By Jason Fairchild, CEO of tvScientific
If you asked any major TV advertiser if they would knowingly spend hundreds of millions of dollars on non-performant advertising, the answer, of course, would be no. It follows, then, that all major brand advertising is performance advertising – it just comes down to how successful performance is defined, which is itself a function of the technologies and tools available.
Thanks to new advancements in technology, marketers now have the power to execute TV ad campaigns and measure their actual performance by establishing a connection between viewed ads and real-world outcomes such as store visits and purchases.
This wasn’t always the case. TV has long been considered a “branding” channel that delivered high-level, awareness value but was impossible to measure. Conventional wisdom has held that performance advertising is associated with driving product sales, while branding aims to foster loyalty and customer lifetime value. “Brand lift” studies purported to fill in the missing measurement information for TV campaigns, but have been widely recognized as inadequate.
Legacy proxy metrics, often centered around reach and frequency against the target audience, have been the standard for structuring and evaluating TV ad campaigns for generations. These legacy proxy metrics for TV tend to prioritize wide-scale exposure with limited scientific precision, leading to a “spray and pray” approach to campaign planning and optimization. By relying solely on legacy metrics, marketers overlook the potential of reaching new audiences that can generate substantial returns on ad spend (ROAS).
This raises the question of why major brand advertisers advertise in the first place. Is it to drive Gross Rating Points (GRPs), or is it to sell products? If the ultimate goal is to sell products, it becomes imperative to question the disconnection between established KPIs and advertisers’ actual objectives. The inability to measure outcomes accurately from TV ads has contributed to this misalignment. Moreover, the advertising industry’s adherence to legacy targeting and measurement paradigms has hindered necessary change.
Marketers need to reevaluate their strategies and embrace the opportunities presented by new targeting and measurement capabilities for TV. By leveraging these advancements, advertisers can bridge the gap between ads viewed and actual outcomes, thereby obtaining more accurate insights into the effectiveness of their campaigns.
Marketers can now focus on metrics directly related to their ultimate objective: driving sales. By connecting the dots between ads viewed and tangible outcomes such as store visits and purchases, advertisers can measure the true performance of their TV campaigns and find new audiences in the process. This shift empowers marketers to move beyond legacy metrics and adopt a more data-driven approach, resulting in improved ROAS and better-informed decision-making.
Currently, the US ad market is worth about $300 billion, with two-thirds of that directed toward performance channels like search, social, email and display. TV has represented most of the one-third that has remained branding-focused. With new technologies applied to CTV, that ratio is likely to continue shifting toward performance, where every dollar spent can demonstrate firm ROI.
The evolution of targeting and measurement capabilities in TV advertising has provided marketers with an opportunity to execute campaigns with greater precision and measure their true performance. Moving away from legacy proxy metrics and embracing actual performance advertising for TV allows brands to align their objectives with tangible outcomes, ultimately leading to improved ROAS and more effective advertising. As the advertising industry continues to adapt to these changes, it is crucial for marketers to leverage the power of data and analytics to drive their campaigns