The Impact & Importance of Addressability & Digital Personalization
Addressability is a highly effective and scalable form of personalization, driving sales without coming across as “salesy.” Attention is the currency of the digital age, and relevance is how you earn it. Personalization ensures relevance and timeliness.
In this post, we’ll take a deeper look at addressability: What it is, how it works, and why it’s changing what’s possible in the world of digital personalization.
Advertising was simple in the days of I Love Lucy and Johnny Carson. Because everyone was watching the same few shows, it was possible to reach a massive audience with your brand message.
Today, however, ads are skippable — and an ever-increasing variety of programing and screen choices spreads attention thin. It’s more important than ever to focus on relevance rather than trying to reach the maximum number of eyeballs.
Essentially, this is a call for greater personalization — and we already know that personalization works:
- According to eConsultancy, 74% of marketers say targeted personalization increases customer engagement.
- Forrester uncovered the fact that 77% of consumers have chosen, recommended or even paid more for a brand that provides a personalized service or experience.
- The Relevancy Group reports that advanced personalization can generate $20 in ROI for every $1 invested.
Addressability: What Is It?
First things first: Let’s get on the same page about what addressability is.
Addressability is a form of personalization that optimizes relevance and timing to deliver effective brand engagement at scale. It’s a way of connecting your product, content or offer with the people who’d be most interested in it, at the exact time they’re most ready to hear from you. It combines data and business infrastructure with a deep understanding of the customers’ needs to create a tailor-made experience.
And thanks to CRM and automation technology, addressability has become highly scalable (yet may not be right for everybody). First-party data from multiple channels, including website browsing history, social media, surveys and purchase history, now give marketers the ability to design brand messaging that’s specific to individual audience members.
This reduces waste in marketing budgets and means you no longer have to choose between the personalization of email or direct mail and the scalability of a platform like television. Addressability allows you to spend your ad dollars on content that is only shown to audience members who meet very specific parameters.
A Brief History of Addressability
The first addressable platform at scale was the U.S. Postal Service. Companies leveraged data from this platform (like names, addresses and basic demographic info) to take their marketing content directly to consumers.
In March 1990, AT&T launched a credit card. They designed a marketing campaign for the card based on their relationships with millions of existing customers as a phone company.
Today, search engine insights, social media and data analytics across dozens of platforms have made personalized marketing more precise than ever, unlocking potential in niches that were once too small to profit from.
How Addressability Is Evolving in the Realm of TV & Digital
Anybody with a Netflix account knows that television is going through a revolution. As the way people watch (and “stream”) programing changes, advertisers and brands need to adapt to reach potential customers.
At first glance, you might think TV advertising is in big trouble—or that it remains accurately priced, depending on how you read the numbers. TV had long been the highest category of ad spending, but in 2017, it was eclipsed by digital for the first time. Digital ad spending worldwide is expected to surpass $420 billion (accounting for over 53% of all ad spending) by 2022.
However, the technology advances driving this digital upheaval are also powering innovations in addressable advertising content. The same streaming platforms that seem to put TV as we know it at risk offer greater opportunities for addressability than their broadcast predecessors.
Many industry leaders predict 25% of TV ad budgets will be spent on addressable content within the next 3 years. Technology is just one part of what’s driving this change. Ultimately, it comes down to human behavior and consumer trends. For example: Deloitte reported that in 2019 the number of consumers paying for internet video streaming services surpassed the number paying for cable or satellite subscriptions.
But by far the biggest threat to TV advertising and ads on new digital platforms is the simple fact that few people watch ads anymore. An estimated 90% of viewers skip TV and streaming advertising. Features like “skip” buttons and DVR make dodging commercials easier than ever.
Gary Vaynerchuk gets into this issue in his aptly named Cannes 2018 Keynote, “Surprise! Your TV is Dead.” He points out that while Nielsen ratings might look encouraging, they have no way of measuring the percentage of people that turn to cell phones and other screens when the ads roll.
The good news is: Addressability can help. Studies have shown that households receiving addressable advertising tuned away 38% less often than those receiving non-addressable messaging. This speaks to a simple truth of marketing: People don’t mind being marketed to in a way that feels relevant and timely.
Forty years ago, you could buy the attention of 80% of America’s female population by running a single ad across the three major networks. Today, you’d have to run the same ad three times a day on 100 channels (and hope nobody’s checking their phones) to have the same impact. But with addressability, you can do something better than reaching everyone: You can reach the right people.
How Addressable TV Works
Chevy accomplished this in 2013 by marketing their new Silverado through DirecTV and Dish Network. By using a combination of their own customer data and profiles of the networks’ subscribers, they were able to target their TV spots to households likely to be shopping for a new truck.
Chevy didn’t need to reach 100% of viewers. They just needed to reach 100% of their target audience (which they did.) The results were staggering: A 23-to-1 ROI, an 11% boost in sales for that model truck, and a 209% increase in sales overall.
Challenges to Addressability and Digital Personalization
With this information about how addressability is evolving, let’s next look at some of the challenges it faces today. It starts with a conversation about inventory.
Addressable TV ad spend is set to break the $3 billion mark by 2022, tripling from just $900 million in 2016.
Unfortunately, the amount of ad inventory that’s available for addressable content remains low. Until recently, just two minutes of ad time per hour was available through local networks and cable providers. That number is changing rapidly, however, especially the level of national programing.
This is the downside of scale. Savvy and fast-moving marketers hoping to capitalize on addressability have to compete with major players who have large budgets and influence. Many of the changes we’ll see in TV over the next few years will come from necessity and pressure from digital platforms, not from a desire to innovate or set trends.
At the same time, we’re starting to see tech behemoths like Google and Facebook make moves in this space. While this could spell disaster for some of the more established names in the world of TV, there could be benefits all around from the innovations in addressability that these titans of data aggregation bring with them.
The convergence of TV and digital is a new frontier for the metrics by which we measure viewership and ad reach. New measurement providers are popping up and delivering insights into Amazon, YouTube, and Netflix viewers. Meanwhile the old standard bearer, Nielsen, has rolled out new products to track digital viewers on computers and mobile devices.
Closing Thoughts
Addressability gives you the power to scale relevance. It’s a way to reach the right people wherever they may spend their viewing time rather than aiming for a big reach and keeping your fingers crossed that some of the right people get the message.
This fast-growing form of personalization is ideally suited to the massive changes we’re seeing in where and how people consume media, and it feeds off data insights that will only get deeper and more precise as these technologies develop.
But at the end of the day, your customers don’t care about ROI or reach or conversion rates. They don’t know what CX means, but they do care about their experience. They don’t want to hear a sales pitch or be bombarded with content they don’t care about, but they do want to connect with products and services that are relevant to them in a way that feels genuine and timely.