Why isn’t TV advertising more like digital?
Pose this question to media people and you’ll get a few answers. Romantics will wax poetic about the beauty of branding and claim that TV holds a lofty place in the media mix—whereas digital sits lower in the funnel. Pundits will pontificate about the promised land of addressability, a hypothetical future where TV is—kinda, sorta—one-to-one like the web. And realists who fly closer to the ground will point out TV’s inability to efficiently target audiences and close the purchase loop.
Each of these responses, however, turns out to be wrong. Because with each passing day, TV advertising becomes more and more like digital. The reason is data. By matching massive, representative panels of high-quality datasets, it’s possible to measure the behaviors of people exposed to TV advertising and use these measures to optimize future campaigns. I know because this is what we do every day at Simulmedia—we use data, software and science to make TV accountable, like digital.
On the eve of the TV Upfront and Digital Content NewFront, Simulmedia convened its third annual PeopleFront, bringing together experts from Wall Street, marketing, media and big data tech. Here are some of the big picture questions these experts addressed during the event (or skip to the end to watch video highlights).
The View From Wall Street
Why do big TV stocks remain volatile even though advertising will be robust in 2016? Anthony DiClementi, Managing Director of Nomura Securities debunked the narrative that digital advertising growth has come at the expense of TV, as both digital and TV are expected to grow in 2016. DiClementi, however, said there is a “long-term bear case that an optimist has a difficult time disproving,” given the changes in consumer behavior and the automation of TV selling.
What can TV companies do to restore investor confidence? Not surprisingly, Terry Kawaja, Founder and CEO of Luma Partners, suggested mergers and acquisitions. Kawaja was excited to see new entrants coming into the M&A arena, notably from the Telecom space. When asked whether there is a particular theme or capability the buyers are seeking, he said, “the generic capability is the ability to manipulate consumer data.”
The Marketing Scientists
Is TV advertising effective at driving ROI? Gayle Fuguitt, CEO and president of the Advertising Research Foundation, presented findings from a newly released meta-analysis of 3,200 ad campaigns, definitively proving that TV advertising is the most effective vehicle for driving ROI, and adding digital to a TV campaign yields a 60% kicker effect. Fuguitt zeroed in on the greatest drag on advertising ROI—excess frequency—and quoted the legendary Erwin Ephron saying that “frequency is like crabgrass” in the media plan.
How can marketers reduce frequency to make their TV dollars work harder? Bill Harvey, co-founder of TiVo Research, previewed some results of a study he is conducting on roughly 70 campaigns Simulmedia has run for clients. One case study showed that 48 percent of the impressions in the client’s schedule exceeded the optimal frequency compared to only 6 percent of the Simulmedia-delivered impressions. Furthermore, a panel of matched set-top box and purchase data proved that—across several other campaigns—Simulmedia achieved a 2.5 times greater return on ad spend.
The Big Data Companies
How far have we come in operationalizing big data for marketing analytics? Steve Hasker, President and COO of Nielsen, noted that most of today’s set top boxes can’t deliver data overnight. “When you are in the business of producing overnight currency ratings,” said Hasker, “that is an inconvenient truth.” On the other hand, Omar Tawakal, SVP, GM of the Oracle Data Cloud, noted the incredible progress made in digital channels measuring business outcomes. “It’s fantastic to see these techniques coming to TV,” he said. “But change is going to be incremental.”
What kind of opportunity does this present today? Wes Nichols, Co-founder MarketShare; SVP & CSO of Neustar elevated the discussion to the boardroom where “they don’t care about who saw what. They care about did it actually move the needle. Linking it all the way through P&L in a transparent way … is mission critical for our industry,” said Nichols.
Buyers and Sellers
What do marketers expect from TV advertising, and are sellers prepared to deliver? Yin Woon Rani, VP U.S. Marketing at Campbell’s, set the stage saying, “fundamentally, digital has changed what people expect to be able to measure, and that has finally come to TV.” The challenge is closing the loop on purchase, but as M’Lou Walker, CEO of Matrixx (maker of Zicam) said, “that’s gotten better and better over time.” Arlene Manos, President National Ad Sales, AMC Networks noted the increasing data sophistication on the sell side, however this has largely been used internally to inform marketing decisions. “We’re just beginning to apply it to advertisers,” she said. And Peter Naylor, SVP of Ad Sales for Hulu, noted the irony of the marketplace: “All of the NewFront guys will be talking about talent in front of the camera, and then the broadcast and cable guys will be talking about data.”
In the end, change is hard—it tends to be evolutionary, not revolutionary. But as an industry we are all working together to make TV smarter. As a result, TV advertising is becoming more like digital, and that’s a good thing.
Check out video highlights from Simulmedia’s PeopleFront: