Since the advent of internet advertising, marketers have been demanding verifiable results and increased accountability from their media buys, instead of being forced to rely on the sorts of broad gender and age demographics used by TV for decades. And now that possibility is a reality, thanks to smarter set-top boxes, new software and sophisticated data. And yet here we are, with few taking advantage of this capability. Just like in the early days of cable TV, buyers turned their back until clients forced them to buy in. It’s essential then with these new capabilities that traditional TV step up and become as accountable to standards as their Internet video counterparts have always lived by.
Ever since the days of black-and-white TV, the broadcast industry has been a big-reach numbers game – and despite the hype and allure of the ‘net, it’s still by far the big gun in an overwhelming majority of national media plans today. To wit: Broadcast and cable TV combined lead all advertising categories, with revenues hitting $ 70 billion this election year, while total market for mobile video and display advertising won’t even hit $ 7 billion until around 2015. This is a testament not only to traditional TV’s reach, but also to its track record in stimulating sales. Marketers know that there’s simply no substitute yet for the impact of a good TV spot and its ability to convince customers to buy their products.
When ported to a big screen, OTT, Hulu and YouTube can have the same big-set experience; however, none of these players have created the type of audience traction that broadcast delivers. A hot online video can certainly grab several million eyeballs in a short period, but typically only for short-burst viewing and nowhere as predictably as TV, which delivers millions of viewers every night, for hours at a time, 365 nights a year.
Of course, TV’s preeminence as the big-reach vehicle still makes it a comparatively expensive medium for advertisers. This is in part because of the inefficiencies of the marketing buy. For the most part, TV is still bought on the basis of age and gender – two very broad demographics – so advertisers inevitably end up paying for viewers who will never buy their product. For instance, while women ages 18 to 34 may be a great target demographic for selling cat food, there are far more women without cats than women with them.
There have been some advances in media accountability throughout the years. For example, TV programmers finally signed up for commercial ratings a few years ago, charging marketers only for the audiences that actually watched the commercial break, raising the bar and the scrutiny about audience guarantees. (What a shocking move, right?) But there is still a lot room for improvement. In fact, the data now exists to let marketers know that if he or she spends X dollars on the right TV programs –which is to say ones that deliver buyers not just bodies – they can expect almost precisely Y product sales.
Nielsen’s IAG and Precision Demand (disclosure: Precision Demand is a Rho Ventures portfolio company) are making real advancements in the underlying analytics for this. While IAG measures viewer engagement via online commercial recall surveys, Precision Demand uses product-purchasing data to correlate with settop box and viewer profiling information from marketers to predict reliable ROI on TV media dollars spent with remarkable accuracy. For example, in one case study one client was able to calculate sales within 5 percent for all channels and within 1 percent for a big box store by using such data. Thus the same behavioral attributes used to guide internet media buys allow marketers to target key purchasers and eliminate waste from their media spend.
So while the TV industry cocktail conversation continues to revolve around how video is migrating to the Web, there’s another important storyline that needs to be aired: that the ability to strengthen traditional TV buys is not only possible, but readily available now. Agencies must start managing media spends to develop specific sales forecasts for items or services that their clients are marketing, while ensuring that they deliver the target users at the most efficient price. The agency/media equation should not stop with the delivery of tonnage audiences. It needs to take the next step. And once they transition to using a scientific media buy, using the most recent tools available, the result will be a win-win for marketers and TV.
Doug McCormick is a partner at Rho Ventures. Previously, Doug was chairman and CEO of iVillage Inc. and CEO of Lifetime Television Networks.
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