With the midterm elections here, one last wave of campaign ads is washing across your TV screen. And there’s a decent chance that some of those ads are aimed at you — personally.
For years advertisers have been customizing the pitches they send to computers and smartphones. Now they can do it on television, and politicians are signing on.
Known as “addressable ads,” these are commercials that are sent only to those viewers most likely to appreciate them. The ubiquity of cable, satellite, and Internet video streams has made it much easier for broadcasters to target certain viewers with one kind of ad, while other viewers get something different.
By combining voting records, data that is commonly available from commercial brokers such as home ownership and job history, and the cable box addresses of broadband customers, a campaign can pay the broadband provider to show a custom-made ad to only those households where it will do the most good.
“We can particularly target someone a campaign wants to reach.” said Jim Wilson, president of Premion, a Virginia company that delivers addressable ads on Internet video streaming channels. “We have data on 90 million households.”
Wilson said addressable political ads are “a meaningful part of our revenue this year,” but declined to disclose which campaigns use his service. However, a Premion spokesman said his company has used addressable ad technology in 600 political advertising campaigns since April.
TargetSmart, a Washington, D.C., company that provides addressable ad services for Democratic candidates, also declined to provide specifics. But Bill Russell, the company’s director of digital partnerships, said “all indications are that there is more addressable TV going on than there has in past campaigns.”
One high-profile user of addressable ads, billionaire political activist Tom Steyer, is running TV spots calling for the impeachment of President Trump. Steyer’s Need To Impeach movement has signed up more than 6 million supporters, and uses addressable ads to target them directly. “It’s more of a one-to-one way to talk to people,” said lead strategist Kevin Mack.
Why advertise to those who already support you? In order to get them to the polls, said Mack. He points to data from the March special election in Pennsylvania’s 18th Congressional District as evidence that it works. Over 80 percent of voters who were targeted with Need To Impeach ads turned out at the polls, compared to just 49 percent of those not targeted. This may have provided the margin of victory for Democratic candidate Conor Lamb, who won by 755 votes.
Addressable ads could also help candidates target undecided voters. Michael Beach, chief executive of marketing analytics company Cross Screen Media, estimated that only 4 to 8 percent of voters in battleground districts will be open to changing their minds this Election Day. Some campaigns use addressable advertising to reach this critical audience.
The process begins with collecting publicly available voter data, such as names, party affiliation, and prior voting habits. This is combined with information purchased from commercial data brokers, such as Acxiom, Equifax, or Experian. These companies have vast quantities of sensitive personal information about nearly everyone in the United States, from marital status to educational background, bankruptcy, or criminal records.
The data brokers also offer a service called onboarding that combines all this information with customer records from cable, satellite, or Internet streaming companies to produce a unified profile of each voter. Using software to delete names and other personally identifiable information, the data brokers substitute a digital code for each profile that corresponds to the customer’s cable box.
By analyzing all this data, a campaign can identify, say, every middle-aged high-school graduate in Brockton who voted Republican in 2016 and might be interested in a GOP replacement for Senator Elizabeth Warren. If there are enough such voters, the campaign could even create a TV spot just for them.
“All you have to do is send a set of ID numbers to the cable company, and they can target those people that way,” said Russell of TargetSmart.
A typical cable TV show has an inventory of commercials that have been sold by each network, be it ESPN or Fox News. But the cable or satellite system gets a couple of minutes per hour where they can sell ads. Usually, these are the ads you see for neighborhood restaurants or car dealerships. They are also the slots where the addressable ads run.
The market for addressable ads is expected to reach $2.8 billion in the United States this year, according to MAGNA, an advertising research company. That’s a trivial amount of the total US television advertising market, estimated at about $64 billion.
Cost might have something to do with it. Video networks charge for ads by how many thousand people will see them. For example, AT&T said last year that ads on its cable and satellite systems generally cost $12 to $13 per thousand viewers. But for addressable ads that reach far smaller numbers of viewers, the price was as high as $40 per thousand. The higher cost might be offset in some cases because the addressable ad will be aimed at a smaller audience, but the higher price could still scare off some advertisers.
There are also technical limitations.
“Only 50 percent of TV households are able to receive addressable advertising through traditional TV,” said Beach.
As a result, only about $800 million in such ads will be sold through cable and satellite systems this year, according to the MAGNA study. Old-school over-the-air TV broadcast systems can’t send addressable ads.
But for Internet video streamers like Sling TV and Hulu, the addressable ad business is booming. MAGNA estimates that the market will swell by 40 percent this year, and reach $2 billion.
These ads won’t just be used by politicians. Russell said that consumer products companies are just as interested in targeting ads only at viewers with a genuine interest in their products.
“I don’t think it’s the political advertising that’s driving it,” Russell said. “We’re drafting behind Anheuser-Busch and Chevrolet . . . the big consumer brands are always in the forefront of advertising changes like that.”