A Guide to Addressable TV Advertising: What, Why, and How
Updated: Feb 13
Addressable TV advertising provides the best outcomes for all parties involved in the television ecosystem: publishers, advertisers, and audiences. Let’s discover why and how exactly this system works in the following article.
The growing availability of high-speed broadband and the increasing number of connected devices is profoundly changing every sector, including the television ecosystem.
Because of video-on-demand and social media platform algorithms, audiences are now accustomed to highly personalized content from TV series to news to advertising.
Even though interruption marketing like commercials during a TV show was traditionally considered intrusive and annoying, current state-of-the-art technology allows advertising to be useful when targeted at a household or even at a personal level.
In this sense, addressable TV is an ideal combination of online marketing and television, which allows commercials to be delivered to very specific targeted groups of TV users. Unsurprisingly, digital video ad spending saw a substantial development in 2021, up 49% YoY to $39.0B and, in 2022, the growth is expected to increase an additional 26% to $49.2B.
A lot is going on in the sector and this is the best time to invest both for advertisers and publishers, who have to equip themselves with the ultimate tools in terms of ad insertion and delivery.
Addressable TV advertising: a general definition
The Global TV Group defines ATV as a “technology that lets you show different ads to different audience segments watching the same TV program.”
According to IAB Europe, this “segmentation can occur at geographic, demographic, behavioral and - in some cases - first and third party data-matched household levels, through cable, satellite, and Internet Protocol television (IPTV) delivery systems.”
These new technologies mean valuable opportunities for advertisers, who now can reach more targeted audiences and have better measurability and ROI for their communication efforts.
At the same time, advertising on TV 2.0 is also evaluated better by consumers: although many of them say they do not pay particular attention to it, 30% of viewers find targeted advertisements interesting and effective enough to interact with them.
Via remote control or smartphone, it is possible, for example, to delve into product-related information or visit advertiser micro-sites that are navigable from the TV screen.
“Given the enthusiasm shown by advertisers supported by a higher level of consumer acceptance and interactivity, it would be short-sighted for traditional broadcasters and telcos not to take advantage of this new way of advertising through their channels and platforms. It would mean wasting a valuable opportunity and being left behind". Gérald Sauvageon, Responsible for CTV/Advanced TV at French AdTech company Equativ ( formerly Smart)
Addressable TV advertising delivery platforms
From a technology perspective, addressable TV advertising delivery platforms can be classified into three main categories:
Over-the-top (OTT) TV: OTT TV is the term used to designate all those apps and online services - both with and without subscription - which make possible the distribution of live and on-demand TV content over the internet. Platforms like Netflix, Pluto TV, and Dazn constitute as many examples of OTT TV. Broadcast players' video-on-demand apps (also named BVOD) are included in this category. This is probably the best-known channel for addressable TV ads, but not the only one.
Managed TV platforms: Through managed TV platforms you have content distribution via proprietary infrastructure, which generally requires installing the operator’s set-top box. It usually also requires a subscription with a TV service provider. Examples of managed TV platforms are the ones offered by telcos - like Nowtilus client A1 Telekom Austria - and pay-TV operators, which can also include, with the right implementations, addressable tv ads.
Digital Video Broadcasting (DVB) TV: DVB TV is the acronym to designate traditional broadcast television whose signal is now digitalized. This is probably the less-known and still underestimated channel for addressable TV advertising. The Hybrid Broadcast Broadband (Hbb) TV standard, which most smart TVs in Europe carry, enables ATV advertising in broadcaster-controlled TV ecosystems by substituting fixed commercials and other types of ads with household-level targeted ones. Discovery's TV channels in Italy and Poland are utilizing this system to increase satisfaction among audiences and advertisers with the HbbTV solution powered by Serverside.ai.
