What Is Addressable TV Advertising and How Does It Work

In the early days of TV, ads were placed based on the programs they supported. This means that every household tuning into a given broadcast would experience the same commercial break. Marketers were forced to take a spray-and-pray approach to TV advertising, broadcasting generic messaging to large groups in hopes of reaching a handful of prospects.

Addressable TV turns this practice on its head, enabling advertisers to target different ads to specific households based on viewer data. This ensures that viewers see more relevant commercials, and media buyers don’t waste their ad spend on the wrong people

The rise of streaming services and connected TV devices makes this all possible and it’s changing the game for TV advertising. In this article, we explore what addressable TV advertising is, how it works, and why it’s becoming an essential part of any successful advertising strategy.

What Is Addressable TV Advertising?

Addressable TV advertising is a form of targeted advertising that allows advertisers to deliver ads to specific households or individuals. Thanks to programmatic technology, advertisers can pinpoint who sees their ads based on demographics, interests, viewing habits, buying behavior, and more.

Unlike traditional TV, which broadcasts the same ads to all viewers, addressable TV advertising allows for a more personalized and targeted approach. This means that different households watching the same program may see unique ads based on their specific characteristics and interests.

Addressable TV Advertising Examples

Imagine that your neighbor, Jane Doe, is watching her local team play Thursday Night Football with an over-the-air antenna. Meanwhile, her out-of-town brother, John Doe, is streaming the game on Amazon Prime.

During Jane’s commercial break, a generic ad for a large insurance company plays while she heads to the bathroom. The commercial has little to do with Jane’s interests or buying activity — and achieves nothing other than keeping the company’s name top of mind.

Meanwhile, Jane’s brother John sits tight during the commercial break because the ads align with his hobbies and purchase history. A Nike commercial runs showcasing the brand’s newest running shoe complete with a custom URL that takes him directly to a page featuring that pair. As an avid runner training for his first marathon, John follows the link and makes a purchase.

John’s experience is a perfect example of addressable TV advertising — and it’s all made possible with connected TV (CTV).

How Does Addressable TV Advertising Work?

Unlike traditional linear TV, which targets viewers based on the programs they’re watching, addressable TV takes an audience-centric approach to ad placements. This is achieved using programmatic CTV technology, which relies on first- and third-party data to identify specific households. 

Here’s a breakdown of the process:

• Data collection: Data is collected from various sources, such as first-party CRM data, Amazon purchase data, and connected TV viewing habit data. These sources are combined to provide information about viewers’ demographics, interests, and viewing habits.
  
  
• Audience segmentation: Using this data, advertisers segment their audience into different groups based on their characteristics and interests. This allows them to create targeted ads that are more likely to resonate with each group.
  
  
• Ad delivery: Once the audience is segmented, the targeted ads are delivered to specific households through their CTV screens. These ads run during streaming content like on-demand shows on Amazon Prime, live sports broadcasts on YouTube TV, and must-watch TV shows on DirecTV Stream.
  
  
• Measurement and optimization: Advertisers are then able to track the performance of their ads and make adjustments based on the data collected. This paves the way for continuous optimization that can be done on the fly.

Benefits of Addressable TV Advertising

Addressable TV advertising benefits viewers, media buyers, and streaming platforms.

More relevant and personalized viewing experiences? Check. Lower costs and better performance for advertisers? Check. More transparency into results? Check.

Here’s a look at why addressable TV advertising is so compelling to media buyers and marketing leaders:

• Targeted reach: With addressable TV advertising, advertisers can reach specific households or individuals, ensuring that their ads are seen by the right audience.
  
  
• Personalization: By targeting specific households or individuals, advertisers can create personalized ads with nuanced messaging that’s likely to resonate with unique audience segments.
  
  
• Cost-effective: Advertisers only pay for the ads that are delivered to their target audience, making it a more cost-effective option.
  
  
• Measurable results: Addressable TV advertising allows for more accurate measurement of ad performance, providing advertisers with valuable data that can be used to optimize their campaigns.
  
  

How Is Addressable CTV Different from Traditional TV Advertising?

Rather than broadcasting expensive and irrelevant commercials to countless viewers, addressable programmatic CTV allows businesses to reach likely buyers with sophisticated campaigns.

Strategus EVP and Co-founder Joel Cox explains:

“Programmatic advertising brings new capabilities to more mid-market companies who can now afford more precise targeting, and therefore more accessible budgeting and reach. The opportunities for more advertisers are democratized by new technology. We want to move the market more toward where it should go, where ads are targeted to individuals in the audience, who see ads that are relevant to them, as opposed to the old way, where ads are targeted more toward the content that people are watching. 

The data-driven approach makes so much more sense as the content is exploding with digital streaming over the internet. Serving relevant ads to the right people at the right time is where the advertising industry has wanted to go for generations.”

It’s also worth noting that streaming has surpassed traditional TV in terms of viewership, so allocating ad budget to programmatic CTV is a must at this stage of the game.

Addressable TV Tactics

Addressable TV advertising can be used in a variety of ways to achieve different advertising goals. Here are some examples of how advertisers can target niche audiences on the living room TV:

• Website retargeting: Reengage warm leads on the big screen and lure online shopper back to their abandoned carts. This keeps your brand top of mind after leads step away from the computer.
  
  
• First-party data targeting: Leverage customer data from your CRM to deliver personalized CTV ads directly to your contacts’ living rooms. 
  
  
• Lookalike modeling: Expand your reach by building custom lookalike audiences. This powerful tactic is our second-best performer for driving results.
  
  
• Location-based retargeting: Reconnect with users who‘ve visited your stores — or conquest foot traffic from competitor locations. Both are powerful tactics to translate physical touchpoints into digital engagement.
  
  
• Smart audience contextual: Reach consumers actively researching your services by targeting viewers based on the websites they’ve been visiting and keywords they’ve been typing into Google.
  
  
• ACR data targeting: Reach specific households based on their TV viewing habits and interests for precise audience alignment. This could mean showing an ad for a Lexus convertible on its way to a golf course to a viewer who regularly watches live golf.
  
  
• Linear TV extension: Bridge the gap between your linear TV campaigns and CTV by targeting households exposed to your TV ads for increased reach and frequency. A combination of both mediums ensures that your efforts aren’t siloed.
  
  
• Amazon data targeting: Leverage Amazon purchase data to reach consumers actively shopping for products related to your campaign. For instance, a person who often purchases gluten-free products may see a commercial for a local health store.

How to Get Started With Addressable TV Advertising

At Strategus, we partner with brands and agencies to make the most out of addressable TV advertising by combining industry-leading tech, programmatic CTV expertise, and dedicated resources. 

Our CTV experts augment your team by executing customized campaigns and monitoring the data, so you can focus on what you do best. Once your target buyers and KPIs have been pinned down, we develop a multi-channel strategy that’s personalized to your business needs. From there, we provide all the tools needed to quantify ROI and understand your customers’ journey — including a 24/7 dashboard and an evolving roster of attribution solutions. 

Our experts continuously optimize the targeting and cross-device tactics based on real-time data. Instant access to our team of experts allows you to ask any questions, make any changes, and scale campaigns as your CTV advertising needs grow.

Whether you’re new to programmatic advertising or are looking for an extra layer of support for complex campaigns, we’re the CTV experts that make addressable TV advertising easy. Contact us today for a free consultation.