4 Reasons Addressability is Changing the Media Landscape

April 14, 2016

Brands today operate in “The Age of the Customer.” In other words, consumers now dictate business and marketing strategies, and demand consistent, valuable in-person and digital experiences. They have the technology to access and accept marketing messages as they see fit, and expect to receive relevant ads that actually improve their shopping journeys.

As a result of this shift in the role of the customer, marketers face heavier demands to use their budgets effectively and avoid wasted ad dollars. To add to this complexity, marketers must work harder to break through an increased volume of noise as consumers shift from devices and channels more quickly. But the problem is that the traditional wide-net approach to advertising that spans channels from TV to digital just isn’t as effective anymore.

In fact, DoubleClick’s benchmarking tool revealed most traditional display ads have an average click-through rate of just .07%. Moreover, the power of large TV networks is declining as consumers transition to online viewership as their preferred channel for viewing televised content: 23% of homes will have switched from cable subscriptions to online streaming offerings by 2019.

So how do advertisers adapt to evolving expectations and declining performance results that define their long-practiced methods? The answer is addressable media – an approach that is accurate, and therefore relevant – and this new approach will change the media landscape for good.

1. People-Based Advertising Impacts Performance Results

As marketers shift from cookie-based targeting of broad, assumed audiences to leveraging their first-party data to reach consumers based on known information, their budgets and performance results speak to a quickly changing media landscape:

•  Among North American brands who have deployed people-based advertising, 83% report it has outperformed standard campaigns on similar media.

•  Ninety-two percent of North American media buyers polled said they and their clients were increasing their people-based media buys, and they are will to pay an average premium of 29%.

People-Based advertising is set to become the new norm in digital media. As more advertisers catch on to the power of addressability, ads that target known customers will change the way the media landscape functions.

2. Traditional TV is No Longer the Top Dog

Not only are consumers moving away from traditional cable subscription models; they are far less captivated by TV ads than they have been in the past. Today, viewers can easily move their attention from a TV to a mobile device during a commercial break, and far too often, broadcast ads are irrelevant to the audiences they reach.

These realities are part of the reason why advertisers are throwing their budgets into digital. According to eMarketer, in 2017, TV ad spending will total $72.01 billion, while digital will reach $77.37 billion, eclipsing TV for the first time. And as marketers spend more on digital, proving ROAS will grow in importance, furthering the emphasis on addressable strategies that drive proven results.

Beyond digital, addressable, data-driven TV advertising also has the potential to change the media landscape. This practice, by which ads seen by TV users are selectively segmented, makes broadcast advertising about quality, not quantity. One study found households receiving addressable advertising tuned away 38% less often than those receiving non-addressable messaging. As a result, many industry leaders predict one-quarter of TV ad budgets will be spent on addressable TV within three years.

3. Traditional Loyalty is a Thing of the Past

Addressable media fueled by first-party data is a path to customer retention, which can drastically impact a brands ROI. In fact, Marketing Tech Blog wrote that a 5% increase in customer retention increases a company’s profits by 25% to 95%. Given the ability to recognize their own customers at various touchpoints throughout their shopping journeys, marketers can cross-sell, upsell and provide offers and messaging that actually benefit consumers and encourage them to remain loyal to a particular brand.

In many ways, the customer benefits of people-based marketing have lessened the impact of traditional loyalty programs. Shoppers are far less enamored by the opportunity to earn rewards for transactional benefits, and more interested in relevant interactions from the brands they support. As a result, the modern media landscape has quickly become a rich playground for data-driven loyalty marketers.

4. Personalization is a Customer Expectation

Finally, as consumers begin to expect personalized messaging and experiences from brands, advertisers that leverage addressable media will set a high bar for other marketers to compete with, and completely transform the media landscape businesses operate within. Data from Marketo revealed 80% of shoppers say they will only engage with an offer if it is related to how they previously interacted with the brand delivering the message. In the age of the customer, shoppers set the terms for success and advertisers lead the way constructing a new media landscape that meets those demands.

Technology has disrupted traditional advertising and consumers have heightened expectations of their interactions with brands. As the brand-consumer relationship continues to evolve, marketers who leverage addressable media are in the best position to succeed in this new media landscape.

People-Based Advertising Study

Jon Padilla

Jon is a data-driven marketer who's passionate about using technology to deliver innovative media strategies and create meaningful digital measurement. He the former Director of Product Strategy at Signal.