Ahead of the Curve: Addressable TV Insights

Transcription

1 Ahead of the Curve: Addressable TV Insights Published by Advertiser Perceptions Justin Fromm, VP Business Intelligence

2 Audience-based buying and Addressable Television is poised for explosive growth. While the Internet has revolutionized advertising over the past decade, the TV ad-buying model has remained largely unchanged. Audience measurement has yet to evolve to enable estimation or verification of TV audiences beyond broad demographics. But with its ability to target specific households and connect ad exposure to outcomes, Addressable TV provides advertisers all that they have come to expect from digital advertising, on advertisers preferred screen. emarketer estimates that Addressable TV ad spending in the U.S. will grow 443% between 2015 and Audience-based buying and Addressable Television is poised for explosive growth, says Tracey Scheppach, former Executive Vice President of Publicis Groupe Media, and now CEO & Co-Founder of Matter More Media. Having been involved in more than 250 addressable media deals, Scheppach has long been regarded as a pioneer in the space. TRACEY SCHEPPACH CEO & Co-Founder, Matter More Media 1 2

3 Advertisers Use of Addressable 26% 1-2 years AT&T AdWorks and Advertiser Perceptions commissioned a study of 150 Addressable TV decision makers in March 2017, the results of which indicate that those currently utilizing the platform quickly see its value 4% more than 2 years 71% of advertisers surveyed have been working with Addressable TV for less than 1 year 42% 6-12 months and identify it as an important part of their media buy. These marketers recognize that Addressable TV offers many benefits, across all stages of the marketing funnel. Respondents point to a lack of awareness and a need for further education around the platform as important reasons why others in the industry are not yet executing addressable campaigns. While those concerns have kept marketers from making significant investments in the past, this report will help bring the true benefits of addressability to light, using data and illustrative case studies to help fill the knowledge gap. 38% currently testing Addressable TV 29% less than 6 months Majority already believe it s a valuable part of their media buy 62% Addressable TV is valuable Q: Which of the following best describes your current approach to Addressable TV advertising? Source: Advertiser Perceptions Addressable TV State of the Industry, March/April

4 Advertiser Perceptions identified key topics that advertisers wanted to hear more about following the 2016 Upfronts and NewFronts. Advertisers consistently mentioned a top priority was to apply data to better inform TV buying decisions. Marketers have become accustomed to targeting digital advertising to more specific and more precise target audiences. Despite this digital trend, the majority of TV media buying continues to be done by traditional age and gender demographics. Combine precision targeting and ROI measurement with the sight, sound and motion of video The State of the Advertising Marketplace Over the past several years, advertising dollars have been shifting from TV to digital video as advertisers seek to combine precision targeting and ROI measurement with the sight, sound and motion of video. But the digital video ecosystem is fractured and crowded, which dilutes audience reach and complicates measurement. At the same time, Advertiser Perceptions research indicates that marketers are looking to consolidate and simplify how to allocate their marketing budgets. TV has seen a resurgence in spending in the past year as advertisers are committing more budgets to Advanced TV opportunities. Among these Advanced TV solutions, Advertiser Perceptions data indicates that some are taking a wait-and-see approach to Addressable TV advertising while others immediately realize the value and consider it important in their overall strategy. 5 6

5 Addressable TV Deep Dive Addressable TV s top benefits Targeting precision and granularity 65% Addressable TV delivers household-specific TV advertising based on an advertiser-defined target segment, regardless of programming or time of day in both live and playback modes. Anna Papadopoulos, Vice President of Integrated Media Services for Prudential Financial, notes that Addressable TV advertising results in less waste, better segmentation and targeting. This sentiment is shared by the many participants in our survey who cite targeting precision, increased ad relevancy, the elimination of waste, and better return on investment metrics as the top benefits of Addressable TV advertising. Increased ad relevance Targets unique households Eliminates waste in TV buys Better ROAS/ROI Delivers hard-to-reach audiences Greater accountability and measurement 59% 56% 50% 49% 47% 44% Delivers important and meaningful reach Ability to optimize future campaigns based on back-end results 36% 36% Less waste, better segmentation and targeting Ability to manage ad frequency Ads delivered across screens/platforms 29% 27% ANNA PAPADOPOULOS Vice President of Integrated Media Services, Prudential Financial Q: Please rank the top 5 benefits of Addressable TV advertising. Base: Total Respondents. 7 8

