The lines are blurring between TV’s role as a high-reach, long-term brand builder and a short-term targeted sales activation platform due to the growth of addressable TV households. According to the Video Advertising Bureau (VAB), 54% of U.S. TV homes can receive targeted TV advertising, and as a result, addressable TV ad spending is projected to grow 33% in 2020 to $3.4B.
The evolution of addressable consumer targeting means that television could deliver valuable business outcomes across the full marketing funnel — from brand awareness to sales activation.
But seminal research from Binet & Field for the IPA Databank recommends a balanced approach between long- and short-term strategies of roughly 60/40, given that reach remains essential for long-term growth.
TV is certainly offering new value for marketers, and the industry believes that addressable TV will deliver a deeper level of personalization, resulting in greater relevancy and attention for TV advertising. But is this true from a scientific perspective?
For the last decade, MediaScience has been testing the performance of TV/video advertising formats in long- and short-term messaging applications across traditional TV and digital platforms.
Based on a series of controlled lab studies on category-baed targeting, we have produced insights in five key areas. These may run counter to conventional wisdom, but are essential to understanding the value and limitations of addressable advertising:
1. Addressable advertising does not improve ad recall and brand recognition. Even when controlling for factors such as program liking, brand familiarity and brand category relevance, there is no significant difference in ad recall or brand recognition influenced by category relevance to a viewer.
2. Targeting and relevance alone does not affect ad engagement or reduce ad avoidance.
In general, ads for product categories relevant to the viewer do not affect engagement or ad avoidance. Only when the category is highly relevant and the need is very timely can addressable ads reduce ad avoidance.
One key insight for advertisers is that likable ads, brand familiarity and optimized frequency are essential to gaining engagement and mitigating ad avoidance.
3. There is no difference in addressable ad effectiveness in a cluttered vs. a limited interruption environment.
In evaluating ads that were highly relevant and “in-market” and ads that were of low or no relevance, we found that limited interruption produced no significant difference in ad avoidance, ad liking or attitude toward the brand across ad types. Another insight was that ad liking and brand attitude explained more than half of the total variance in ad avoidance, while rated relevance explained less than 10%.
4. Optimizing frequency for addressable ads is critical — especially for new and unfamiliar brands.
Brands that are highly familiar or repeated are more likely to be seen and more likely to improve brand measures, but managing excessive frequency in short periods is critical as this can increase ad avoidance and erase all benefits.
The best conditions for addressable advertising occur when familiarity and optimized frequency are combined with ads that are targeted using timely consumer information — same day or less.
5. Regardless of which screen it is, behavioral targeting does not produce higher ad engagement.
Whether on TV or a personal smartphone, ads targeted for product categories more relevant to a viewer do not stimulate more attention or more emotional response than standard ads. There is also no difference in memory between moderate and high relevance ads. Creative matters more than relevance.
It’s clear that consumers do not ignore ads from non-relevant categories, nor do they favor targeted ads from relevant categories.
What is clear is that ads for categories and brands we use may be easier to process or remember, but attention and the enjoyment of ads are more attributable to creative quality than relevance.
So, video ads seem to have the ability to gain the attention of more than just the “most likely” viewers, which is good news for advertisers that need to strengthen their brand.
It’s more important for an ad to be “good” than “relevant.” Our research suggests that advertisers should not pay a premium for targeting ads based on the hope of higher engagement.
Instead, premiums should be justified in terms of efficiency, extra reach and less waste.