Addressable advertising will bring no benefits, linear still King, says GroupM’s Smith

Mass-market linear TV will continue to dominate the global advertising market, and targeted advertising will not bring any benefits to platforms operators, according to Adam Smith, futures director at media buying agency GroupM.

Speaking on the second day of Informa Telecoms and Media’s Digital TV Central and Eastern Europe conference in Bucharest, Smith said that mass-market advertising still accounted for 85% of GroupM’s overall business, rising to 95% in central and eastern Europe. “I can’t see a single case where an advertiser has forsaken mass-market advertising,” said Smith, noting that even internet brands looked to TV to spread brand awareness. He said that even in the US 98.6% of viewing was via the TV, compared with only 1.3% on online platforms and only 0.1% on mobile. A full 98.4% of video ad spend was spent on TV, while only 1.5% was spent on online and 0.1% on mobile, he said.

However, Smith said, targeted or addressable advertising – until recently identified as the likely saviour of TV advertising – was failing, and that interest in this area was moving to web-based video. “We hare having big trouble getting it to work,” he said, pointing to difficulties experienced by Project Canoe in the US and relatively little progress on a trial on the Echostar Dish DTH platform in which GroupM was involved. “The interest we had is already shifting towards serving video advertising on the web – I get the feeling that the time for [addressable advertising on TV] has come and gone now,” he said. Smith also warned that investing in addressable advertising platforms was unlikely to produce returns for platform operators because agencies and media buyers would seek to keep the benefits for advertisers rather than service providers, and he argued that the concept was in any case flawed. “You will get return on investment [based on] working out who the one customer is that’s your target audience, but advertising is about converting a wider audience of potential customers,” he said.

Smith also told delegates to the conference that GroupM had upgraded its forecasts of recovery in the ad market for this year, with western Europe likely to see growth of 2% rather than a drop of 2% and central and eastern Europe likely to see growth of 7% rather than 6%. The Asia Pacific region would also see stronger growth than anticipated, while the drop in North America would be less severe than anticipated. Central and eastern Europe is expected to see growth of 11% next year, compared with 2% in western Europe. TV is expected to contribute US$11.9bn (€9.7bn) to advertising growth this year, making it the biggest single sector, while the internet will contribute US$6.9bn.