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Targeted TV Advertising Is Taking Off (#GotBitcoin?)

Streaming platforms allow companies to tailor their marketing to a bigger audience and with more precision than ever. That’s causing advertisers to rethink their budgets—and their strategies. Targeted TV Advertising Is Taking Off (#GotBitcoin?)

Early this year, made a move that gives a glimpse of where the ad business may be heading. used to do the lion’s share of its marketing through TV ads aimed at any and all consumers, including running commercials during the Super Bowl.

But early this year, the automotive-recommendation company tried a new approach—pausing all traditional TV ads and running commercials on streaming-TV platforms like Roku and Amazon Fire TV. On those platforms, could use heaps of audience information to advertise only to those people who were in the market for cars.

Targeting ads so precisely is a choice that many companies are making. And it’s beginning to have big effects on the advertising industry.

Driving this trend: a combination of factors that are finally coming together to make precise targeting of a wide audience possible. The streaming platforms, traditional pay-TV providers and third-party firms are giving advertisers access to robust technology and granular data about viewers, such as income levels, purchase history and web-browsing behavior. At the same time, unlike earlier stabs at targeted TV, marketers can use the streaming platforms to reach a larger and more geographically diverse group of people across the U.S.

As a result, companies are shifting more of their budgets from traditional TV to those streaming platforms and elsewhere, where they can craft marketing campaigns aimed at very precise demographics. In some cases they also can rethink their campaigns on the fly and quickly make changes.

“Traditional TV is awesome at helping us build awareness and getting our name out there, but it doesn’t offer us the ability to efficiently target people shopping for a car,” says Seth Goldberg, vice president of brand marketing at “We’re meeting consumers where they are.”

The monthslong targeted-ad effort, coupled with a more traditional WarnerMedia sponsorship on during March Madness and digital ads around the Super Bowl, led to a bump in traffic to the website, according to the company. It says it plans to spend 6% more on targeted TV advertising and 12% less on traditional TV ads for 2019, compared with 2018.

Finding Enough Viewers

Audience targeting is hardly new to television, of course. It was rolled out years ago with select cable and satellite providers, but never lived up to its promise. That’s because advertisers could reach only people in the geographic footprints of those providers, and there was a lack of ad space—the providers generally sell only two minutes of ads per each hour of TV programming they carry.

Now streaming TV players like Roku, Hulu, Sling TV and DirecTV Now are helping the market to develop by increasing the available ad space, and their growing user bases are sprinkled throughout the country.

“We’re finally seeing some momentum, versus lots of little tests,” says Jonathan Steuer, chief research officer for Omnicom Media Group, a large ad-buying group.

It is still early, with ad spending on digital-TV player and streaming service Roku and Hulu making up under 1% of the $129 billion U.S. online-advertising market in 2019, according to eMarketer. And regular, broad-reach TV ads will remain the mainstay for the foreseeable future. For many purposes—launching a product or movie and promoting it to the mass market, for example—traditional ads are just the blunt instrument that a marketer needs.

But spending on the streaming platforms is growing quickly. And advertisers are increasingly turning to targeted-ad options to make better use of their marketing capital and reach consumers watching TV through new channels.

According to a study released in April, nearly 60% of advertisers surveyed by the Interactive Advertising Bureau said they plan to increase their budgets for advanced TV, including streaming content and devices and addressable video, which lets advertisers serve different commercials to different households watching the same shows.

“We’re seeing more advertisers wanting to put their foot on the gas,” says Tracey Scheppach, co-founder and chief executive of targeted-advertising consulting firm Matter More Media. “Now that traditional ratings are so low, you have to think differently.”

In many cases, that means a blend of strategies—for instance, using targeted ads to push a specific product while sticking with traditional ads for the overall brand. That is especially true considering that the cost of a targeted ad tends to be much higher per view than a traditional one, so an advertiser trying to reach a significant part of the U.S. population might prefer to buy a national ad.

Steve Hartmann, head of integrated marketing at Experian Co nsumer Services, says that traditional national TV ads have been key in helping the credit-reporting company promote a core identity-protection product, which is skewed toward an older consumer. But last year, the company moved around $400,000 from its traditional TV budget to Roku as part of an effort to promote Boost, a new product aimed at a younger audience.

