Author: Mike Rowan, President, Founder @KPITarget
From a marketing perspective, traditional TV advertising in the form of commercials has been a stalwart for decades. Commercials have not only provided brands with an effective means to reach the masses, but in many cases, they have become part of our culture. You just have to look at Super Bowl ads where some companies spend north of $5 million for a 30-second spot to see how much emphasis is placed on premium spots to get visibility in the hopes that the spot may become water cooler chatter in the following days.
Despite the massive amount of spend (178 billion dollars in 2017) that brands invest in TV, digital passed the medium for the first time in 2017, and television spending dropped for the first time since 2009. It is understandable that digital has finally surpassed TV as a means of advertising, as consumers spend more time visiting a variety of online media, but what does this mean for the future of television as a marketing medium, and why does its relative share of spend continue to erode?
When compared to digital, TV has one glaring problem that it has struggled to overcome, which is its lack of an ability to effectively drill down and target its consumers in the way that digital can. Anyone who has run digital campaigns has experienced the ability to use Facebook to completely customize an audience to match up with their ideal customer profile, Google to tap into user search intent to put ads in front of people who are searching for exact products or services, or retarget audiences who have just visited their website to look at specific products. Any brand can track the web traffic from both initial and subsequent visits, and quantify the point of sale/conversion and assign a fixed ROI to the marketing spend.
So given the option to both target and track correctly, why would you rely on an ‘older’ strategy in the form of TV advertising to reach your ideal customer? After all, TV typically relies on Neilson ratings, which paint an audience with an extremely broad brush, and don’t offer much in the way of tracking the end conversions from consumers who have engaged with the ad. Neilson gives you a wide range of data that typically involves something along the lines of “Female ages 25-45” with a small level of demographic add-ins, which pale in comparison to what brands can get with digital, leading to the decline in spend.
But this all may be changing, and TV may experience a massive upswing in the years to come with……..
In the past few years, we have seen a dramatic shift in how many households are watching TV in general. More and more families are not only streaming TV online, but utilizing devices like Roku, Amazon Fire, and Google’s Chromecast to watch traditional programming through the internet at substantial savings to cable providers. Households are saving a tremendous amount of money, the streaming companies are exploding, and traditional cable & TV providers are scrambling to address this growing trend as more people are “cutting the cord. through OTT options.” However the more interesting thing from a marketing perspective is how streaming providers are helping to level the playing field from an advertising perspective, and finally enabling TV to catch up to digital in many ways from a targeting and attribution perspective.
As previously mentioned, digital has changed the game and grabbed a large portion of the overall ad spend due to its enhanced ability to target and track the customers that brands want to reach. Facebook and Google have become some of the largest companies in the world as a result. But looking beyond the simple fact that getting your content through streaming is the fact that all of the providers are now starting to capture the types of demographic data enjoyed by the web-based advertisers, and applying the same principles to reach consumers who are watching TV.
These demographic features mean that brands can now start to hyper-target audiences the same way that say Facebook can and get their message in front of a customized audience that closely correlates to their ideal customer profile. Instead of reaching the “Female 25-45 audience” during a 30 minute television program, you can instead target an audience that may look more like a “Hispanic Married Female between 25-30, who graduated from the University of Georgia, has 2 children under the age of 5, and lives in the 30080 zip code” type of segment. Anyone who has done Facebook advertising knows that many other granular examples can also be applied to this example as well as more data becomes available.
To further this example, consider that Amazon’s Prime Service also offers the ability to stream programming. You can apply all of their shopping data as well as you are building out an exact connected TV audience also to target people who are purchasing online based on their precise behavior. Imagine the ability for Banana Republic to identify shoppers who have recently purchased from Black & White market, and showing similar products to the exact individual in question. The possibilities from a marketing perspective are staggering.
To illustrate the how this may benefit brands, this observation from Smarter Analyst pretty much sums up the opportunity in the connected TV advertising space.
There’s more to Connected TV that marketers should be excited about. In addition to audiences, several key features are being made available with CTV advertising that will further the argument for brands to get involved.
First, the ability for real tracking from an ad to a website is here now. Through integrating your website analytics, you can match up the IP address for any commercial seen on CTV with a web visitor on your site, and attribute that traffic directly to the actual viewer. Attribution features such as these are going to be a huge deal for drilling down and starting to develop a more concrete ROI model for the campaigns as a whole. True, there will still be foot traffic attribution problems, but this is a big step in the right direction for being able to put the whole picture together.
Secondly, it is starting to become possible to retarget people via commercials via their favorite TV programs the same way that you can do with display ads on the web. Retargeting offers brands yet another way of engaging with potential buyers who have visited a website and provides the ability to serve them targeted advertisements to push them through the customer journey, or keep the product that they are considering front of mind.
Essentially, the advantages that “pure” digital advertising has recently offered are quickly becoming available to the “TV Advertising” of the past, and will undoubtedly lead to a revitalization of broadcast commercials for brands. While many of these features are being offered, they are in their infancy, and will continue to be refined, and expanded on in the years to come. However, as all of the ad formats begin to be able to provide similar audience and tracking features, you will start to see them each begin to play an essential (and quantifiable) role in a company’s advertising Rolodex.
KPItarget is on the leading edge of Connected TV Marketing for brands. Contact us today to learn how we can get you started.