6 Addressable TV gets high ratings for cost effectiveness and ROI 40% Valuable (rated 6-7) 16% Neutral (rated 4-5) It s really the relevancy that we re looking for to matter more to the consumer. And with relevancy comes efficiency and effectiveness. 75% agree: Addressable TV offers richer ROI metrics than traditional TV advertising 4% Not at all valuable (rated 1-3) 41% Extremely valuable (rated 8-10) Q: How would you describe the overall value (cost effectiveness/roi) of your Addressable TV advertising? Base: Current/Past Addressable TV Users. Q: Please indicate how much you agree or disagree with each statement about Addressable TV advertising. Base: Total Respondents. TRACEY SCHEPPACH CEO & Co-Founder, Matter More Media Measuring ROI for linear TV advertising has historically been an inexact science and an expensive undertaking, both in the costs of measurement and the media weight required for valid measurement. Not only does Addressable allow advertisers to direct every dollar to their specified target audience, but in combination with 1stand 3rd-party data, advertisers can more accurately determine a campaign s return on investment. The ability to connect exposure from Addressable TV ads to concrete results is often cited as a key differentiator for the platform. Three-quarters of the advertisers in our study agree that Addressable TV offers richer ROI metrics than traditional TV advertising. Michael Mazza, Director of Marketing at Reynolds Consumer Products, notes that the ROI for Addressable TV campaigns for Reynolds Wrap, has been favorable to some of the broader market, and even some of the cross-channel [buys], whether it s online video or print. And while consumer packaged goods advertisers might measure ROI based on incremental units sold, advertisers in our study state that they use Addressable TV advertising to deliver on various KPIs, whether it be sales conversion, target audience delivery and reach or frequency distribution. These individual KPIs ladder up to a higher-level benefit, that all advertisers are seeking in this age of distraction: consumer engagement. Two-thirds of the advertisers in our study indicate that Addressable TV advertising is important in helping them achieve their overall marketing goals. Tracey Scheppach sums it up succinctly: It s really the relevancy that we re looking for to matter more to the consumer. And with relevancy comes efficiency and effectiveness. 9 10

7 As a relatively new platform, Addressable TV advertising is naturally subject to apprehension on the part of advertisers. Only about one-third of respondents in our study indicate that they have a thorough understanding of the various components or feel comfortable recommending a campaign. However, our findings indicate that many of the deterrents to investment are not inherent problems with Addressable TV advertising, but rather a matter of educating advertisers on its applications and efficiencies. Dispelling Misconceptions 11 12

8 1. It s just too expensive Advertisers recognize multiple benefits of using ecpm to measure ad efficiency About half of advertisers in our study mentioned Addressable TV pricing as a roadblock to greater investment in the platform. Addressable TV advertising, like other targeted marketing opportunities, often comes at a premium as it delivers a more specific audience. Comparisons on a cost per thousand (CPM) basis may make Addressable TV appear more expensive, but when compared to a traditional linear TV ad buy, there is actually less waste, yielding a better effective CPM (ecpm). Addressability creates efficiency and helps lower overall advertising expenditure by limiting wasted impressions. Allows for an easy comparison between media types Allows for an easy comparison between media brands More accurate ROI measurement 47% 45% 55% Simplifies advertising reporting/measurement 43% Advertisers are planning on increasing their spend on Addressable More precise measure of target audience reach Don t know 2% 43% 55% Increase 39% Stay the same 6% Decrease More than half of the respondents in our study recognize the benefits of utilizing ecpms when comparing media types, but ecpm comparisons across linear and Addressable TV buys are still not the norm, with fewer than one-in-four respondents reporting that they use ecpm comparisons Ideally, advertisers would like to allocate 10% MORE of their budgets to Addressable TV all the time. Q: What are the advantages of using an ecpm to measure efficiency? Base: Total Respondents

9 81% agree: Over the next few years, Addressable TV advertising budgets will grow and make up a larger share of TV advertising 39% We re testing Addressable TV and determining its role in our media buy Addressable TV adoption 61% Addressable TV is an important part of our media buy Advertisers use Addressable across the funnel 25% FULL FUNNEL 2. It s only for lower-funnel campaigns 40% TOP FUNNEL Addressable TV is sometimes compared to direct response advertising, which is typically used to convert viewership into immediate sales via phone or web. Yet, those surveyed in our study stated they are utilizing Addressable TV across the purchase funnel. Case studies from AT&T AdWorks advertisers reveal the platform s potential to drive results at multiple touchpoints throughout the consumer journey, from brand awareness and identity to ad recall and purchase intent. 34% MID FUNNEL 30% LOWER FUNNEL Q: For which types of campaigns would you include Addressable TV advertising on the media plan? Base: Total Respondents