Working with Roku, Experian selected specific viewers it was trying to reach, such as young people in the market for a big-ticket item like a home, and sent 15- and 30-second ads only to those Roku households.

In the middle of the campaign, the connected-TV company also helped Experian select and target families with children under 17, when Experian learned through separate digital-marketing efforts that its ads were well received by a broadly defined category of young families. Roku lets users watch content from its own channel and other programmer apps and streaming services such as CBS All Access or PlutoTV.

The campaign led to a boost in website visits and free enrollments, prompting the company to increase its projected spending with Roku. The company will have spent $1.85 million by the end of June, Mr. Hartmann says. Experian is also buying some ads through streaming services like Hulu and YouTube.

Increased ad spending by companies like Experian is boosting the new players like Roku and Hulu.

Hulu ad revenue increased 50% in 2018, and the company is seeing similar growth this year, says Peter Naylor, senior vice president and head of ad sales. Roku is also soaring on interest from ad buyers, according to Scott Rosenberg, senior VP and general manager at the company. The company in the first quarter of this year increased revenue at its platform unit—which includes the smart-TV operating system and its advertising, metrics and subscription business—79%, to $134.2 million.

Hulu serves 28 million households, the company says. Roku has 29 million users. Those user counts are on par with AT&T ’s 24 million pay-TV connections, including its DirecTV satellite and online DirecTV Now subscribers.

Different Strategies

Campbell Soup Co. has increasingly used targeted TV advertising for individual brands, sometimes for extending reach on a traditional TV campaign, and other times to target a specific consumer base for a brand like Milano cookies.

A few years ago, the company worked with satellite and cable operators like DirecTV and Cablevision, now part of Altice, to send ads for its higher-end Slow Kettle brand to targeted households, while running a national campaign for its broad soup portfolio. The targeted effort was a success, leading to an increase in sales, says Marci Raible, vice president of global media and marketing services at Campbell. The company is currently spending more of its budget on targeted TV ads where it makes sense, she says.

“It is no longer this new thing or test area,” Ms. Raible says. “It is just a part. When we’re looking at building the plan, is it a lever we pull or not?”

While many brands are exploring new advertising opportunities, they’re also navigating a much more complex and fragmented media marketplace. Potential venues are multiplying, making it difficult to figure out where to place ads and how to plan an overall marketing strategy, industry experts say.

“The fragmentation is getting more unbelievable,” says Kevin Corcoran, marketing communications manager at Volvo Car Corp., whose total targeted TV spending represents about 7% to 12% of its media budget. “There might be 16 choices of partners over the next year in this landscape, and we have to pick the ones who make sense. We’ll dilute our budget if we try to do it with all.”

What’s more, some ad venues are more transparent than others about where the ads landed and who they reached, the experts say. That makes it tough to judge just how effectively ad dollars are being spent, and whether campaigns should be adjusted. And advertisers need to make separate deals with more TV distributors if they want to be sure of reaching everyone in their audience segment.

Some older names in the media business, meanwhile, are also getting into the targeted-ad business, crowding the field even further.

Companies like CBS, Fox and Viacom are currently having discussions with pay-TV businesses to add a targeting capability to a small percentage of their national commercial space. One offering will make it possible for a national advertiser to pay for a 30-second commercial, but send different ads to different households. For example, a packaged-goods company might buy a spot from a TV network, and then send ads for different products to different households watching the network, based on demographics and consumer behavior.

A handful of media companies recently teamed up with Inscape, a data company owned by smart-TV manufacturer Vizio Inc., to form a consortium called Project OAR. The group will develop technology that makes it easier for traditional programmers—such as CBS, ABC and NBC—to place targeted ads into shows through certain internet-enabled TVs, instead of relying on cable and satellite providers to place those ads for them.

Meanwhile, media-measurement giant Nielsen is gearing up for the growth of targeted-TV advertising, and recently created a task force about figuring out viewership in this new environment, says Kelly Abcarian, general manager of advanced advertising at the company. Nielsen also recently bought Sorenson, a company that helps programmers send targeted ads to some smart TVs by overlaying the ad on top of the programming.

“Smart TVs really entered the market at a huge accelerated pace,” she says. “The acceleration really is unlocking new capabilities and the potential for all the [TV] ad minutes to truly become one-to-one addressable.” Targeted TV Advertising Is, Targeted TV Advertising Is


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