According to the American Time Use Survey, conducted by the U.S. Bureau of Labor Statistics, on any given day nearly 80% of U.S. adults watch TV. And, despite the increasing popularity of cord-cutting, 78% of households still subscribe to pay-TV, whether that be via cable, satellite or through their telecommunications provider.1 Millions of households also subscribe to at least one online video service, either in addition to their pay-TV subscription or in the case of cord-cutters, instead of it. In 2017, American households watched an average of 7 hours and 50 minutes of television per day.2
Traditionally, advertisers used Nielsen television ratings data and consumer surveys to target advertising campaigns based on a program’s targeted audience by age and gender. As more devices, including televisions and set-top boxes, became connected to the Internet, more data became available about the viewers themselves. Addressable TV advertisements are personalized ads based on household characteristics such as income, lifestyle interests, shopping behavior, and family composition. They’re shown during live or on-demand television programs delivered via cable, satellite, telecom, or streaming services. Traditional TV ads target an audience based on a show’s content. Everyone watching a particular show sees the same advertisements. Addressable TV ads target the household’s viewers regardless of what content they are watching. Different types of households see different advertisements even if they’re watching the same program.
Out of the 120 million households in the United States that own televisions, more than 65 million can be served addressable ads, according to Cadent, an advanced TV advertising agency. However, ad sellers make only one-eighth of ad inventory available for targeted ads. As Pay-TV providers upgraded their equipment to allow for more addressable TV ads, advertisers found it difficult to create national addressable TV ad campaigns. Cable and satellite companies can only target ads to their subscribers, therefore advertising agencies needed to contract with multiple pay-TV providers at a local level to put together a national advertising campaign. This changed in 2018. NCC Media, a TV advertising sales firm owned by Charter Communications Inc., Comcast Corp., and Cox Communications, created a division to sell targeted ads across all of its parent companies’ platforms, reaching 45 million households.
Today’s market size shows the estimated amount spent on addressable television advertisements in the United States in 2018 and projected for 2020. According to the source, this market will remain small compared to traditional television ad spending, which totaled $69.87 billion in 2018 and is projected to reach $71.18 billion in 2020.
1 Leichtman Research Group study.2 Nielsen.
Geographic reference: United States
Year: 2018 and 2020
Market size: $2.06 billion and $3.37 billion, respectively
Sources: Audrey Schomer, “Vizio is Teaming Up With Disney, NBCU, and Turner to Develop an Open Standard for Addressable TV Advertising.” Business Insider, March 14, 2019 available online here; Tim Peterson, “Agency Ad Buyers Say There Isn’t Enough Addressable TV Inventory,” Digiday, March 21, 2019 available online here; “What is Addressable TV?” July 2018 available online here; “Programmatic vs. Addressable for Dummies,” June 17, 2015 available online here; Tim Peterson, “‘There is Scale There’: Myths of Addressable TV Advertising, ” Digiday, December 19, 2018 available online here; Rachel Krantz-Kent, “Television, Capturing America’s Attention at Prime Time and Beyond,” Beyond the Numbers, U.S. Bureau of Labor Statistics, September 2018 available online here; Daniel Frankel, “Pay TV in 78% of U.S. Homes, Down 8% in Five Years: Research Company,” Multichannel News, October 31, 2018 available online here; Alexis C. Madrigal, “When Did TV Watching Peak?” The Atlantic, May 30, 2018 available online here; Todd Spangler, “Cord-Cutting Keeps Churning: U.S. Pay-TV Cancelers to Hit 33 Million in 2018 (Study),” Variety, July 24, 2018 available online here.
Original source: eMarketer
Image source: StockSnap, “room-office-modern-lectronic-2559790,” Pixabay, July 31, 2017 available online here.