Ahead of the Curve: Addressable TV InsightsPublished by Advertiser Perceptions Justin Fromm, VP Business Intelligence

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While the Internet has revolutionized advertising over

the past decade, the TV ad-buying model has remained

largely unchanged. Audience measurement has yet

to evolve to enable estimation or verification of TV

audiences beyond broad demographics. But with its

ability to target specific households and connect

ad exposure to outcomes, Addressable TV provides

advertisers all that they have come to expect from digital

advertising, on advertisers’ preferred screen. eMarketer

estimates that Addressable TV ad spending in the U.S.

will grow 443% between 2015 and 2018. “Audience-based

buying and Addressable Television is poised for explosive

growth,” says Tracey Scheppach, former Executive Vice

President of Publicis Groupe Media, and now CEO &

Co-Founder of Matter More Media. Having been involved

in more than 250 addressable media deals, Scheppach

has long been regarded as a pioneer in the space.Audience-based buying and Addressable

Television is poised for explosive growth.

TRACEY SCHEPPACH CEO & Co-Founder, Matter More Media

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AT&T AdWorks and Advertiser Perceptions

commissioned a study of 150 Addressable TV decision

makers in March 2017, the results of which indicate that

those currently utilizing the platform quickly see its value

and identify it as an important part of their media buy.

These marketers recognize that Addressable TV offers

many benefits, across all stages of the marketing funnel.

Respondents point to a lack of awareness and a need

for further education around the platform as important

reasons why others in the industry are not yet executing

addressable campaigns. While those concerns have kept

marketers from making significant investments

in the past, this report will help bring the true benefits

of addressability to light, using data and illustrative

case studies to help fill the knowledge gap.

Q: Which of the following best describes your current approach to Addressable TV advertising?Source: Advertiser Perceptions Addressable TV State of the Industry, March/April 2017.

Majorityalready believe it’s

a valuable part of their media buy

38%currently testing

Addressable TV

62%Addressable TV is valuable

71%of advertisers surveyed have been working with

Addressable TV for less than 1 year

26%1-2 years

4%more than 2 years

29%less than 6 months

42%6-12 months

Advertisers’ Use of Addressable

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The State of the Advertising Marketplace

Advertiser Perceptions identified key topics that advertisers

wanted to hear more about following the 2016 Upfronts and

NewFronts. Advertisers consistently mentioned a top priority was

to apply data to better inform TV buying decisions. Marketers have

become accustomed to targeting digital advertising to more

specific and more precise target audiences. Despite this digital

trend, the majority of TV media buying continues to be done

by traditional age and gender demographics.

Over the past several years, advertising dollars have been shifting

from TV to digital video as advertisers seek to combine precision

targeting and ROI measurement with the sight, sound and motion

of video. But the digital video ecosystem is fractured and crowded,

which dilutes audience reach and complicates measurement.

At the same time, Advertiser Perceptions’ research indicates that

marketers are looking to consolidate and simplify how to allocate

their marketing budgets. TV has seen a resurgence in spending in the

past year as advertisers are committing more budgets to Advanced

TV opportunities. Among these Advanced TV solutions, Advertiser

Perceptions’ data indicates that some are taking a wait-and-see

approach to Addressable TV advertising while others immediately

realize the value and consider it important in their overall strategy.

Combine precision targeting and ROI measurement with the sight, sound and motion of video

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Addressable TV Deep Dive

Addressable TV’s top benefits

Addressable TV delivers household-specific TV advertising based on

an advertiser-defined target segment, regardless of programming or time

of day in both live and playback modes. Anna Papadopoulos, Vice President

of Integrated Media Services for Prudential Financial, notes that Addressable

TV advertising results in “less waste, better segmentation and targeting.”

This sentiment is shared by the many participants in our survey who cite

targeting precision, increased ad relevancy, the elimination of waste, and better

return on investment metrics as the top benefits of Addressable TV advertising.

