LONDON – Addressable TV ad campaigns are driving TV ad revenues to “insane” levels in some markets, according to David Downey, CEO and president of Invidi Technologies, a developer of targeted advertising systems, originally founded in Edmonton and now headquartered in Princeton, N.J.
Downey made his comments earlier this month at the Future TV Advertising Forum held in London, England. Click here for the full presentation.
Talked about for years, addressable TV ad systems use dynamic ad insertion technology to allow advertisers to target specific household audiences, based on age, income and other demographic factors, such as the presence of children in the household.
Of the 105 million pay TV households in the United States, currently 64 million of them are under contract to deploy addressability, Downey said. Invidi’s own reach into that market is currently 26 million homes. Downey explained Invidi’s targeted advertising system technology provides four types of addressability: dynamic zoning, aggregation, multiple-advertiser spot optimization and single-advertiser spot optimization.
Dynamic zoning, whereby advertising zones can change size and configuration instantly, could allow a car manufacturer to run different dynamic ads for each of its dealerships, specifically targeting the audiences in the areas where the dealerships operate, Downey explained.
The results from applying dynamic zoning to addressable ad campaigns have been significant for Invidi’s clients, he said. “We’ve increased revenues by 439%. (Ad) inventory that was worth $4.91 (CPM) sells for $21.54,” Downey said. “When my CFO brought the first cheque in that we were getting paid for this, I thought he was crazy. I said, ‘Go back and check your numbers. There’s no way.’”
“When my CFO brought the first cheque in that we were getting paid for this, I thought he was crazy. I said, ‘Go back and check your numbers. There’s no way.’” – David Downey, Invidi
Even more impressive are the results from using aggregation to target specific demographic categories of audience, Downey said. “With aggregation, we separate the audience from the (TV) show. You simply buy a demographic that you’re looking for and you can apply multiple different buying tools against that, and you can also apply multiple targeting parameters. You really can sell dog food to dog owners.”
“Results? Insane — 748%. This is 10 consecutive months in a row, and honestly it’s still going up,” Downey said. “If you’re a broadcast TV station or a satellite network, or a distributor, you just gotta do it.” He later explained the 748% figure was an average of 10 months’ worth of results from ad agency clients. “The lowest CPM in the group was $10.10 per thousand, and the highest CPM was $151 per thousand, in that analysis.”
In Canada, Cogeco and CHCH have experimented with the Invidi system but have not yet made public their results.
Downey used the example of Nestlé to explain single-advertiser spot optimization (SASO). “The Nestlé company makes all of these different brands of water and they all come out of the same hole in the ground. But depending upon where you live, they wrap a different label around it and run you different commercials,” he said. “So Nestle can buy the whole United States now, but depending upon where you are, you’ll get a different brand of water presented to you.”
Multiple-advertiser spot optimization (MASO) is where Invidi thinks the real money is. MASO could be used to deliver TV ads targeted to individual homes on the same street, or to individual devices within the same home, Downey said.
“This is four different houses, all on the same street, all watching ‘The Big Bang Theory’ — Boom! You get four different commercials, based upon the targeting that you’re looking for… Today, you can target by individual device. So if you’re watching it on your iPad out by the barbecue grill, or you’re watching it by the phone in your bedroom, or you’re watching it on your cable box in the living room — everyone’s watching the same show, everyone gets a different commercial.”
Having completed a one-year technical trial of a MASO system with a major broadcaster and a cable company, Invidi is getting ready to roll out the system in the next 60 days. Although he didn’t name CBS as the broadcast network, he said the MASO system would be used to deliver addressable ads during top TV shows such as NCIS New Orleans and Survivor. “We’re very excited about that. So next year we might be able to come back and give you some results from top network shows,” Downey said.
Comparing SASO to MASO, he believes SASO will be the least-profitable form of addressability, potentially driving revenues by 50 to 125%.
“But MASO, where you’re dealing with the largest shows, the biggest audiences, a market where we know there are many additional advertisers that would like to be in each single break, we think that could go anywhere from 250 to 625%.” Downey offered a couple of case studies where Invidi’s addressable ad technology was used to help advertisers (a truck manufacturer and a riding lawnmower manufacturer) target specific audiences and achieve measurable success in driving product sales directly as a result of the ad campaigns.
But perhaps the most interesting case study presented by Downey didn’t involve product sales, but rather political advertising — expected to be an $8 billion business in the next presidential election in 2016. During the 2012 American presidential election campaign, two candidates running for president used addressable ads in an attempt to reach undecided voters in so-called “purple states”, Downey said. (In the U.S., states are defined as red or blue depending on whether they have a majority of Republican or Democrat party supporters, respectively.)
One presidential candidate ran ads at just the state level, using one piece of creative for the entire state, Downey said. The other candidate went further in his ad campaign and targeted “purple counties” within states.
“So within a particular state like Ohio, not every county is up for grabs. Some are very defined, red or blue, as Republicans or Democrats. This particular candidate just ran the ads in undecided counties, and they ran eight different pieces of creative over that period of time… The results? Addressability was five times more effective and he was the president of the United States. Number 44, President Obama.”
