Addressable TV ads open a new marketing frontier for digitally-native brands, but questions of scalability remain.

WHAT HAPPENED: Addressable ads—TV spots curated to specific households based on demographic, rather than just gender and/or age—are providing a new path for brands to diversify their marketing strategy.

Why it matters

  • In a survey, the Video Advertising Bureau saw TV ad spend among 120 direct-to-consumer brands rise from $1.1 billion in 2016 to $2 billion in 2018—70 of the brands purchased TV spots (traditional and addressable) for the first time last year. Chewy, Peloton and Purple each spent more than $100 million on TV ads in 2018. Addressable ads are often cheaper because they target smaller viewerships than national ads. As TV ads, they also round out digital brands’ marketing strategy, interacting with new audiences, which can feed back into digital and/or brick-and-mortar sales. It’s also a way for companies to stake out an advertising space independent of Facebook and Google where they not only compete with a cacophony of other brands in consumers’ newsfeeds, but must also fork over ever-rising costs.
  • However, it’s harder for digital brands to realize this ad strategy at scale, not least because companies must take both digital and cable metrics into account to maximize addressability—it also means developing various TV ads for the scope of demographics they seek to target without being able to measure its customer conversion as thoroughly as a digital ad. Further diversification in ad strategy is expected in the future—most recently, Walgreens’ pilot is testing freezer and cooler door ads that assimilate to customers based on face and gender recognition and other macro trends like weather. But it’s up to brands to find the right balance of channels that will see the highest ROI.