Column: Targeted Ads: The Holy Grail?

May 3, 2009  •  Post A Comment

The idea of targeted advertising has been held out as the promised land of marketing, a sort of holy place where advertisers can finally talk directly to consumers about their products and services, without mindless chatter.
In this nirvana state of marketing, advertisers would commune only with the people who are in the market to buy their products—dog food for dog owners, cola ads for cola drinkers, sports cars if you like that kind of thing.
Now that the television business is finally stepping into its targeted advertising future with actual commercial launches—not just tests, but real honest-to-goodness rollouts of so-called addressable ads—it’s worth asking if addressable advertising works, and to what degree.
The early evidence is promising. In its Huntsville, Ala., market, Comcast says customers are 38% less likely to tune away when a targeted ad is delivered. In general, targeted ads on television are generating a 7% click-through rate, meaning consumers click on the ads using the remote 7% of the time. That’s much better than the rate of 1% or less for direct-response ads, Josh Herman, innovation leader for Acxiom’s Global Multichannel Marketing Services Group, said during a panel I moderated at Ad:Tech in San Francisco in late April.
We’ll need to keep a close eye on the numbers as targeted advertising grows. As the reach for these ads expands, will they still deliver the same payoff? The footprint for such ads is getting bigger.
Just a few months ago, Cablevision turned its 100,000-home targeted advertising experiment into a full-fledged launch across 500,000 homes in Brooklyn, the Bronx and New Jersey. It’s using Visible World technology to send ads to households based on information about income, gender, number of kids and even pets in the home.
Then there’s Comcast, which has introduced targeted advertising in two markets, including Baltimore, where it can target consumers based on demographic data and habits. Of course, it should be noted Google TV Ads also delivers ads targeted to specific demographics via its deal with EchoStar.
The next big step is Canoe Ventures, the cable operator consortium that includes Cablevision, Cox, Comcast, Time Warner, Charter and Bright House. Canoe is aiming to develop standards for addressable ads and a national footprint for operators.
Operators like targeted ads because they’re charging about 30% more on a CPM basis for them.
To be sure, privacy groups have expressed concerns for some time that delivering ads targeted to specific homes could be an invasion of privacy.
Kyle McSlarrow, president and CEO of the National Cable Television Association, told Congress last week that Canoe had no plans to collect set-top box info, according to CableFax. The consortium plans to use other demographic information to deliver the ads, CableFax said.
But privacy concerns aside, the bigger issue for this brave new world of addressable advertising is how far do you go? How deep do you slice and dice a demographic?
“It’s possible to oversegment,” Mr. Herman said. “You need a certain critical mass for an ad.”
Which means you’re not going to get one-to-one targeting with TV. It’s just not worth it. But that’s OK. Targeted ads are essentially more refined TV ads. And that can be nothing but a good thing.

126 Comments

  1. From a media buyer perspective, I am MUCH more likely to spend money on advertising when I know it is targeted. That is what normally makes direct mail and certain internet advertising so appealing, since it is a sniper approach, as opposed to a shotgun blast out there, hoping and wishing that the advertisement hits a few people. Especially during a “down” economy when every dollar spent is being watched very closely and ROI is so important, I think that this targeted marketing option is going to only grow in importance.

  2. I’ve been in the media/broadcasting business for — well I am not going to tell you – Let’s just say I know where the bodies are because I put them there.
    The basics never change, the most effective advertising is that which delivers consumers to the product at the least possible cost to the advertiser. Simple!
    Determine your customer, the demographic, the lifestyle, etc., and go after him/her in the most cost effective manner.
    I started to say we don’t sell diapers to seniors, but then again maybe we do, we just call the product something else. The main thing, the only thing is to match the product with the most likely consumer.
    Picking the right content/program/media outlet is as important as picking the right target. The pond’s got to be full of fish for you to catch them, or at least please understand it’s easier to sell a product if the consumer is present.
    Of course you’ve got to pay to fish in a fully stocked pond. So expect it, that’s what the term fully qualified leads means, the pond’s been stocked for you!
    From the consumer point of view, an advertisement that appeals to him/her is not an annoyance but information, it doesn’t have to be witty, funny or weird it just has to deliver a solution to the consumers need.
    Please remember that it takes at least three impressions before he/she even knows that you are there to solve his/her problem. Listen boys and girls don’t blow that ad budget on a one-shot campaign – it’s not going to work, never has never will. Reinforcement is needed, then do it all over again.
    Sorry off track – target advertisement is cost effective for all the logical reasons, it’s profiling at its best. Use it, profit from it.
    Products that have been marketed well succeed, provided that the “product” does what it’s suppose to do – never ever lie to the consumer – if you do then no amount of media marketing can save it or you. That’s what we call H1N1 with lipstick.

  3. This targeted ad model is what my website is all about. Foodies come to Le Gourmet TV, and the videos that they watch have branding built in with product placements etc.
    It is no longer viewed as advertising because the consumer feels that they are getting something from it.

  4. It’s the privacy issues that has kept us focused on providing content targeting solutions as a proxy for reaching the right people. By deeply and accurately classifying content you can start to do interesting things in terms reaching the right person. Not likely a 15 year old boy will be watching movies or TV shows about “infant health”, “child nutrition” or “breast feeding” (OK, well maybe that one ;), but new mothers are very likely to be watching those. This sort of targeting is agnostic to online video or TV when done properly and provides nice addressability.

  5. We believe at EQ Network that hyper-targeting to enable higher cpm’s is the future for advertisers, sponsors and content owners. The question is, will advertising based on who’s viewing the content come to television in a scalable, dynamic, meaningful fashion before the internet merges with television? And, even if the technology arrives, because it’s very difficult to determine who is watching any particular screen in any house at any particular time, especially without an invasion of privacy or untenable user interface concepts… will it provide meaningful results for advertisers? We invented an on-demand video auto-assembly system called Ad-Per-View™ that can read any video file wherever it resides and deliver it into any device, website or wirelessly because, short term, this is a practical way to deliver personalized content in a timely way with hyper-targeted advertising for on-the-go and web viewing experiences.

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