Dive Brief:

• Advertisers are making significant investments in advanced TV options, with 58% investing in over-the-top (OTT) or connected TV; 44% in programmatic linear TV; 40% in addressable TV; 35% in data-enabled linear TV and 32% in set-top box VOD, according to an Advertiser Perceptions’ 2018 Video Advertising Convergence Report made available to Marketing Dive. 
• Audience targeting, cross-screen planning and buying, and addressability are driving the investment. Two in five advertisers are leveraging data to target ads — 69% for audience buying and 31% for program buying — nearly equally across third-party platforms, satellite providers and multichannel video program distributors, Advertiser Perceptions found. 
• Most advertisers in the survey said they intend to plan and buy TV and digital video together, but Advertiser Perceptions emphasized how a true convergence of the channels isn’t a widespread practice on the marketing side yet. Just 53% of respondents plan the two strategies together, and only 40% buy bundles from multichannel providers.

Dive Insight:

Marketers’ investments in linear TV continue to decline, with digital video often snapping up a good deal of those advertising dollars. Advanced TV formats like addressable ads let marketers more easily blend the two channels, but while they’re an appealing option, many in the industry haven’t adjusted their planning and buying strategies to accommodate them. 

Addressable TV ads can appear on traditional TV platforms during live and on-demand viewing, but marketers also have access to higher levels of audience targeting often associated with digital. Most addressable ads are targeted based on demographics, like age and gender. Chipotle is one brand that plans to invest more in addressable TV. During a fourth-quarter earnings call in February, executives at the fast-casual chain said it plans to leverage its 25th anniversary this year to deploy addressable TV campaigns targeting both existing and new customers. 

Targeted TV, or addressable ads, were projected to grow 65.8% to $1.26 billion in 2017, according to eMarketer, but were expected to remain a small segment of overall TV spending. Addressable ads were previously only available on cable or satellite, but the Federal Communications Communication approved them for broadcast TV in November. The move led many to speculate that addressable TV could be a potential savior for struggling networks.

Traditional TV ad sales have suffered multiple years of decline, falling 7.8% last year to $61.8 billion — the steepest drop in the past few decades barring economic recessions — according to Magna Global.