Nielsen is launching a new group to focus on addressable TV advertising.
The group will integrate technology from Sorenson Media which was recently acquired by Nielsen. Sorenson was previously offering addressable advertising through partnerships with Samsung, Hearst and Sinclair Broadcast Group.
Why this matters: We are in the early innings of the addressable video game with between 15%-17% of advertisers fully implementing either addressable or advanced TV.
Quote from Tim Peterson– Senior Reporter @ Digiday:
Molly Wood: How much more money can cable companies make? I assume they can charge more for an addressable TV ad than a generic one.
Tim Peterson: Oh yeah, absolutely. They can charge you about 10 times more for these kinds of ads, because they can be somewhat more effective, or at least more pinpointed, for the advertisers. So if an advertiser is paying $10 for a general ad that will just run during the basketball game to everyone who’s watching the basketball game, they can alternatively pay, say $100, to only show it to people in certain markets who have a certain household income and certain other interest levels. So there’s a bit more efficiency or less waste with it, but it’s more expensive to do that.
If AT&T offers addressable advertising AND owns the networks the following could occur:
1) Ad pricing — A single ad impression increases 192% from 1.2¢ to 3.5¢ due to improved targeting.
2) Inventory — The number of 30s spots available to AT&T increases 600% from 4 to 28 now that they are both the cable provider and content owner.
3) Total impact — AT&T currently makes roughly $0.05 per hour (4 spots x 1.2¢), but that could increase to $0.98 per hour (28 spots x 3.5¢) if they accomplish #1 and #2.