Q: Please rank the top 5 benefits of Addressable TV advertising. Base: Total Respondents.

Targeting precision and granularity 65%

Eliminates waste in TV buys 50%

Better ROAS/ROI 49%

Increased ad relevance 59%

Delivers hard-to-reach audiences 47%

Delivers important and meaningful reach 36%

Ability to manage ad frequency 29%

Targets unique households 56%

Greater accountability and measurement 44%

Ability to optimize future campaigns based on back-end results 36%

Ads delivered across screens/platforms 27%

Less waste, better segmentation and targeting

ANNA PAPADOPOULOS Vice President of Integrated Media Services, Prudential Financial

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Measuring ROI for linear TV advertising has historically been an inexact science

and an expensive undertaking, both in the costs of measurement and the media

weight required for valid measurement. Not only does Addressable allow advertisers

to direct every dollar to their specified target audience, but in combination with 1st-

and 3rd-party data, advertisers can more accurately determine a campaign’s return

on investment. The ability to connect exposure from Addressable TV ads to concrete

results is often cited as a key differentiator for the platform. Three-quarters of the

advertisers in our study agree that Addressable TV offers richer ROI metrics

than traditional TV advertising. Michael Mazza, Director of Marketing at Reynolds

Consumer Products, notes that the ROI for Addressable TV campaigns for Reynolds

Wrap, “has been favorable to some of the broader market, and even some of

the cross-channel [buys], whether it’s online video or print.” And while consumer

packaged goods advertisers might measure ROI based on incremental units sold,

advertisers in our study state that they use Addressable TV advertising to deliver

on various KPIs, whether it be sales conversion, target audience delivery and reach

or frequency distribution. These individual KPIs ladder up to a higher-level benefit,

that all advertisers are seeking in this age of distraction: consumer engagement.

Two-thirds of the advertisers in our study indicate that Addressable TV advertising

is important in helping them achieve their overall marketing goals. Tracey Scheppach

sums it up succinctly: “It’s really the relevancy that we’re looking for – to matter

more to the consumer. And with relevancy comes efficiency and effectiveness.”

Addressable TV gets high ratings for cost effectiveness and ROI

Q: How would you describe the overall value (cost effectiveness/ROI) of your Addressable TV advertising? Base: Current/Past Addressable TV Users.Q: Please indicate how much you agree or disagree with each statement about Addressable TV advertising. Base: Total Respondents.

41%Extremely valuable

(rated 8-10)

40%Valuable

(rated 6-7)

16%Neutral

(rated 4-5)

4%Not at all valuable

(rated 1-3)

It’s really the relevancy that we’re looking for – to matter more to the consumer. And with relevancy comes efficiency and effectiveness.

TRACEY SCHEPPACH CEO & Co-Founder, Matter More Media

75% agree:Addressable TV offers richer ROI metrics than traditional

TV advertising

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Dispelling Misconceptions

As a relatively new platform, Addressable TV

advertising is naturally subject to apprehension

on the part of advertisers. Only about one-third

of respondents in our study indicate that they

have a thorough understanding of the various

components or feel comfortable recommending

a campaign. However, our findings indicate

that many of the deterrents to investment are

not inherent problems with Addressable TV

advertising, but rather a matter of educating

advertisers on its applications and efficiencies.

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More than half of the respondents in our study recognize the benefits

of utilizing eCPMs when comparing media types, but eCPM comparisons

across linear and Addressable TV buys are still not the norm, with fewer

than one-in-four respondents reporting that they use eCPM comparisons

all the time.

Q: What are the advantages of using an eCPM to measure efficiency? Base: Total Respondents.

