with the trackability of digital and ACR adds an additional tool for helping to make that comparison all the more apt.
Smart TV Growth Helping Smarter Advertising
ACR technology has been around for the better part of the last decade, but the emergence of new analytic players like iSpot and deals and growth within the TV manufacturing industry are what have pushed it to the fore and helped fuel recent developments. For example, Forbes noted the growing penetration of smart TV’s in consumer households—75% by 2020—and the market dominance of Samsung and Vizio, both of which employ ACR in ways designed to help advertisers better understand viewer behavior. The prevalence of smart TVs, along with the increasing sophistication of ACR analytics, are some of the forces leading Forrester analyst Jim Nail to conclude that the addressable TV ad market is at an inflection point and will grow rapidly in the months to come. Advertisers would do well to monitor these developments and watch for the many ways they can help the industry realize the ultimate goal of fewer but better targeted TV ad campaigns that both drive awareness and action.