10 3. It s only for the big guys Robert Anderson, Digital Media Consultant at Adlab, points out Addressable s potential for better data on small audience segments, an opportunity for niche brands to leverage the effectiveness of television. 68% agree: Addressable TV is very important in helping achieve marketing goals Addressable television allows us to increase our frequency against our core customer segment without the burden of the expense and the waste. 76% agree: Addressable TV offers more actionable audience insights than traditional TV advertising MICHAEL BOLOGNA President of one2one Media Q. Please indicate how much you agree or disagree with each statement about Addressable TV advertising. Base: Total Respondents

11 4. It hasn t scaled Factors inhibiting greater investment into Addressable TV advertising, ranked 1-3 Though about 40% of agency decision-makers in our study indicated low client adoption was a factor inhibiting greater spend, 45% of surveyed marketers consider Addressable TV important to their media plan. More than half of respondents in our study plan to increase their Addressable TV budgets in the next year. Cost/Price 49% Lack of scale / Inadequate reach 40% Low client adoption (Agencies) 39% Top factors inhibiting greater spend: Industry reliance on traditional linear TV measurements Confusion about how addressable TV advertising works / its benefits 32% 36% 49% COST 40% REACH 36% MEASUREMENT Inadequate metrics/measurement 29% Not compatible with how we typically buy TV 27% Consumer privacy concerns 26% Lack of internal sources to implement 21% Low agency adoption (Marketers) 15% 1 in 3 SEE GENERAL CONFUSION ABOUT HOW ADDRESSABLE WORKS Poor performance/roi 14% Q: What are the top 5 factors inhibiting greater investment into Addressable TV advertising? Base: Total Respondents

12 What will spur greater adoption? Opportunities for Marketplace Education Better reach against my target 49% More attractive cost 47% Better metrics 36% Better understanding of effectiveness 36% Ease of use/execution 27% More transparency 27% Client recommendation (Agencies) 21% Better consumer privacy protections 20% Senior management adoption 19% More automated buying options 19% Many believe that greater adoption will only come once there is a greater pool of inventory available across a unified platform of providers. Our findings suggest that general education on the value of Addressable TV and how to best execute and measure campaigns is also barriers to adoption. When we asked advertisers what would make Addressable TV advertising more attractive, four of the top five responses were areas that providers and early adopters could actively influence today. Agency recommendation (Marketers) 11% Q: You indicated that Addressable TV is second-tier buy. What would persuade you to move it to a must buy? Base: Total Respondents

13 Summary Given the desire to target ads more accurately and better measure ROI, Addressable Advertising is poised for significant growth. As advertisers continue to seek better ways to effectively and efficiently reach their target audiences, Addressable TV can be a solution for many advertisers to do both, today

14 Key category insights and case studies 25 26

15 Case Study Pharmaceutical: Antacid Target: Purchasers of the advertiser s antacid and its competitors OTC medication Flight Duration: 7 weeks Pharma advertisers more likely to use addressable for top funnel campaigns Highly penetrated categories and brands can utilize the targeting capabilities of Addressable TV to complement their broad brand awareness campaigns with messages to segments that are known to be purchasers. Using data from Nielsen Catalina Solutions, we can compare brand spending nationally for this OTC Antacid brand to a control holdout group to see that not only did their Addressable campaign reach a more valuable target, but that by reaching this high-value target, they drove increased spending. Without exposure to the specific campaign, U.S. households only spent $0.16 on the category while households in the identified target spent $1.23. Target households that were exposed to the specific campaign spent 7% more over the campaign and a fixed post-campaign period. 23% FULL FUNNEL vs. 25% total 63% TOP FUNNEL vs. 40% total NATIONAL CONTROL TARGET +7% LIFT OVER THE CONTROL +725% LIFT OVER NATIONAL $1.23 $ % MID FUNNEL vs. 34% total 23% LOWER FUNNEL vs. 30% total $0.16 Average Dollars per HH Campaign flight: Q Case study results are based on individual campaign factors. AT&T makes no performance warranties. National: Represents national numbers during the analysis period using xaoc data. Control: Represents 10% of DTV HHs within the target that did not receive exposure to the addressable ad. Source: Nielsen Catalina Solutions. Q: For which types of campaigns would you include Addressable TV advertising on the media plan? Base: Total Respondents, Total Pharmaceutical Respondents

16 Most important Addressable TV advertising metrics for Pharma Advertisers Sales Conversion Pharma 74% Total 67% Target audience delivery and reach 69% 71% Purchase consideration metrics, quotes, website visitation, store visitation 60% 59% Directly attributable actions: purchase site visit, sign up, log in, download within a specific attribution window 57% 60% Frequency distribution, measurement of the number of times a viewer sees an ad 40% 43% Q: Below is a list of commonly used Addressable TV advertising metrics. Please rank them in order of most important to least important (Rank each with 1 being most important). Base: Total Respondents, Total Pharmaceutical Respondents