Allows for an easy comparison between media types 55%

Allows for an easy comparison between media brands 47%

More accurate ROI measurement 45%

Simplifies advertising reporting/measurement 43%

More precise measure of target audience reach 43%

Don’t know 2%

Advertisers recognize multiple benefits of using eCPM to measure ad efficiency

Advertisers are planning on increasing their spend on Addressable

Ideally, advertisers would like to allocate

10% MOREof their budgets to Addressable TV

55%Increase

39%Stay the same

6%Decrease

About half of advertisers in our study mentioned Addressable TV pricing

as a roadblock to greater investment in the platform. Addressable TV

advertising, like other targeted marketing opportunities, often comes

at a premium as it delivers a more specific audience. Comparisons on a cost

per thousand (CPM) basis may make Addressable TV appear more expensive,

but when compared to a traditional linear TV ad buy, there is actually less

waste, yielding a better effective CPM (eCPM). Addressability creates efficiency

and helps lower overall advertising expenditure by limiting wasted impressions.

1. It’s just too expensive

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Q: For which types of campaigns would you include Addressable TV advertising on the media plan? Base: Total Respondents.

39%We’re testing Addressable

TV and determining its role in our media buy

61%Addressable TV is an important part of our media buy

Addressable TV adoption81% agree:

Over the next few years, Addressable TV advertising

budgets will grow and make up a larger share of TV advertising

40% TOP FUNNEL

34% MID FUNNEL

30% LOWER FUNNEL

25% FULL FUNNEL

Advertisers use Addressable across the funnel

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Addressable TV is sometimes compared to direct response advertising,

which is typically used to convert viewership into immediate sales via

phone or web. Yet, those surveyed in our study stated they are utilizing

Addressable TV across the purchase funnel. Case studies from AT&T

AdWorks’ advertisers reveal the platform’s potential to drive results

at multiple touchpoints throughout the consumer journey, from

brand awareness and identity to ad recall and purchase intent.

2. It’s only for lower-funnel campaigns

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Addressable television allows us to increase our frequency against our core customer segment without the burden of the expense and the waste.

MICHAEL BOLOGNA President of one2one Media

Q. Please indicate how much you agree or disagree with each statement about Addressable TV advertising. Base: Total Respondents.

68% agree:Addressable TV is very important in helping achieve marketing goals

76% agree:Addressable TV offers more actionable audience

insights than traditional TV advertising

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Robert Anderson, Digital Media Consultant at Adlab, points out

Addressable’s “potential for better data on small audience segments,”

an opportunity for niche brands to leverage the effectiveness of television.

3. It’s only for the big guys

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Q: What are the top 5 factors inhibiting greater investment into Addressable TV advertising? Base: Total Respondents.

Cost/Price 49%

49%COST

40%REACH

36%MEASUREMENT

Lack of scale / Inadequate reach 40%

Low client adoption (Agencies) 39%

Industry reliance on traditional linear TV measurements 36%

Confusion about how addressable TV advertising works / its benefits 32%

Inadequate metrics/measurement 29%

Not compatible with how we typically buy TV

27%

Consumer privacy concerns 26%

Lack of internal sources to implement 21%

Low agency adoption (Marketers) 15%

Poor performance/ROI 14%

Factors inhibiting greater investment into Addressable TV advertising, ranked 1-3

Top factors inhibiting greater spend:

1 in 3SEE GENERAL CONFUSION ABOUT HOW ADDRESSABLE WORKS

Though about 40% of agency decision-makers in our study indicated low

client adoption was a factor inhibiting greater spend, 45% of surveyed

marketers consider Addressable TV important to their media plan.

More than half of respondents in our study plan to increase their

Addressable TV budgets in the next year.

4. It hasn’t scaled

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What will spur greater adoption?

Many believe that greater adoption will only come once there is a greater

pool of inventory available across a unified platform of providers.

Our findings suggest that general education on the value of Addressable

TV and how to best execute and measure campaigns is also barriers

to adoption. When we asked advertisers what would make Addressable

TV advertising more attractive, four of the top five responses were areas

that providers and early adopters could actively influence today. Q: You indicated that Addressable TV is second-tier buy. What would persuade you to move it to a must buy? Base: Total Respondents.

