MIAMI — Addressable TV, the idea that brands can target TV viewers at the individual household level using IP connections and data, is growing up, now that it can reportedly target around 50 million US households.
But a nationwide footprint is still some way off, many industry execs believe.
Tim Hanlon, founder and CEO of his own Vertere Group, an investment advisory and consulting firm, thinks the current deployment of addressable – limited to the two minutes per hour of local cable programming available – is a “ghetto” that limits grand uptake.
That could be solved by national operators and networks coming closer together or by local broadcasters and operators to partner. Hanlon isn’t betting that either of those things will happen in the near term – but he thinks the companies should recognize the need.
“One only has to look at how people are unbundling their cable subscriptions … cable distribution of cable networks is starting to decline,” he tells Beet.TV in this panel interview. “Even ESPN, the king of all kings, is seeing significant declines.
“As those subscriber bases get smaller, it’s pretty clear that the network operators are not going to pay programmers or TV stations as much as they have been in the past, because their subscriber levels are going down. So that money has to be made up and then some – and advertising … comes to the rescue.”
Now here is an interesting comparison. Hanlon likens the cable operators’ situation to that of Netflix. Netflix’s subscriber base may still be growing – but many observers, casting forward to slow-down, imagine the outfit will need to start selling ads to maintain positive momentum for investors. Hanlon agrees.
Typically, those most excited about advertising on Netflix are on the advertiser side. What does Hanlon think?
Asked which he conceives happening first – national broadcast addressability or Netflix beginning advertising – Hanlon says: “I don’t think national broadcast addressability happens that soon only because the local TV stations and the affiliate relationships are so convoluted and murky that that has to be completely rethought and reinvented.
“So, if I were a betting man, I would say that we’re probably going to see some judicious, target ad opportunities within the Netflix environment sooner than that.”
In January, Ampere Analysis’ Richard Broughton gave Beet.TV an analysis of Netflix’s advertising opportunity, saying the company could make between $270m and $2bn per quarter from advertising, depending on the model. But each model would also have an implication for subscriber churn.
This panel was conducted at Beet Retreat 2016: The Transformation of Television Advertising, an executive retreat presented by Videology with AT&T AdWorks and the 605. Please find more videos from the event here.
This panel was moderated by Matter More Media CEO Tracey Scheppach.