Consumers Have Already Found Connected TV, But Agencies and Advertisers Are Missing in Action

Despite that massive audience, agencies and advertisers have been slow to adapt to Connected TV

If you watch Connected TV—whether through an internet-enabled device like a Roku, on your mobile phone or a smart TV set—you’re not alone. In fact, last year 168 million Americans, or about half of all U.S. consumers, accessed traditional television content over the internet, according to eMarketer. But despite that massive audience, agencies and advertisers have been slow to adapt to Connected TV.

In a recent survey, Forrester found that only about 15 percent of marketing professionals regularly include Connected TV in their television media plans. And while 35 percent of the marketing professionals surveyed said they’ve experimented with Connected TV but need to learn more (an encouraging sign), more than half of them had yet to go beyond doing the most basic investigation. Why the disconnect?

We aren’t just talking about cord-cutters anymore

A few years ago, when the industry first started talking about cord-cutters, the term was synonymous with millennials. But that’s no longer the case. According to a recent Deloitte study, a majority of American households (55 percent) subscribe to at least one video streaming service.

But whether they’ve cut the cord or not (some households use both cable and Connected TV), the bottom-line is that agencies and advertisers can no longer afford to think of Connected TV audiences with such a singular mindset. Yes, those audiences were initially led by the young and the early adopters, but that’s old news. Today, older Americans and late adopters are among the Connected TV audience, thanks to smart television sets that ship with everything you need to connect, easy-to-use OTT services, and perhaps most important of all, the increasingly high cost of subscribing to linear television. In fact, what the Deloitte study illustrates is an unspoken truth: linear-only households aren’t just shrinking, they’re in the minority.

Changing the old mindset isn’t easy, and to be fair to agencies, and advertisers, our world always seems to be moving faster than we can comprehend. But change we must. If you’re among the 15 percent of marketing professionals in the Forrester survey who regularly include Connected TV in your media plan, then 2018 is the year your forethought pays off. But if you’re still experimenting or taking a wait-and-see approach, this needs to be the year you commit to making Connected TV your top priority. After all, the only way to truly kill off the myth that Connected TV is an outlier experience is to find the truth in your own campaign data.

There’s a myth that targeting and measurement aren’t ‘there’ yet for Connected TV

The migration of consumers to Connected TV opens significant opportunity for agencies and advertisers, as this type of media, is inherently digital and thus, targetable with the right technology. You may have heard of “cross-device” solutions, called “graphs.” These graphs enable the connection of households, consumers and devices, thus, “joining the dots” for audience targeting and measurement. This ability makes a reality the dream of marketing professionals of yore who wanted to target a very specific audience, but had to previously settle with the full reach for a TV show. Using this new technology, marketing professionals can now converse in a different language and frequency with consumers who have been loyal for several years, versus consumers who are new to their brand. Furthermore, this enables full-scale story-telling, showing a sequence of messages.

One recurring criticism of Connected TV is that targeting and measurement rely on imprecise IP-based solutions. In fact, while media buyers can’t dispute the size of the Connected TV audience, many are quick to knock the capabilities of Connected TV. The trouble is, those media buyers aren’t quite right.

Some graph solutions rely on residential IP addresses as their fundamental building block, which unfortunately misses activity outside the home. There are, however, graph management solutions that enable leveraging of multiple graphs simultaneously, providing media buyers with the ability to target and identify consumers' response in and out of home, at scale.

The shift from the TV of yesteryear to the TV of tomorrow has been an iterative process, and with each iteration targeting and measurement capabilities have improved dramatically. Better addressability and better measurement not only benefit all marketing professionals, but are also helpful to media sellers, and ultimately consumers. With less waste in targeting and frequency, better price points for the same marketing benefits are possible, and an eventual ad load reduction, will improve the experience for consumers.

Ad agencies and advertisers have always been looking for ways to drive into the future. The good news is, the future is here, and it’s happening now. 

Sandro Catanzaro is chief innovation officer at dataxu. Prior to co-founding dataxu, Sandro held positions at Bain & Company and NASA, where he straddled the worlds of science and business strategy. Based on research he did at MIT, he co-invented the real-time optimization algorithm that lies at the core of the dataxu technology platform.

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