No flipping: How smart TVs are getting quite smart about you

Author

Michael Beach
September 11, 2018

Tipping point: Connected-TVs will make up 70% of total TV sets sold this year.

Advanced TV ad spending (% of total):
1) 2015 — $720M (1%)
2) 2016 — $1.5B (2%)
3) 2017 — $3.4B (5%)
4) 2018 — $6.7B (9%)

Key passage from a recent article via John R. Osborn:“Specific audiences like dog owners in Tulsa or households with young children are now becoming addressable at the “glass” level. And because an ad impression viewed on digital platforms can be verified, buyers are buying realized impressions rather than an “opportunity for exposure.”

This measurability renders Wanamaker’s “half the money spent on advertising is wasted” obsolete. Through targeted ads, less of a buyer’s budget will be “wasted,” or spent on untargeted impressions. Higher costs per unit will be acceptable to advertisers since the value of inventory will be more clearly understood, and sellers will gain higher CPMs — a win-win outcome.”

Adoption for addressable TV:
1) Fully using — 15%
2) Experimenting or not using — 85%

Adoption for advanced TV:
1) Fully using — 17%
2) Experimenting or not using — 83%

Huge opportunity: 83–85% of advertisers have not yet integrated either addressable TV or advanced TV into their ad plans.

Quote from Omar Sheikh — Analyst @ Credit Suisse.“Investors continue to regard U.S TV advertising as a structurally declining business, driven by erosion in viewing and competition from the growing reach of digital platforms,” Sheikh said. “In our view, if the TV industry can combine its reach with greater relevance by using technology to improve targeting, the medium will be well-placed to grow its share of the marketing mix over time. This will particularly be driven by below-the-line items, including direct mail and telephone marketing, which account for more than $100 billion of spend today.”

Big question: Did you buy a Maserati last year? If so, then you purchased one of the 7K that were sold domestically in 2017.

Quick math:
1) U.S. TV households — 119.6M
2) Maserati sales — 7K
3) Households / Maseratis sold — 17K

Only1 out of every 17K U.S. households bought a Maserati in 2017 and yet addressable advertising allows them to effectively advertise on television/digital.

This is why both addressable and advanced TV advertising holds so much promise.

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