While the goal of Addressable TV (ATV) remains the same in the US and the EU—to help combine the reach and user experience of TV advertising with the data, targeting and measurement of digital—the method is very different. With the growth of OTT and CTV and the rapid decline of traditional TV packages, advertisers are increasingly demanding more advanced ways of reaching viewers, more measurability and higher ROI than traditional national TV buys.
In a previous post, we described the prevalence and capabilities of HbbTV technology. In the US, however, no silver bullet technology has emerged to help counter the steep viewer/subscriber declines that hurt broadcaster and Multichannel Video Programming Distributor (MVPD) ad dollars.
Outside of the explosive growth of CTV and OTT, broadcasters, programmers and MVPDs are trying to use new and existing infrastructure to enable Addressable TV within their existing footprints of traditional TV. We’ve outlined several technologies below that may help accomplish this.
For MVPDs, some basic addressability is possible through STB technology. Newer STBs partition space on the hard drive to store ads. Typically, satellite operators download these ads as a slow drip overnight while cable operators deliver ads over QAM or IP. Due to space restrictions of the local hardware and the fact that ads must be downloaded in advance, it is not possible to transact this Addressable advertising programmatically. Still, some measure of targeting can be achieved such as DMA, HH Income, etc. The ad selection is limited, and MVPDs typically limit this functionality to their own two minutes per hour of ad space and don’t enable programmers and broadcasters to utilize it to sell the remaining 10-14 mins of advertising per hour. Most ATV advertising occurs on video on demand (VOD) services, but it can occur in linear as well. Another problem with this method is that it is very disjointed. Each MVPD has different technology, different systems for booking ad sales, measuring, recording, etc. AT&T and Comcast currently have the largest addressable footprints, and AT&T said their purchase of Time Warner (and Appnexus) is intended to build out their ATV offering. However, there are still significant obstacles in the US that HbbTV doesn’t face in the EU market.
Internet Protocol Television (IPTV)
Bandwidth constraints on traditional infrastructure and the proliferation of internet-connected STBs cause cable and satellite companies to distribute some TV programming via IP to traditional STBs. For example, DISH international programming and DISH’s deal with Comcast are delivered over IP, suggesting that some addressable advertising is theoretically possible using methods similar to OTT/CTV. Still, Verizon’s FiOS and CenturyLink’s Prism shuttered their IPTV operations recently, so don’t expect a sudden growth of this method.
This new over-the-air (OTA) spec was introduced to bring OTA to the modern era by allowing internet-connected interaction, time-shift and VOD over-the-air. Many consumers in the US are unaware that broadcasters of major local stations (ABC, NBC, Fox, CBS) are required to broadcast OTA for free, but as consumers continue cutting the cord, OTA antennas are on the rise. This is the most similar solution to HbbTV, though it is an entirely different specification. It requires infrastructure updates and is years away from commercial adoption. However, with the merger of Sinclair and Tribune, owners of a significant chunk of the local stations in the US, there is an additional incentive for investment. ATSC 3.0 is an opportunity to improve the user experience and bring some viewers back who have left to other streaming services and skinny bundles. If broadcasters can recover some of their lost funds, they may also be able to reduce ad load through garnering higher CPMs. It will be worth keeping a close eye on ATSC 3.0 as it rolls out.
Where do we go from here?
The Addressable TV market in the US is growing, but the technology to enable it is still uncertain. At the same time, CTV and OTT are growing at a rapid pace and offer more advanced advertising capabilities than the Addressable TV technologies highlighted above. It is quite possible that CTV and OTT will leapfrog Addressable TV technologies in the long term, but in the short term, there is still plenty of money to be made with Addressable TV. To learn more about Addressable TV, check out our previous posts:
- HbbTV: How Addressable TV Is Implemented In The EU
- HbbTV’S Benefits For Broadcasters and Advertisers
Eric Shiffman, Product Marketing Manager