Programmatic Decoded: What is Advertising Addressability?

• What is advertising addressability?
• What is an addressable audience?
• What is a non-addressable audience?
• What does the term “addressability gap” mean?
• How has addressable advertising evolved?

What is advertising addressability?

The term advertising addressability refers to advertising efforts that can be customized to individual users and validated as having successfully reached a specific audience. Often synonymous with terms like addressable media or addressable marketing, this approach encompasses advertising campaigns where the outcomes and impact of the advertisement are quantifiable to some degree. Rather than a one-size fits all approach, addressable advertising enables the possibility for distinct users to view the same webpage, or watch the same video program but receive entirely personalized advertisements tailored to their individual interests.

To take an example, a car repair shop may choose to use social media ads and online display advertising to get their message out to local residents. In this case, social media ads and online display ads are both forms of addressable advertising because engagements with the ads can be unique to the person viewing it.

What is an addressable audience?

Now that you understand what addressable advertising is, it’s time to take things a step further and decode the meaning of addressable audiences.

An addressable audience is a specific group of individuals who share a defined set of characteristics or criteria that make them well-suited to consume and engage with a particular advertisement. Addressable audiences are a central concept in advertising addressability, as they enable advertisers to maximize the relevance and impact of their campaigns by delivering content that is more likely to resonate with the intended recipients.

This approach contrasts with traditional mass advertising, where messages are broadly broadcasted without taking individual preferences into account. Addressable audiences are crucial for effective marketing strategies as they facilitate precise targeting and improved engagement, leading to better outcomes for both advertisers and their audiences.

What is a non-addressable audience?

If there is such a thing as addressable audiences then there must be non-addressable audiences, right?

Yup, you nailed it.

A non-addressable audience is a broad and undefined group of individuals who are exposed to advertising without personalized targeting or segmentation, making it challenging for advertisers to tailor their messages effectively and measure the outcomes of their campaigns. In traditional mass advertising messages are often broadcasted to a wide and diverse audience without the ability to customize the content for different segments.

To stick with the previous example, that same car repair shop may choose to display a billboard in the region that they service. In this case, it is not possible to measure how many people the billboard reached or how effective the billboard ad was, making it a non-addressable form of advertising.

Non-addressable audiences may arise in cases where there is insufficient data about the audience or when the advertising platform lacks the necessary tools to deliver personalized content. Addressable advertising seeks to move away from non-addressable audiences by leveraging data-driven insights and digital technologies to create more relevant and engaging campaigns.

What does the term “addressability gap” mean?

As anyone familiar with the advertising industry knows, new acronyms and terminology pop up quicker than most people can keep up. One new term that has been thrown around in recent years is the term “addressability gap”. The addressability gap refers to the disparity between marketers’ ability to target and reach specific audiences with personalized content and the potential or desired level of precision they aim to achieve. In a simplified example, let’s say a marketer wanted to reach all new car owners in the United States. They set up an ad campaign targeting “new car owners”, but only end up reaching 40% of U.S. new car owners for one reason or another. In this scenario, the marketer is experiencing an addressability gap of 60%.

This gap often emerges due to factors such as limitations in data availability, tracking capabilities, privacy regulations, and changes in technology that impact the accuracy and effectiveness of audience targeting in advertising campaigns. In essence, the addressability gap represents the challenge faced by marketers in bridging the divide between their aspirations for highly targeted and relevant advertising and the practical constraints that may hinder achieving those goals. It highlights the need for innovative solutions and strategies to narrow this gap and deliver more effective and personalized advertising experiences.

How has addressable advertising evolved?

Over the last few decades addressable advertising has evolved from relying on physical mediums like print ads and direct mail to digital platforms such as email marketing or web ads. The rise of the internet enabled granular data collection for more precise audience targeting, while new technologies like programmatic advertising automated ad buying based on that data. The explosion of social media platforms introduced behavioral targeting and personalized content, followed by the integration of location data for mobile advertising.

With so much data being utilized in today’s advertising world it’s no wonder concerns about consumer data privacy have arisen. Over the last few years we’ve seen new data privacy regulations introduced as well as browsers moving away from third-party cookies for tracking and targeting. Each of these changes results in an increased gap in addressability, unless new targeting and measurement tactics are developed and embraced. Thankfully, artificial intelligence is being harnessed in new ways to power personalized, addressable advertising with new methods that maintain respect for user privacy. The future of the industry holds immense potential for further innovations in data privacy solutions and enhanced cross-device targeting, shaping the ongoing evolution of addressable advertising.