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TV advertising represents 37%, or over $70 billion, in annual marketing spend in the US. However, despite all the analytical advancements made in other channels, TV advertising targeting and attribution seem to be stuck in the dark ages. Advertisers are still relying on Nielsen age and gender demographics for targeting and gross rating points for attribution.

The old methods of targeting and measurement, however, aren't even close to what we see in other channels, such as direct mail, and online video and display.

Enter addressable TV.

Simply put, addressable TV is the ability to show TV ads at the household level using analytical profiling and segmentation. It brings data-driven precision of digital advertising into the TV space.

Here are six reasons why addressable TV should be embraced:

1. You can target at the household level and eliminate waste

This level of granularity has never before been achieved in TV advertising. It significantly reduces waste by eliminating the population not in the market for your product or services.

Why show the right product to the wrong person?

2. You can harness data beyond Nielsen age and gender

Data elements are deeper and more granular than ever. Sophisticated programs now use multiple data installations with assets that include core demographic, behavioral, public record, lifestyle, summarized credit (both borrowing and payment behavior), and financial capacity.

By using this approach, you can develop a targeted, modeled solution and selections based on elements that have been thoroughly tested against actual response and conversion performance.

3. No guesswork is needed as to which networks to target

Brands and advertisers don't have to worry about researching or understanding the core demographic of each program and network. If your designated target audience is watching TV, its members will be exposed to the ad.

You won't miss out on any lost opportunities. For example, you will be able to target the group of Millennials who love watching reruns of the "Golden Girls" TV show but are not part of the conventional demographic that watches the show.

4. TV becomes a direct marketing channel and ROI is measurable

Compare the target audience selected to receive ads to your CRM file, and you'll be able to accurately calculate ROI. Take it a step further and add a holdout to your test to determine incremental lift.

5. You can use the data generated from addressable campaigns to optimize traditional linear buys

If network and time stamp data is returned, you can use that data to better inform your traditional TV buys.

For instance, if you know certain networks and times are converting really well, you can increase your investment.

6. Coordinate with other channels

You understand who you are targeting at the household level and you can increase the frequency by coordinating with other cross channel efforts, such as display ads or online video. TV ads, when used with online video, increased purchase intent by 160%, according to a recent study by ESPN.

Have I piqued your interest regarding addressable TV? Then consider the following when getting started with addressable TV:

  • Determine who you really want to reach. Examine your current customer base and determine your core prospect audience. Consider third-party data providers if you don't have a sizeable (1-6 million+) audience to target.
  • Determine target audience. After you have a handle on who you want to target, you need to identify the available universe on each of the MSOs. Providers like DataLab USA, Experian, and Acxiom have all the major MSO files in house and can run counts for you. (Disclosure: Author is affiliated with DataLab USA.)
  •  Consider using creative messaging tailored specifically to the audience you're targeting.

Addressable TV has completely revolutionized TV advertising as we know it. It makes data-driven household-level targeting a reality. Addressable TV takes a very traditional and difficult-to-measure broadcast channel and makes its ROI measurable.

Marketers now have the ability to optimize their traditional TV buys and coordinate their cross-channel marketing efforts. Addressable TV makes data-driven household-level targeting a reality.

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Six Reasons You Should Embrace Addressable TV

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image of Nick Lockard

Nick Lockard is a digital marketing manager at DataLab Digital Advertising, an analytics-driven online marketing consultancy.

LinkedIn: Nick Lockard 

Twitter: @nicklockard88