egta Expert Series: Growth Opportunities of Addressable TV

Addressable TV is predicted to generate $7.5 billion globally in 2022, and targeted advertising within TV content is also rapidly growing across Europe. In this session of egta’s Expert Series — hosted by Anne-Laure Dreyfus, TV Director at egta — smartclip Co-CEO Dr. Oliver Vesper goes into detail on where this growth comes from and elaborates on the different reasons for traditional TV buyers, digital-first advertisers, and small and medium-sized enterprises to leverage the medium. Watch to learn more.
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Transcript

Anne-Laure Dreyfus: Hello and welcome to this new series of our Expert Series. This time we’re focusing on Addressable TV. It’s a very hot topic for our members. It has been in the last year, but it’s even more this year where it’s really getting very concrete for the sales houses across Europe. We have Oliver Vesper with us who is the Co-CEO of smartclip. Obviously, Oliver, you’re a reference in the business, and so we wanted to talk to you today about a few questions we keep on getting at egta. And I’m starting straight away with the first question, which is how big is even the Addressable TV ecosystem? You know, how much money are we talking?

Dr. Oliver Vesper: Thanks for having me. It’s a very interesting topic, Addressable TV. Since its inception in 2016/2017, it really continues to grow and according to two latest numbers, you see a formidable size of 7.5 billion global US dollars in that business. And if we reference a little bit down to Europe, we already see for Germany — last year, we saw an eight-digit figure in Addressable TV. We will see this year a nine-digit figure for Europe. So it’s really constantly growing and it’s much more growing than the latest predictions or predictions from two or three years ago have shown. So the money, maybe it’s interesting for the members to ask, where does the money come from? And then we see really three buckets. So, the one bucket is, of course, the traditional TV spenders. They know the TV game, they know the value of TV advertising, and they are of course jumping on that train for Addressable TV and they buy additionally Addressable TV on top of their TV campaigns. They are really tapping into the ad break and they are waiting months until the ad break is fully replaceable and mastering it. This was somehow expected and they do it. Maybe even more interesting is the area of medium-size and small and medium-sized enterprises. There, we see a very interesting new kind of client because what Addressable TV brought, and is still bringing, is to lower the entry barriers. For them, it’s really interesting. The mid-sized company we classify as: they are digitally grown, they are not socialised with TV ads, maybe 10 maximum 15 years on the ground. They grew up with Google, Facebook, and Instagram advertising, with all the data-driven beauty which comes with it. So for them, it’s something new and very powerful and they understand that. They have a different evaluation of it, but that is something that Addressable TV is very attractive for. If you then go one step deeper, then you have the very small and medium-sized enterprises. These are the retailers, the local car dealers, and so on. And these are typically investing into out-of-home areas, or radio, or digital out-of -home, things like that. But also Addressable TV can become a very interesting innovative field for them. All three categories, you could say 60%, 35%, up to 5%, something in the range like this, have different requirements. And if you want to really put it in a nutshell, then you really see the big spenders are waiting for the ad break and the programmatic solution. The medium-sized spenders which grew up digitally definitely need a programmatic solution, and they are also more into attribution, so things which are not new for them. And the small and medium-sized enterprises — there’s really a lot of scalability — but there, the self-service tool is really something that has now become very important for them.

Anne-Laure Dreyfus: They’re booking I guess mostly into geo-targeting. That’s like what makes it more relevant for them, for the very small businesses right?

Dr. Oliver Vesper: Yes, they still book, of course, audiences, what they want to achieve, but most likely then the geo is just one additional attribute on top. But this combination with still a sizable reach is very interesting for them, and it’s completely new, and also display formats, which is not present in every country, but for them it’s very powerful because of the production costs. The effect is still very high for them. That’s the reason why it is a pretty good format for them.

Anne-Laure Dreyfus: And generally speaking, the medium-sized and small ones are really tapping into TV. Generally speaking, we see it really worldwide with some facts and figures we’ve gathered with The Global TV Group, by the way, which is that they see the value of how cheap and efficient TV is actually, and how much it drives sales. And it drives not only the brand knowledge, but it really drives sales—and so the KPIs they discussed with our members. It’s very new. So, we like seeing that Addressable TV is adding a layer of data-driven advertising to this. That’s really interesting. That brings me actually almost to the last point, which is what’s the next step? What is missing for Addressable TV to scale up and reach the next level? One thing we didn’t mention maybe is the definition. It’s now on OTT, it’s set-top-boxes, but it’s also connected TVs. You know, is the penetration a big discussion, is it the booking system what makes us reach the next level?

Dr. Oliver Vesper: Yes, I would say the two topics, the definition — of what we see across Europe and even globally — is that the definition is now either extended or enlarged or reclassified. Typically, Addressable TV has always been born with a linear TV consumption model. This is also something where we say, I also might include broadcaster VOD in this game. But every country has a different view on this at the moment. Something where also research might be interesting, but this is something. And the second question, what you are addressing is that these three clusters have really different requirements. Mastering the ad break is something technologically very complex in combination with programmatic TV for the first and second buckets and the different models for self-service is what we will see across Europe. We are pretty sure of that because also many of your members, we know that they are looking into these different tools.

Anne-Laure Dreyfus: I think we can close by saying our members are really looking into making TV easier to buy. Generally speaking, make it easier to understand how TV works, and particularly in a few clicks for the small businesses. And proving the effectiveness of TV and particularly of Addressable TV is probably a hot topic right now for sales houses also, generally. So thank you so much for the work you’re doing in the area, for everything you’re doing to grow the business. We hope to see you in person at one of our upcoming meetings and that our members can drink a cup of coffee and discuss that business. In the meantime, feel free to comment and share and discuss the issue here on LinkedIn. Voilà. Take care. Thank you, Oliver, so much for the time you spent with us. And thank you, smartclip.

Dr. Oliver Vesper: Thanks for having me. Thank you. It was a pleasure.