SAN FRANCISCO — To reach potential buyers of its all-electric RAV4, Toyota is using an advertising strategy as experimental as the battery-powered crossover car it seeks to sell.
The automaker is working with DirecTV to zero in on would-be customers identified as tech-savvy early adopters in Los Angeles, San Francisco and San Diego, where the $50,000 vehicle is sold. They’re using a new tool that combs satellite-TV subscriber data to help marketers like Toyota reach narrow slices of consumers, cutting wasted dollars and improving the effectiveness of ads.
“A mass campaign doesn’t make sense,” Dionne Colvin, Toyota’s national media marketing manager, said in a phone interview. “But we do want to get the message out.”
The new technology is known as dynamic advertising, and it reflects a push by U.S. TV networks, cable and satellite carriers and providers of Web-based TV services to help marketers like Toyota connect more directly with audiences. The changes threaten to upend a decades-old system of delivering commercials over TV airwaves to large slices of the population, many of whom have little interest in the products.
DirecTV hires marketing-data firms that compile consumer information from credit cards and other sources to identify, for instance, Spanish speakers, people trying to lose weight or, in the case of the Toyota campaign, who like to buy new gadgets. DirecTV can transmit the ads only to subscribers who meet the criteria and live in the targeted cities.
At stake for DirecTV, the largest U.S. satellite service, along with broadcasters such as CBS and cable operator Comcast, is part of the $73 billion a year marketers spend on U.S. TV advertising. They’re also defending their share of the almost $100 billion a year consumers spend for packages of channels at a time when technology companies like Intel are developing pay-TV services that will use the Web to collect ever-more-granular data on viewers.
Competition for users and advertisers alike is made all the more intense by the emergence of a generation of consumers who choose not to buy pay TV altogether. These budget-conscious young adults, known as cord-nevers, are bypassing pay-TV subscriptions, getting by on Hulu, YouTube and Netflix streaming. This year is the first ever that total U.S. pay-TV subscriptions will decline, according to researcher IHS.
Advertisers too are directing more money toward digital budgets, and television networks are putting shows online to accommodate them. Intel, Google, Apple and Sony are all racing to introduce pay-TV services that would deliver programming over the Internet, gather a rich trove of data on viewers and accelerate the push toward targeted ads.
The new services have the potential to disrupt a system in place since the 1940s. Networks like CBS or MTV traditionally show ads to broad swaths of TV audiences. Marketers choose shows and pay based on the number of people reached within a targeted demographic group – say, women ages 18 to 49.
In the new world, Gillette could show a shaving ad to a male viewer, even if he’s watching Oprah instead of ESPN. Neighbors might be watching the same program at the same time, over the same pay-TV service, and see different ads because one is a woman shopping for a car and the other is a male who doesn’t buy cosmetics.
Pay-TV services have been testing the technology that allows for more tailored commercials for several years, said Amanda Richman, president of investment and activation at advertising firm Starcom USA.
“Companies are willing to pay more to reach that qualified viewer,” Richman said.