17 Case Study CPG CPG advertisers more likely to use Addressable mid funnel Target: Custom target Flight Duration: 6 weeks While many advertisers think of Addressable TV as a tool for campaigns that are focused on lower-funnel metrics, such as driving purchase, it is equally effective for upper-funnel campaigns that focus on brand awareness, perceptions, and purchase intent. This CPG brand drove upper-funnel and mid-funnel metrics utilizing AT&T AdWorks Addressable platform. Compared to the control group (10% of the target audience who were not shown the campaign), households that were exposed to the campaign showed increases across all key metrics. By delivering a brand message to their target, the brand was also able to shift perceptions around innovation. 20% FULL FUNNEL vs. 25% total 25% TOP FUNNEL vs. 40% total CONTROL TARGET +260% LIFT +81% LIFT 47% +84% LIFT 45% MID FUNNEL vs. 34% total +82% LIFT 36% 26% 35% 38% LOWER FUNNEL vs. 30% total 20% 19% 11% 10% Brand Awareness Ad Recall Purchase Intent Innovative Campaign flight: Q Case study results are based on individual campaign factors. AT&T makes no performance warranties. Control: Represents 10% of DTV HHs within the target that did not receive exposure to the Addressable ad. Source: Experian for targeting. Penn Schoen Berland for the Brand Health Study. Q: For which types of campaigns would you include Addressable TV advertising on the media plan? Base: Total Respondents/Total CPG Respondents

18 Addressable TV s top benefits according to CPG advertisers Increased ad relevance CPG 65% Total 59% Targeting precision 58% and granularity 65% Targets unique households Delivers hard to reach audiences 47% 58% 56% 58% Eliminates waste in TV buys Better ROAS/ROI 50% 49% 53% 53% Greater accountability and measurement 44% 48% Delivers important and meaningful reach 38% 36% Ability to manage ad frequency 28% 29% Ability to optimize future campaigns based on back-end results 23% 36% Ads delivered across screens/platform 23% 27% Q: Please rank the top 5 benefits of Addressable TV advertising. Base: Total Respondents/Total CPG Respondents

19 Case Study Travel Target: Age 25-54, HHI $75K+, Online travel purchaser, Hotel guest loyalty program members Flight Duration: 6 weeks Post-campaign total Addressable TV conversions Non-member target universe: 23,420 Addressable TV empowers advertisers to utilize 1st- and 3rd-party data to measure the effectiveness of their TV advertising. By utilizing their 1st party sales data for the prior three years, this hotel client was able to determine the New Customer Effect of their campaign. They built a target audience that would include current and potential customers and were able to segment post-exposure booking behavior of those groups to see what proportion of the bookings came from consumers who had stayed with them over three 12-month periods. In this way they re able to demonstrate the efficacy of their TV advertising. PRE-EXISTING CUSTOMERS NET NEW CUSTOMERS +65.6% LIFT +73.6% LIFT +77.6% LIFT CONTROL TARGET % LIFT 12.70% 14.26% % LIFT 16,068 17,232 18, % 8.52% % LIFT 1.86% 2.12% 7,352 6,188 5,252 Total Bookings 1 Booking 4+ Bookings Prior 12 Months Prior Months Prior Months Campaign flight: Q Results are based on individual campaign factors. AT&T makes no performance warranties. Control: Represents 10% of DTV HHs within the target that did not receive exposure to the addressable ad. Source: Experian

20 Travel advertisers rank target audience delivery and reach the most important measure of Addressable TV campaigns Target audience delivery and reach Travel 77% Total 71% Sales conversion 63% 66% Purchase consideration metrics, quotes, website visitation, store visitation 60% 59% Directly attributable actions: purchase site visits, sign up, log in, download within a specific attribution window 50% 60% Frequency distribution, measurement of the number of times a viewer sees an ad 44% 50% Q: Below is a list of commonly used Addressable TV advertising metrics. Please rank them in order from most important to least important. (Rank each with 1 being most important). Base: Total Respondents, Total Travel Respondents

21 For this study, Advertiser Perceptions interviewed 154 Marketer and Agency executives and conducted in-depth interviews with advertisers with a high level of familiarity running Addressable Advertising campaigns. Fieldwork was completed in March Advertiser Perceptions is the global leader in data-driven business intelligence for the advertising industry. Our exclusive insights, practical advice and expert guidance produce solutions that deliver results and enable our clients to thrive in today s complex and competitive advertising market. For more information about our services please contact us at or info@advertiserperceptions.com.