The $70 Billion Advertising Dilemma

August 9, 2017 Kevin Kohn

No need to sugarcoat it: cutting the cord on traditional broadcast is indeed a very real thing. But that doesn’t mean that TV has lost its relevance as a meaningful source of content. The living room of today simply has a few more devices now than it did 50 years ago, making TV a more digital experience than ever before.

That being said, while some marketers are shifting TV spend to other channels, even though, according to the New York Times, TV ads reach 87% of people over 18. Yep, TV’s reach is still undisputed, and that’s why it’s still commanding over $70B a year in ad spend.

So, as far as reaching audiences goes, TV’s still got it. The real problem is advertisers are still spending billions of marketing dollars a year on a medium that hasn’t been able to accurately attribute these investments to business outcomes.

A Pastime That Must Evolve

TV has traditionally been used for awareness-level campaigns, and because of that, advertisers long gave it a pass when it came to being accountable for producing ROI. The thinking seemed to be that as long as TV advertising created an emotional connection and resonated with audiences, it had done its job. This line of logic additionally allowed the industry to pass on prioritizing more evolved measurement practices, and therefore historically relied on a broad, viewership-based understanding of TV performance.

But now in an era of choice: dozens of over-the-top (OTT) devices, smart TVs, mobile devices and thousands of channels—advertisers have much more to think about than just reaching audiences and making an emotional connection. They must also ensure they make literal connections across devices and apply what they learn about their efforts on one device to their efforts on others. 

Moving to a far more acute, and transparent, level of TV measurement would be no small undertaking. But this move has the potential to put TV in a position to influence the way digital channels are measured for the first time—and is fast becoming one of its most important areas for the industry to get right.

We’ve come leaps and bounds in the way that we are able to define and find audiences—leveraging the power of data management platforms, first-party data, point-of-sale data, IP addresses, device IDs, you name it. This has meant huge breakthroughs for targeting and measuring on digital platforms, just not so much for traditional TV.

So while it might be getting easier to define audiences, when it comes to TV, it hasn’t gotten any easier to measure them.

Thinking Local, But Acting Global

With a strategy of trying to reach as many eyeballs as possible, TV hasn’t always been blessed with the best local tactics. In fact, there have always been separate local and national TV samples in traditional television measurement. Even modern-day tactics typically only measure national ad-pods in the top DMAs. Combine these already-present deficiencies with TV data that only reveals who’s seeing what and where (but not the resulting engagement or purchases beyond the spot or campaign) and it’s obvious that TV is just that much further behind when it comes to true attribution. For those contributing to $70 billion a year in advertising investments, this just shouldn’t be acceptable.

While TV may always be rooted in generating awareness, the fact is, the ROI of any awareness-based campaign follows a long-tail model, where initial awareness creates desire and desire creates purchase or engagement over time—whether hours, days or even months later. For the many industries that still rely on in-store traffic (Auto, CPG, Big Box Retail, QSR) to drive revenues, this means that half the data story is missing.

The solution is rooted in access to rich local TV data that will allow advertisers to tie local purchase data (or what’s happening after the ad is seen) to tangible, measurable ROI, both directly after the fact and over time. Marrying household-level TV exposure data with true audience behaviors—such as website visits, dealership traffic, and off-the-shelf sales—is the only way we’re going to understand TV’s role in marketing ROI, and optimize local and national campaign strategies.

And you know, start understanding the return on at a least a piece of that 70 billion-dollar pie.

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