The Golden Age of television advertising may just be arriving. More than 40 million households can be pinpointed with relevant TV spots.

Last year a national beverage brand sought to win back business from households with incomes in excess of $70,000 and kids ages 7 to 12. It purchased third-party data from a leading aggregator and matched it with first-party data from participating media companies to execute a highly targeted blitz. It scored big. Following the campaign, penetration within the target segment increased 38%, bringing with it a 21% sales lift. But it wasn’t direct mail couponing or programmatic display advertising that accomplished this feat. It was television—addressable TV, to be precise.

The beverage brand was one of 100-plus Starcom Mediavest Group clients that contributed to $300 million worth of addressable ads placed by Publicis’s huge media network last year. That’s twice what it was the year before. SMG started looking at addressable TV a decade ago, introduced pilot programs in 2013, took it to the open market in 2014, and moved beyond tests into always-on flighting in 2015. The data flow and the set-top box technology had finally caught up to the desire for a more targeted approach to advertising on what still is the number one media channel (see table below). Americans, on average, spend about four hours a day watching video content on TV versus only one hour on digital devices.

“It turns out that all things are not Nielsen and programmatic advertising,” says Tracey Scheppach, the EVP who runs SMG’s Addressable Forefront. “We are doing addressable in 42 million households in the U.S. today, and several agencies are very involved in the market. TV is poised for a transformation like you’ve never seen. It’s been stuck with Nielsen until this 42 million came along. We’ve greatly increased our ability to do one-to-one delivery.”

Here’s how it works: An advertiser defines a target and provides customer data. The TV provider adds subscriber data and the files are sent to third-party “safe havens” (so called because they strip personally identifiable information) such as Acxiom or Experian for matching. The segment files are then returned to the TV companies. The number of those companies with set-top boxes equipped for the task is constantly growing, and now includes Cablevision, Comcast, DirectTV, Dish Network, and Verizon Fios.

“We’ve got 32,000 bits allocated to us in the set-top box. Any kind of data at all can be ingested and used to target viewers. We can identify anything you want. We can identify a left-handed juggling clown,” says Michael Kubin, EVP of media at Invidi, one of the chief technology platforms powering addressable TV. Invidi taps click-stream data, viewer patterns, Census data, ZIP+4, and even remote control usage to determine a viewer’s age, gender, income, and location. Company literature claims to be able to “pick and choose TV viewers with the same accuracy as direct mail.”

Looking to become the Nielsens of the addressable TV age are third-party data providers such as Acxiom, which last month launched Acxiom TV and the Audience Interconnect platform to help clients pinpoint TV audience segments. The business unit grew out of Acxiom’s December acquisition of Allant, a third-party TV data management company whose clients included Comcast and Dish. “TV is changing in a big way. It used to be an appliance that sat in your house and received one prefixed signal. Now it’s about receiving video content through a device,” says Rick Erwin, president of Acxiom Audience Solutions. “The cable and satellite operators who operate those devices control two minutes of every hour to run their own ad inventory, and now they can use those two minutes to deliver ads that will be more meaningful to the consumers receiving them and to their partners.”

Kubin says that the outermost universe of households reachable by addressable TV ads is now 68 million, a number that is attracting pharmaceutical, consumer goods, automotive, and financial companies. As election frenzy heats up this year, addressable is sure to get a workout from political campaigns—especially congressional and even mayoral candidates for whom TV has always been too wasteful. Presidential candidates, meanwhile, will use addressable’s segmentation capabilities to target appeals to women, seniors, likely voters, or voters on the fence.

“We provide the efficiency of reaching only the households [candidates] want to reach. Think of how revolutionary that is,” says Mark Failla, director of political ad sales for D2 Media Sales, a joint effort of Dish Network and DirectTV. “Furthermore, addressable TV enables us to keep all the impressions within state boundaries.”

Like data-driven marketing on the Web, addressable TV platforms such as Invidi’s use metrics to track results, refine lists, and improve future outcomes. An SMG study of 20-plus addressable campaigns run between 2013 and 2015 discovered a 37% increase in CPM efficiency for its clients. Failla says presidential candidates will surely apply such efficiencies to the medium that is the biggest drain on their budgets. “The backend reporting that we provide is able to show how many of those households we actually reached and with what frequency. We can show the number of impressions by daypart and day of the week for the top 25 cable networks,” he says. “This can inform other media buys.”

SMG’s Scheppach thinks that, given time, addressable TV will kick programmatic Web advertising’s butt. “Addressable is programmatic, yet not automated. TV doesn’t really need automation, because it’s not time consuming to buy. It’s fairly easy to buy a billion dollars of TV time,” she says. “What’s more, it’s a closed ecosystem. No bots can get in there. And there’s no below-the-fold. The only non-viewable ad is when you go to the bathroom.”

Al Urbanski, Senior Editor, Direct Marketing News

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