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Does Addressable Advertising Spell the End of Demographics?

January 22nd, 2019   ||    by Susan Kuchinskas

In early December, Nielsen expanded its Dynamic Ad Insertion (DAI) pilot that will let MediaTek-powered smart TV platforms deliver addressable advertising in five major US markets.

According to Research Live, the platform will consider not only the traditional demographics of gender and age but also unspecified advanced demographics.

This is just the latest step toward the age of addressable advertising for television. Advertisers can deliver ads relevant to individuals who are watching a show, instead of inferring what’s relevant based on the show they’re watching.

What does this mean for the traditional demographics that advertisers have relied on so heavily when it comes to TV advertising?

Demographics Aren’t Dead

Well, Google has officially declared demographic targeting as dead, claiming, “Targeting audiences based on their behavioral ‘intent’ or affinity (such as what they watch, search, visit) gives marketers a more accurate picture of their audience.”

True enough, although the situation is more complicated for television advertising. Using demographic assumptions can lead to advertisers missing large swaths of their prospects. For example, 49 percent of viewers of the 2017 Super Bowl were female, according to Forbes. (Women also paid more attention to the game and to ads than the men did.)

That doesn’t mean we’ll be seeing more ads for Pampers and less for beer in future Super Bowls. But with addressable advertising, Pampers could combine demographic assumptions—female, under 40—with viewing behavior to send ads to women during lower-profile games. (Behavioral data might also show that men actually buy their fair share of diapers. You never know.)

We don’t think demographics are truly dead. They’ve just been demoted. As this hypothetical example shows, combining demographics with a variety of third-party data is the winning play.

A Boon to Advertisers and Stations

As Adweek details, addressable advertising provides many benefits to advertisers:

  • Multiple ways to define an audience, including purchase history, behavioral data, and third-party data, as well as traditional demographics
  • Reducing waste in the ad spend
  • Better response from consumers when ads are relevant to them
  • The ability to test spots and target audiences quickly in order to find the right balance
  • Better attribution

Addressable advertising could benefit broadcasters and local stations as well, by allowing them to charge higher rates for the more effective advertising. They might pass along some of this benefit to viewers by reducing the number of commercials shown.

One example of these benefits is campaign ads—one of the biggest sources of revenue for many local stations. The Boston Globe says political groups and candidates combine voting records with data such as home ownership and job history, to pay broadband providers to show ads to the desired target.

One addressable advertising campaign could be targeted toward undecided voters, while a get-out-and-vote campaign could be targeted toward a candidate’s supporters.

This tactic is used frequently for cable, broadband, and streaming services. The ability for broadcast and local stations to offer similar targeting could increase ad revenues while it improves advertisers’ ROI.

There’s been a call for the television industry to adopt and enable digital strategies, especially the use of data to drive campaigns. Movement is slow but steady—and this will be a win for advertisers, broadcasters, and consumers.

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