TV Viewing and Advertising Targeting

Television, the predominant advertising medium, is being transformed by the microtargeting capabilities of set-top boxes (STBs). By procuring impressions at the STB level (often denoted “programmatic television”), advertisers can now lower per-exposure costs and/or reach viewers most responsive to advertising creatives. Accordingly, this study uses a proprietary, household-level, single-source data set to develop an instantaneous show and advertisement viewing model to forecast consumers' exposure to advertising and the downstream consequences for impressions and sales. Viewing data suggest that person-specific factors dwarf brand- or show-specific factors in explaining advertising avoidance, thereby suggesting that device-level advertising targeting can be more effective than existing show-level targeting. Consistent with this observation, the model indicates that microtargeting lowers advertising costs and raises incremental profits considerably relative to show-level targeting. Further, these advantages are amplified when advertisers can buy in real time as opposed to up front.