The five challenges of Addressable TV:
- Number of set-top boxes: The first challenge is that when you're trying to target people addressably, you only can reach the set-top boxes that deliver addressable inventory. However, many people have cable boxes that don't yet support this approach. Cable companies are in the process of swapping out those cable boxes so that more people can be reached addressably. This will lead to a substantial amount of growth over the next one to five years and we will see this industry growing significantly.
- Integrating this buying into the existing programmatic digital architecture: The next issue is that it's not as available in the programmatic infrastructure, like when buying digital display advertising. That is also changing and it will make it easier for companies to actually execute addressable buys. Things that are easier or more scalable are oftentimes the things that advertisers want.
- Ability to integrate first and third-party data into buys: Thirdly, we're just being able to bring data into this environment. The addressable TV companies now are partnering with third-party data sets, and companies like Merkle are helping them bring actual advertiser data, so they can reach specific known individuals.
- Standardization of measurement, terms and conditions, contracts, etc.: The fourth thing is that the infrastructure for measurement and analytics but become standardized as it evolves. The good news is this is improving rapidly. For example, the industry is figuring out things like: how do you make goods against addressable TV buys? What are the standard terms and conditions? How do contracts work? How do guarantees work? How does attribution work? All of these things can be done…and we’re doing them. But they're happening on a bespoke basis. As those become standardized, we’ll see a lot of continued growth in the space.
- Consolidation of cable companies: There's one final thing that's happening—cable companies are actually merging. This merge is creating a much bigger footprint for addressable TV. When you think about it from an advertiser’s perspective, dealing with two cable companies is more complicated than dealing with one much larger cable company and then doing a single buy with that cable company. And, we believe that's driving a lot of the consolidation in the marketplace.
