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Is Dynamic Ad Insertion the future of TV?

March 12, 2015

by Eleanor Stone - Account Manager, Mediaocean

Having recently attended a number of conferences on the future of television and video, it seems that the latest buzzword in the industry is Dynamic Ad Insertion. Both agencies and advertisers are talking about how Dynamic Ad Insertion is changing the face of TV, but is it as likely to revolutionise TV planning and buying as some of the stats may suggest?

Dynamic Ad Insertion, otherwise known as Addressable Advertising, is a relatively new technology that allows a far more targeted approach to reaching your TV audiences. In the UK, it seems that Sky is the only company offering Dynamic Ad Insertion and has done so for the past year.

So how does it actually work? It turns your Sky+ box into a dynamic Ad Server that delivers set adverts to a specific target audience, whilst non-Adsmart adverts are delivered to all the other Sky boxes. Audiences can be derived from a combination of data including Sky’s own customer data, Experian’s consumer data and more recently, advertisers own consumer insights. Where as in the past, adverts could be broadcast regionally at station level, now it is actually possible to refine advertising to a postcode in conjunction with other factors such as age, lifestyle or even if you own a cat. Successful campaigns so far have included East Coast Trains - Feel at Home adverts, where affluent metropolitan areas in key cities on the train line were targeted.

If you look more broadly at the types of campaigns that have used Dynamic Ad Insertion so far, there really are three distinct types.

The first (and least commonly used) is ‘Single Advertiser Spot Optimisation’, where a single advert is delivered by an advertiser with multiple brands. The second, ‘Dynamic Zoning’ allows advertisers to specify down to exact geographical areas, based on postcode regions. Finally, ‘Aggregation’, the most precise option taps into lifestyle factors, combined with location to reach a correct demographic. As you read this, even more targeted approaches are currently being examined, such as ‘Multiple Advertiser Spot Optimisation’ where Dynamic Ad Insertion goes beyond household level to potentially deliver different adverts in a single household, to individual family members on their own devices, who are watching the exact same programme.

Is Dynamic Ad Insertion as good as it sounds for brands? One argument for it, says that businesses of all shapes and sizes will finally be able to benefit from advertising on TV. Sky was recently quoted saying that 77% of their Adsmart advertisers had not previously engaged in any form of TV advertising. There is also the argument that Dynamic Ad Insertion actually reduces waste for brands and that targeted campaign should deliver more value for money.

However, is the brand equity that advertisers build over the years with supposed wastage as invaluable, as it may seem to some? Brands that do not rely on niche audiences, such as everyday essential products, actually benefit from reaching a much wider audience. Plus it’s unlikely that we’ll see TV stations give up their high value spots to Dynamic Ad Insertion any time soon, especially when they have the power to drive spot bidding wars.

Dynamic Ad Insertion is certainly here to stay and offers up interesting possibilities for viewability and advertisers but all of this is in conjunction with linear TV, at least for now.