"In addition to the further spread of HbbTV-enabled smart TVs, the harmonization of formats, targeting options, media innovations, and technical standards across marketers is crucial for the sustainable development of the addressable TV market. Technological enablers have the task of removing structural market barriers and breaking down silos in order to make the planning, booking, and control convenience of addressable TV as expedient as possible for advertisers.” Ralf Hammerath, Managing Director at D-Force
But how exactly are these ads delivered to the right viewer or household?
The Addressable TV advertising ecosystem
Like in traditional advertising supply chains, a publisher (a broadcast player, a telco, or an OTT TV platform in our case) who owns the advertising space, sells its space to an advertiser who intends to buy that space to spread its promotional message.
Between the publisher and the advertiser, supply and demand technology platforms are connecting them, which regulate the real-time buying and selling mechanism (programmatic advertising):
SSP (Supply Side Platform): platforms that enable publishers to make their ad-breaks inventory available in the marketplace in an automated manner.
DSP (Demand Side Platform): platforms that collect advertisers' requirements for purchasing certain advertising space.
Ad Exchange: automated platform connected to SSPs and DSPs for real-time evaluation and negotiation of advertising inventory on which buying and selling take place.
Ad Network: a company that connects advertisers to websites or platforms that want to host advertisements. The key function of an ad network is aggregating ad supply from publishers and matching it with the advertiser's demand.
DMP (Data Management Platform): platforms that collect, analyze, and manage user data - proprietary or third-party ones. In a nutshell, a DMP is a technology that centralizes the management of online user data for optimizing trades.
In such a complex industry, turning to a vendor who can cover much of the supply chain while maintaining transparency and flexibility can be the differentiating factor.
That's why a tight integration between ad server, SSP & DSP vendors and Nowtilus' ad-insertion platform Serverside allows broadcasters and telco platforms to enhance the advertising space on their channels in a way that promotes publishers' revenue, advertisers' ROI, and audience satisfaction.
Dynamic Ad Insertion vs. Dynamic Ad Substitution
These results are obtained thanks to fewer ad interruptions delivered without any leaking or buffering and targeted exactly to what the needs of the individual household or user are, alternatively through dynamic ad insertion (for OTT TV and telco platforms) and dynamic ad substitution (for Broadcast channels with HbbTV).
While DAI stitches your video content and ads into a single stream removing the ad request and the ad response process from the software development kit (SDK), DAS substitutes a traditional broadcast ad with a personalized one providing a personalized experience within a one-to-many broadcast environment.
“We hand over to the client side this full ad break to substitute for an existing broadcast advertisement,” said Patrick Knippel, Managing Director at Nowtilus, “It’s not stitching in this case because we don’t stop the broadcast. The broadcast goes on, but the overlay client-side personalize the ad break," added Lander Carell in a recent interview for Streaming Media.
“The Ad-Substitute is an ‘overlay’, and technically it’s another video player loaded, either an AV Object or HTML5 player, depending on the HbbTV Version”, he continued, “Our SSAI back end is processing the ad-break stitching and then delivering a unique full ad break to the device where the client-side ad substitution takes place. That’s why we call it a hybrid ad-insertion solution.”
So, in short, also traditional broadcasters can finally forget about disturbing and irrelevant commercials, replacing them with ones that are relevant for each household. This results in two important benefits:
Reducing the risk of viewers switching channels during ad breaks
Being more competitive in attracting advertisers’ investments.
Still to be determined is the currency question: what makes advertisers pay for Addressable TV? In conventional Broadcast, GRP (Gross Rating Point) is dominant which defines the impact and value of a spot placement. But this is not only outdated due to its panel approach but also only measures media with high potential exposures or impressions. Therefore it does not apply to today's audiences of connected, digital TV platforms, where narrow and specific addressable viewers can be targeted.
Addressable TV Ad Formats
This new connected TV environment led to the birth of new ad formats in addition to the traditional TV commercials, including:
L-Banners are currently the most widespread ATV display ad format.
They usually appear outside of the regular ad break and are placed directly within the TV program broadcast, surrounding the content in an L shape and covering 40% of the screen.
