Targeted, or addressable, TV ad spending in the US is growing quickly, but will remain a small portion of total TV spend for the foreseeable future.
According to eMarketer’s latest forecast, US addressable TV ad expenditures will grow 65.8% to reach $1.26 billion in 2017. eMarketer includes broadcast and cable TV in its TV ad spending forecasts, but excludes digital.
Addressable TV ads are targeted ads delivered by a cable or satellite provider via set-top boxes. The ads mainly target viewers based on age and gender. They can be seen during live broadcast/cable viewing or during on-demand viewing.
While three-quarters of US households have cable or satellite boxes capable of delivering targeted ads, addressable TV spending will make up just 1.7% of total TV ad expenditures ($72.72 billion) in the country this year. By 2019, that proportion will grow to 4.0%.
“Addressable TV is a seller’s market. Even though cable and satellite providers have the capability to target 74 million US households, they are rationing the inventory,” said Oscar Orozco, senior forecasting analyst at eMarketer. “Some targeted TV ads command lower prices, and measurement capability is limited at this point.”
Meanwhile, programmatic TV ad spending will grow 75.7% to $1.13 billion in 2017— representing 1.6% of total US TV ad spend. Next year, programmatic TV advertising will grow another 85.2% to $2.09 billion, and that figure will reach nearly $4 billion by 2019.
“The advanced targeting aspect of programmatic TV ad spending is sophisticated,” Orozco said. “However, pure automation from beginning to end is still not as advanced as it is for digital programmatic. Currently, ad placement is still generally done manually.”
“For programmatic TV ad spend to grow as fast as we’ve seen on the digital side, it must advance to complete automation,” he added.