Targeting TV audiences at a household level, also known as addressable advertising, often seems best for marketers seeking very specific kinds of consumers: women getting ready to buy a mid-priced car, for example, or executives who travel frequently. Marketers of products like toilet paper, the thinking goes, just need to reach the most people possible.
But AT&T AdWorks is looking to change that perception during its “addressable” upfront pitches to ad buyers this spring, where sales executives are arguing that household targeting can work for any marketer, including those whose target consumer is, well, everyone.
“When thinking about addressable advertising a lot of people automatically go to micro-targeting,” said Maria Mandel Dunsche, VP-head of marketing, AT&T AdWorks. “They think it is black or white, but there is a grey area to targeting.”
Ultimately, targeting doesn’t need to be extreme, Ms. Mandel Dunsche said. Marketers can also target “just enough to minimize waste, [but] not so much that you reduce reach,” she said.
That’s what ConAgra Foods, whose brands include Slim Jim and Chef Boyardee, has found out in its tests of addressable TV ads.
“When you target more tightly, it increases return, but targeting too tightly decreases return,” said Fernando Arriola, VP-marketing, ConAgra.
The possible ways marketers can target consumers on TV goes something like this: They can start very broad, with just an age or gender target, and reach a large group of possible customers as well as others. If they tighten the focus, perhaps targeting people who buy frozen foods, Mr. Arriola said the returns become greater. But if they go too narrow, trying to reach only those who buy single-serve frozen entrees, “you may leave money on the table,” he said.
ConAgra, which has been running addressable TV ads for nearly three years, predominantly uses the inventory to promote brands that are more heavily skewed to certain parts of the country or have a lower household penetration, Mr. Arriola said.
The exercise of pinpointing specific consumers has forced ConAgra to re-think some of its targeting practices, Mr. Arriola said.
The popcorn team, for example, wanted to target moms with kids ages 6 to 18, Mr. Arriola said. But that led to the question, do they really want to exclude young adults watching movies or older empty nesters?
Instead of looking at precision marketing as finding the target and excluding everyone else, Mr. Arriola said ConAgra is figuring out ways to serve up different messaging to different consumers.
When addressable advertising first became available, many media agencies tested the practice for brands in more obvious categories, like autos. Since there are so few people in the market for a new car at any given time and there’s a plethora of data that allows auto manufactures to identify those people, it was a natural fit, said Tracey Scheppach, exec VP-precision video, SMG.
“The mistake many people made is we raced to the bottom of the sales funnel,” she added, referring to the time right before a consumer actually makes a purchase.
Now, there’s more of an understanding that this can “work for everybody,” she said.
Marketers can reach about 65% of consumers pretty easily with standard TV buys, but finding light TV watchers is tough and only getting harder with audience fragmentation, Ms. Scheppach said.
With addressable advertising, “We know which households have already seen the ad so we can target those who haven’t,” she said.
The industry has been slow to adopt addressable TV advertising. For the most part, any given company offering addressable TV has had relatively limited reach. And it can be complicated and time consuming to assemble an addressable campaign across multiple operators because the technology varies by company. Addressable advertising also comes with a premium price tag because the ads target a specific consumer.
But it is certainly gaining size, and marketers are at least a bit open to higher prices in exchange for eliminated waste.
Addressable advertising will be available in about 13 million AT&T households by the end of the year, the company said. All told, the total reach of the addressable marketplace across pay-TV operators is about 40 million households. That figure will be closer to 80 million by 2020, Ms. Mondel Dunsche predicted.