Addressable TV ads can extend golden age of television

LATER this year, Virgin Media Television will begin trialling its new addressable TV offering for advertisers looking to target specific audiences around the country. Although the move was first announced in 2017, the company is close to having its ducks lined up in a row with a view to tapping into and, hopefully, growing the amount of money that is invested in TV advertising in Ireland.

Figures published by the TV audience measurement group, TAM Ireland, show that total advertising spend on TV last year amounted to €247.5m, a 5pc increase on 2017 and a 23.8c share of the total ad spend across all media in Ireland.

Addressable TV — or addressable advertising to be more precise — essentially opens up a new stream of revenue to broadcasters that have settop boxes in households around the country. In other words, Sky and Virgin Media.

Not only will it allow advertisers to target consumers by location — including by county or province — but it will allow them target by demographic.

Addressable advertising is by no means unique and Sky has already been offering addressable advertising in the Irish market for the last two years and some of the brands that have availed of it include AIB, GoCar, Network Security and Nissan. It has also been on a mission to woo

brands, advertisers and agencies to try it out.

In the UK, where there are 30 million addressable households, Sky has also grown the advertising market from zero four years ago into a business which is forecast to generate around €100m in advertising revenue this year. In the USA, meanwhile, 65 million households have the ability to receive addressable advertising through their set-top boxes while ad spend is forecast to hit $3.3bn by the end of 2020.

That’s a lot of money for an industry which many had written off several years ago as people started to cut their cable cords and ad-free OTT platforms like Netflix started to gnaw away at the market.

What is unique about the Virgin proposition is that it’s being offered in partnership with Sky, which will essentially sell the joint venture offering to advertisers and agencies.

Both companies already compete against each other in the cut-throat Irish market for phone, broadband and TV services. But it is also a good example of how two fierce competitors can also collaborate for their mutual benefit. It also demonstrates to other parts of the media ecosystem that such partnerships are possible as sections of it continue to see advertising investment wing its way towards the coffers of the digital behemoths, Google and Facebook. And yes, I am talking about press and the need for greater collaboration on the digital advertising front, but I’ll save that topic for another day.

A combined Sky and Virgin Media offering, however, is likely to offer access to nearly one million Irish households when fully up and running, a prospect that might be too tantalising for many brands to turn their noses up, particularly those looking to target a certain demographic or region.

While initially it was feared that addressable advertising might sound the death knell for its grown up sister, linear TV advertising, it is now being seen by many in the industry as complementary.

Linear TV, after all, still offers big brands mass audiences at scale and it’s generally accepted that it’s hard to beat TV advertising when it comes to brand-building. It’s for that reason that big technology brands like Apple, Sony and Microsoft still use TV as an important part of their marketing armoury.

Addressable advertising, on the other hand, will be of interest to those wanting to target a more specific audience with the precision-like capabilities of normal digital advertising, whether it’s a promotion by a small retailer in Munster offering a discount on wine to people close to their stores in Cork city or a gym in Castlebar targeting locals. Or, indeed, it could still be used by a big brand to reinforce its wider message to a more specific targeted audience.

At the moment, addressable advertising is still in its infancy, a bit like where digital marketing was 15 years ago. But, as we have seen with digital marketing, it can only get better and a lot more sophisticated. Its future success will obviously hinge on the quality of the data it has at its disposal. As much of this is already rich, first-party data, when advertisers and agencies layer their own data on top of it, this is when it will really come into its own. Throw in better attribution and analytical tools while demonstrating its ability to generate a return on investment and then the future looks bright.

And if it can compete with the likes of Google and Facebook and reverse some of the current investment trends, then the so-called golden age of TV could still have a few more years left to run.