With L-banners, advertisers can extend their display ad’s advertising
message by providing viewers with interactive calls to action. By clicking on
the call-to-action button, the consumer can open a fully customizable microsite page, static image, or full video commercial.
The Zoom ad format offers the same features as the L-banner but has a larger, C-shaped branding area for the advertising message (equal to 50% of the screen). The format design is flexible and can be static, animated, dynamic (using real-time data), or interactive with a call-to-action button (click-to-video or click-to-microsite).
Bumpers allow advertisers to place targeted TV spots outside of the regular ad break. These spots are shown directly after switching over to a new channel, which provides maximum attention to the advertising message. The spot is surrounded by an L-shaped frame (L-banner) with the TV channel branding and a countdown indicating the remaining duration of the spot.
The Masthead ad format is displayed for 10 seconds immediately after the viewer turns on the TV for the first time each day. The exclusive placement and large advertising space (50% of the screen) provide an ideal way to launch brand awareness campaigns.
A variant of the L-Banner, the Spot Frame is an L-shaped display ad overlaid onto the traditional TV ad spot. The Spot Frame ad complements the advertiser’s standard commercial, allowing the advertiser to personalize the commercial and reinforce the ad message.
Not all these addressable TV ad formats are currently widely available and deployed, being a technology still in development, but it is useful to be aware of the characteristics of each ad type.
Nowtilus Serverside.ai is an innovation driver in the field working with a huge variety of ad formats like interactive ads (e.g., based on IAB SIMID) with targeting based on first-party data or contextual data and providing the most advanced analytics to its customers and partners.
Future Outlook: What's to come?
As this article sheds some light on the world of addressable TV advertising, it becomes clear that it shows significant potential for both publishers and advertisers.
"The biggest growth opportunity in premium videos will come from making linear advertising more effective through addressability. But such growth will require improvements in terms of interoperability. By bringing the buy and sell sides of the ecosystem closer together, advertisers will be able to improve reach and quantify the impact of their campaigns across any screen.” Marc Lauriac, Executive Director, Advanced TV at FreeWheel International
To move away from technology-based advertising decisions, publishers can also unify inventory from both OTT & HbbTV to provide advertisers with access to what they value: unified audiences, without having to worry about the viewer's delivery platform too much.
But several challenges still need to be overcome. Among those challenges is the currency question: what makes the advertisers pay?
In online videos, we have real-time tracking data per user and viewing session giving clear auditable reporting on which and how long a viewer has seen a spot. With viewability and Open Measurement, there are even more sophisticated metrics available. Still, Broadcast TV is depending on panel measurement with a couple of thousand boxes in the field, providing only statistics, not true data. It is an outdated system, but still the only accepted source for reach measurement and revenue recognition based on GRP. By turning to sophisticated digital video measurement in the mix with fraud-preventing authentication a profound basis for Addressable TV is already out there.
If advertisers, agencies, and publishers can not agree to adopt the latest technical measurement possibilities, that show the actual traction (e.g., in an HbbTV-based broadcast environment) and not just extrapolated panel data, real progress will be held back. But with the willingness to innovate and to base reach and footprint on real data, more and more market participants will be convinced about the positive outcomes of Addressable TV advertising.
"With the increasing digitalization of classic linear media such as TV, we need new, convergent video KPIs that close the planning gap between linear and digital channels. They have to bridge the gap between established KPIs such as a TV quota and new digital planning and control logic such as user-centered frequency capping and make performance, both audience and ad reach, controllable and comparable. A single currency will not be able to achieve this because the structural media differences are too big. In this respect, it will come down to the equivalence of classic and digital currencies as the basis for convergent planning. For this, the market must jointly develop sustainable conventions with the participation of all relevant parties.” Dirk von Borstel, Managing Director of Virtual Minds
Are you a publisher willing to know more about addressable TV ads and how they can provide your channels/platform with the best outcome in terms of advertising KPI?
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