Better reach against my target 49%

Client recommendation (Agencies) 21%

Better understanding of effectiveness 36%

More automated buying options 19%

More attractive cost 47%

Better consumer privacy protections 20%

Ease of use/execution 27%

Agency recommendation (Marketers) 11%

Better metrics 36%

Senior management adoption 19%

More transparency 27%

Opportunities for Marketplace Education

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Summary

Given the desire to target ads more accurately and better measure ROI, Addressable Advertising is poised for significant growth.

As advertisers continue to seek better ways to effectively and efficiently reach their target audiences, Addressable TV can be a solution for many advertisers to do both, today.

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Key category insights and case studies

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Q: For which types of campaigns would you include Addressable TV advertising on the media plan? Base: Total Respondents, Total Pharmaceutical Respondents.

Pharma advertisers more likely to use addressable for top funnel campaigns

63% TOP FUNNELvs. 40% total

29% MID FUNNELvs. 34% total

23% LOWER FUNNELvs. 30% total

23% FULL FUNNELvs. 25% total

Case StudyPharmaceutical: Antacid

Target: Purchasers of the advertiser’s antacid and its competitors’ OTC medicationFlight Duration: 7 weeks

Highly penetrated categories and brands can utilize the targeting capabilities of Addressable

TV to complement their broad brand awareness campaigns with messages to segments

that are known to be purchasers. Using data from Nielsen Catalina Solutions, we can

compare brand spending nationally for this OTC Antacid brand to a control holdout group

to see that not only did their Addressable campaign reach a more valuable target, but that

by reaching this high-value target, they drove increased spending. Without exposure to

the specific campaign, U.S. households only spent $0.16 on the category while households

in the identified target spent $1.23. Target households that were exposed to the specific

campaign spent 7% more over the campaign and a fixed post-campaign period.

$1.32

+7% LIFT OVER THE CONTROL +725% LIFT OVER NATIONAL

$1.23

$0.16

Average Dollars per HH

NATIONAL

CONTROL

TARGET

Campaign flight: Q3 2016. Case study results are based on individual campaign factors. AT&T makes no performance warranties. National: Represents national numbers during the analysis period using xAOC data. Control: Represents 10% of DTV

HHs within the target that did not receive exposure to the addressable ad. Source: Nielsen Catalina Solutions.

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Q: Below is a list of commonly used Addressable TV advertising metrics. Please rank them in order of most important to least important (Rank each with “1” being most important). Base: Total Respondents, Total Pharmaceutical Respondents.

Most important Addressable TV advertising metrics for Pharma Advertisers

Sales ConversionPharma 74%Total 67%

Target audience delivery and reach

69%71%

Purchase consideration metrics, quotes, website visitation, store visitation

60%59%

Directly attributable actions: purchase site visit, sign up, log in, download

within a specific attribution window

57%60%

Frequency distribution, measurement of the number of times a viewer sees an ad

40%43%

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Case StudyCPG

Campaign flight: Q2 2016. Case study results are based on individual campaign factors. AT&T makes no performance warranties. Control: Represents 10% of DTV HHs within the target that did not receive exposure to the Addressable ad.

Source: Experian for targeting. Penn Schoen Berland for the Brand Health Study.

Target: Custom targetFlight Duration: 6 weeks

While many advertisers think of Addressable TV as a tool for campaigns that are focused

on lower-funnel metrics, such as driving purchase, it is equally effective for upper-funnel

campaigns that focus on brand awareness, perceptions, and purchase intent. This CPG

brand drove upper-funnel and mid-funnel metrics utilizing AT&T AdWorks’ Addressable

platform. Compared to the control group (10% of the target audience who were not shown

the campaign), households that were exposed to the campaign showed increases across

all key metrics. By delivering a brand message to their target, the brand was also able

to shift perceptions around innovation.

