Addressable TV flips the traditional TV advertising buying process on its head: Instead of selecting network or program to advertise on, you select the audience (households) you want seeing your ads. Ads are then delivered whenever that audience members are watching TV. It's really that simple.

No additional action is required by the viewers to see the ads, which appear as regular commercials would.

Two of the eight ad minutes per hour of content are available for addressable TV advertising—which has been growing in recent years. Spend on addressable TV advertising doubled from 2015 to 2016 and will reach $2 billion in 2018, according to eMarketer.

The current ecosystem is composed of multiple-system operators (MSOs), including Cablevision, Charter, Comcast, DirecTV/AT&T Adworks, and Dish (Cox to become addressable in 2017). Collectively, they represent roughly 50 million households that are available for targeting.

The technology that enables addressable TV rests in the set-top boxes provided by each company. The set-top boxes give each household a unique identifier and allow for the aggregation of TV viewing data.

What makes addressable TV powerful is the data available for targeting, the ability to significantly reduce waste, measurability at a ROI level, and post-campaign data that helps you optimize your traditional TV buys.

Eight Steps for Getting Started

Now that you know some of the key benefits, let's dive into how to get started:

1. Objectives. What marketing tactic are you pursuing with addressable TV (prospecting, cross-sell, upsell, etc.)? Whom do you need to reach to achieve your goals? What is an allowable cost per acquisition? These are some of the questions you'll need to answer to help determine whether addressable TV is the best solution for you. Though addressable TV was designed to target niche or semi-niche products or services, even CPG brands have run successful campaigns.
2. Data assets. Every addressable campaign should start with a precise target audience in mind. Do you have the names and addresses of the audience you're trying to reach? Consider third-party data providers if you don't have a sizeable (0.5-6+ million) audience to target.
3. Creative assets. Confirm you can use creative messaging that is tailored specifically to the audience you're targeting. Do the measurement objectives align with the creative messaging? If your audience is large enough, you can run split tests with different creative: 15-, 30-, and 60-second spots are accepted by most MSOs.
4. Addressable audience. After you have a handle on whom you want to target, you need to identify the available universe on each of the MSOs (Cablevision, Comcast, DirecTV, Dish, Charter). A handful of data safe havens have all of the major MSO files in-house and can run counts for you.
5. MSO selection. After seeing your available addressable audience on each MSO, you must decide which MSOs make the most sense to advertise on.
6. Campaign planning. The cost of your campaign is determined by the size of your audience (typically, the smaller the audience, the more expensive), the frequency (impressions per week) and duration (number of weeks) of the campaign. Decide whether you want to blacklist certain networks or dayparts.
7. Execution. Send you creative assets to the MSOs. Work with your data provider to get your data assets to the MSOs for targeting. Typically, you should receive weekly reports on delivery, and monthly reports on performance.
8. Performance measurement. Always include a control in your campaigns and compare that against the exposed or test group. Look at incremental lift to determine the effectiveness of your campaign. Give at least a 30-day window to see performance after the campaign has ended; that period will give viewers enough time to act.

Scenarios

A great application for addressable TV advertising might be for solar panel companies. You want to advertise specifically to homeowners with a certain roof area and angle, and who have a tendency to buy green products. By using addressable TV, you prevent advertising to anyone who doesn't quality, you hit households with a high propensity to buy.

Also, imagine you're a large insurance company and you have a corporate initiative to improve new customer acquisition for renters insurance. Instead of selecting which shows you think renters watch, you specifically select known renters you want seeing your ads (eliminating waste).

Summary

With proper execution, addressable TV has the potential to change the way we buy and measure TV advertising. It turns TV from a broadcast channel into more of a direct marketing channel.

The steps outlined in this article are critical for properly and efficiently executing a successful addressable TV campaign.