Editor’s note: Artie Bulgrin is EVP, strategy and insights, at market research firm MediaScience, New York. 

Much has been written about the lines blurring between TV’s role as high-reach, long-term brand builder and short-term targeted sales activation platform due to the growth of addressable TV households. According to the Video Advertising Bureau (VAB), 54% of TV homes in the U.S. can receive targeted TV advertising and, as a result, addressable TV ad spending is projected to grow 33% in 2020 to $3.4 billion. 

The evolution of effective addressable consumer targeting means that television could deliver valuable business outcomes across the full marketing funnel – from brand awareness to sales activation – with many marketers focused on the latter. But seminal research from Binet and Field for the IPA Databank recommends a balanced approach between long- and short-term strategies of roughly 60/40 given that reach remains essential for long-term growth. With that being acknowledged, TV is certainly offering new value for marketers and the industry believes that addressable TV will deliver a deeper level of personalization resulting in greater relevancy and attention for TV advertising. But is this true from a scientific perspective? 

For the last decade, MediaScience has been testing the performance of TV/video advertising formats in both long-term and short-term messaging applications across traditional TV and digital platforms. This article will look at insights in five key areas, based on a series of controlled lab studies on category-based targeting. These may run counter to conventional wisdom, but are essential to understanding the value and limitations of addressable advertising.

  1. Addressable advertising does not improve ad recall and brand recognition. Even when controlling for factors such as program liking, brand familiarity and brand category relevance, there is no significant difference in ad recall or brand recognition influenced by category relevance to a viewer. This means in conditions where the ad pod had no relevant ads, one relevant ad or all relevant ads, there were no significant differences in ad recall or brand recognition. 
  2. Targeting and relevance alone do not affect ad engagement or reduce ad avoidance. In general, ads for product categories more relevant to the viewer do not affect engagement or ad avoidance. Only when the category is highly relevant and the need very timely (such as for allergy medication) can addressable ads reduce ad avoidance. A key insight for brands is that likable ads, brand familiarity and optimized frequency are most essential to gaining engagement and mitigating ad avoidance. It is also essential that consumer data on relevance and “in-market” status be very timely. For example, in one study we found that one quarter of consumers originally surveyed as being “in-market” for a category were no longer in-market 30 days later. 
  3. There is no difference in addressable ad effectiveness in a cluttered vs. limited interruption environment. In evaluating ads that were highly relevant and “in-market” to ads that were of low or no relevance, we found that limited interruption produced no significant difference in ad avoidance, ad liking or attitude toward the brand across ad types. Another insight was that ad liking and brand attitude explained more than half of the total variance in ad avoidance, while rated relevance explained less than 10%.  
  4. Optimizing frequency for addressable ads is critical – especially for new and unfamiliar brands. Brands that are highly familiar or repeated (whether familiar or not familiar) are more likely to be seen and to improve brand measures; but managing excessive frequency in short periods is critical as this can increase ad avoidance and erase all benefits. One of the best conditions for addressable advertising occurs when familiarity and optimized frequency are combined with ads targeted using very timely consumer information – same day or less. This improves efficiency and impact.  
  5. Regardless of the screen, behavioral targeting does not produce higher ad engagement. Based on biometric measures, whether on TV or a personal smartphone, ads targeted for product categories more relevant to a viewer do not stimulate more attention or more emotional response than standard ads. There is also no difference in memory between moderate and high relevance ads. Creative matters more than relevance.  

Creative quality 

It’s clear that consumers do not ignore ads from non-relevant categories, nor do they favor targeted ads from relevant categories. Ads for categories and brands consumers use may be easier to process or remember, but attention and enjoyment of ads are more attributable to creative quality than relevance. 

Video ads seem to have the ability to gain the attention of more than just the “most likely” of viewers. This is good news for advertisers needing to strengthen their brand among light and future buyers. In short, it’s more important for an ad to be good than relevant. Our research suggests that advertisers should not pay a premium for targeting based on the hope of higher engagement. Instead, premiums should be justified in terms of efficiency: extra reach with optimal frequency and less waste.