20%

+82% LIFT

11%

Brand Awareness

36%

+260% LIFT

10%

Ad Recall

47%

+81% LIFT

26%

Purchase Intent

35%

+84% LIFT

19%

Innovative

CONTROL

TARGET

Q: For which types of campaigns would you include Addressable TV advertising on the media plan? Base: Total Respondents/Total CPG Respondents.

CPG advertisers more likely to use Addressable mid funnel

25% TOP FUNNELvs. 40% total

45% MID FUNNELvs. 34% total

38% LOWER FUNNELvs. 30% total

20% FULL FUNNELvs. 25% total

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Q: Please rank the top 5 benefits of Addressable TV advertising. Base: Total Respondents/Total CPG Respondents.

Addressable TV’s top benefits according to CPG advertisers

Increased ad relevanceCPG 65%Total 59%

58%Targeting precision and granularity 65%

Targets unique households

58%56%

Delivers hard to reach audiences

58%47%

Eliminates waste in TV buys

53%50%

53%Better ROAS/ROI

49%

Greater accountability and measurement

48%44%

Delivers important and meaningful reach

38%36%

Ability to manage ad frequency

28%29%

Ability to optimize future campaigns based on back-end results

23%36%

Ads delivered across screens/platform

23%27%

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16,068

7,352

+65.6% LIFT

Prior 12 Months

17,232

6,188

+73.6% LIFT

Prior 13-24 Months

18,168

5,252

+77.6% LIFT

Prior 25-36 Months

PRE-EXISTING CUSTOMERS

NET NEW CUSTOMERS

14.26%

+12.28% LIFT

12.70%

Total Bookings

8.52%

+11.96% LIFT

7.61%

1 Booking

2.12%

+13.98% LIFT

1.86%

4+ Bookings

Case StudyTravel

Campaign flight: Q1 2016. Results are based on individual campaign factors. AT&T makes no performance warranties. Control: Represents 10% of DTV HHs within the target that did not receive exposure to the addressable ad. Source: Experian.

Target: Age 25-54, HHI $75K+, Online travel purchaser, Hotel guest loyalty program membersFlight Duration: 6 weeks

CONTROL

TARGET

Addressable TV empowers advertisers to utilize 1st- and 3rd-party data to measure

the effectiveness of their TV advertising. By utilizing their 1st party sales data for the prior

three years, this hotel client was able to determine the “New Customer Effect” of their

campaign. They built a target audience that would include current and potential customers

and were able to segment post-exposure booking behavior of those groups to see what

proportion of the bookings came from consumers who had stayed with them over three

12-month periods. In this way they’re able to demonstrate the efficacy of their TV advertising.

Post-campaign total Addressable TV conversions Non-member target universe: 23,420

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Sales conversion63%

66%

Purchase consideration metrics, quotes, website visitation, store visitation

60%59%

Directly attributable actions: purchase site visits, sign up, log in, download within a specific attribution window

50%60%

50%Frequency distribution, measurement of the number of times a viewer sees an ad 44%

Target audience delivery and reach

Travel 77%Total 71%

Travel advertisers rank target audience delivery and reach the most important measure of Addressable TV campaigns

Q: Below is a list of commonly used Addressable TV advertising metrics. Please rank them in order from most important to least important. (Rank each with “1” being most important). Base: Total Respondents, Total Travel Respondents.

For this study, Advertiser Perceptions interviewed 154 Marketer and Agency executives and conducted in-depth interviews with advertisers with a high level of familiarity

running Addressable Advertising campaigns. Fieldwork was completed in March 2017.

Advertiser Perceptions is the global leader in data-driven business intelligence for the advertising industry. Our exclusive insights, practical advice and expert guidance produce solutions

that deliver results and enable our clients to thrive in today’s complex and competitive advertising market. For more information about our services please contact

us at 212-626- 6683 or info@AdvertiserPerceptions.com.