Addressable TV industry worth $56BN
Details
Joseph O'Halloran
| 27 June 2023
Research from Ampere Analysis in partnership with GroupM Nexus’s addressable TV solution Finecast and Microsoft Advertising finds that the global addressable TV sector is rising strongly and is set to grow by over 50% from its current value to $87 billion by 2027.
Ampere addfressable Europe US 27June2023
The report, Unlocking the Potential of Addressable TV, was based on over 100 interviews with advertisers, streamers and agencies and supported by bottom-up market modelling and quantitative consumer research. It calculated that an average of a sixth of advertisers’ video advertising budgets are currently being spent with addressable TV service providers. This is as high as a fifth in mature markets like the US, with all major industry categories represented among addressable TV advertisers.

Furthermore, brands were using addressable TV to extend campaign reach beyond broadcast TV. This was seen to be key in younger groups for whom the aggregate reach of addressable TV services provides a nearly 25% incremental reach boost over total monthly broadcast TV reach in developed markets.

Yet while both small and large brands were using addressable TV, smaller advertisers were devoting less of their marketing budget to addressable TV. Addressable TV service providers need to work to remove non-cost barriers to using the technology, simplifying the purchase and planning process to support uptake.

The study noted that addressable TV typically commands higher pricing, which is attractive for service providers, but there are also incentives for service providers to deploy addressable TV to support viewer satisfaction and retention. Viewers who believed their TV service was offering relevant advertising rate their streaming service higher in terms of user satisfaction – with an average Net Promoter Score 16 points higher than those viewers who don’t feel they are receiving relevant commercials.

“The exponential expansion of the addressable TV advertising market serves as a clear indicator of the immense prospects awaiting service providers and brands,” remarked Kristian Claxton, managing partner, innovation and strategy at Finecast. “This research illustrates the inherent potential of addressable TV as a powerful tool for targeted communication with previously hard-to-reach audience segments. The seamless integration of such capabilities with the storytelling possibilities and brand protection mechanisms inherent in broadcast TV is well demonstrated.”

Yet despite the general optimism, the report cautioned that countering misconceptions was key to further adoption. Despite the rapid growth of the addressable TV market, interviews revealed an array of attitudes and opinions that could hold back future growth if not countered by the industry. In addition, in emerging markets, there was a lack of clarity about the capabilities of addressable TV with some brands unaware of the targeting capabilities addressable TV platforms offered in their region, leading them to spend with alternative media.

“The extent to which addressable TV advertising is now being used by non-traditional TV advertisers, including smaller companies and B2B brands, is illustrative of how the medium can support TV service providers in their push to reach beyond traditional broadcast TV budgets and to open entirely new revenue streams,” added Ampere Analysis executive director Richard Broughton. “But it’s clear that there is still work to be done by the industry in challenging entrenched opinions and in countering common misconceptions.”

Looking forward, the research expects that, even for those media buyers who have already incorporated addressable TV into the media mix, there will be a host of new and emerging technologies and screens that will support future campaigns. The report suggests that new technologies such as generative AI may begin to support the creative process in the next few years, helping to address the practical challenges associated with developing the multiple creatives required for dynamic or addressable creative campaigns.