Online Video Ads More Effective Than TV
Advertising executives admit the tide of ads is changing and online video ads taking the lead, new research has found.
Seventy-five percent of ad agency executives say that online video ads are more effective than traditional TV ads compared with just 17 percent who say they are less effective. That sentiment is shared when comparing online video ads with social media and search advertising ads as well. Ad executives also feel that online video ads are also more effective than direct response and display ads, a new eMarketer report found.
“The popularity of digital video viewing is helping drive the expansion of the online video ad market,” the eMarketer report said. “Ad execs may be responding to U.S. consumers’ seemingly endless demand for online video.”
via Online Video Ads More Effective Than TV | BusinessNewsDaily.com.
- Published in Video, Video Advertising, YouTube
Digital Ad Effectiveness Improves, Ad Dollars Following
When it comes to digital advertising, we often spend our time pouring over data in order to create planning, modeling, targeting and buying efficiencies. It’s very easy to get caught up in the process when, in the end, all anyone wants to know is “did it actually work?”
TV has historically controlled the lion’s share of ad budgets, primarily because we have several decades of effectiveness research proving that the medium is very good at driving brand equity and in-market sales lift.
Digital media continues to scrap and claw for those TV dollars, in large part, because we’re still in the early phases of proving out the value of the channel. That said, as digital becomes increasingly effective at demonstrating quantifiable results and as video ad inventory grows, we’re witnessing a clear paradigm shift that is putting it in the same conversation as TV.
Digital ad campaigns drive both brand and sales lift. The methods of evaluating the delivery and performance of campaigns are rapidly improving as we consider three aspects of measurement: ad viewability, branding lift, and sales lift.
Ad Viewability Improves Accuracy of Effectiveness Measurement
The topic of digital ad viewability has been a hot one over the past year. With roughly 50 percent of ads never have an opportunity to be seen by a consumer, it’s easy to understand why.
The industry’s move towards a viewable impression standard is significant for a couple of reasons:
It puts digital advertising on a level playing field with TV in that both are now based on the same ‘opportunity-to-see’ standard. These common parameters can certainly help facilitate the flow of dollars toward digital.
The use of viewable impressions can dramatically improve effectiveness research. When campaigns are evaluated on a served impression basis, the reported lift metrics are diluted by all of the impressions that were delivered but never seen and therefore had no ability to influence consumer behavior. Evaluating campaigns on a viewable impression basis promises to give viewable ads the credit they actually deserve in driving performance.
Branding Lift Metrics Provide Useful Benchmarks for Digital
Branding advertising, which accounts for 70 percent of all traditional advertising, has traditionally relied on a variety of brand-related post-exposure success metrics, such as:
Unaided brand recall.
Aided brand recall.
Likelihood of visitation to the online/offline store.
Likelihood of purchase.
Likelihood to recommend.
These metrics are very useful in showing changes in how consumers’ thoughts, feelings and emotions toward a brand, and they often correlate with lifts in in-market sales. Of all campaign evaluation metrics, these have tended to be the easiest and most cost-effective to collect from a research standpoint.
These metrics are also useful because there are years and years of industry norms collected around these metrics, which gives historical perspective and the ability to benchmark. These metrics have withstood the test of time, and in cases where assessing actual sales is not a reality, they have served as a strong surrogate for this metric of success.
Sales Lift Measurement Leveraging Big Data for Improved Insights
Quantifying in-store (or online) sales lift is perhaps the most direct, and therefore valuable, metric for marketers.
Over the years, the digital ad industry has had the ability to tie campaign exposure to in-store sales through the use of anonymized database matching between online panels and household-level sales databases (e.g. supermarket loyalty cards). While this clever application has helped close the loop between exposure and sales, sample size constraints can sometimes get in the way of performing more granular analysis.
However, new applications that integrate big data sources into traditional effectiveness measurement has opened the door to substantially increased sample sizes, which not only improves the statistical reliability of the reported results, but also opens up new avenues of analysis.
As you can imagine, many marketers salivate at the possibilities of being able to have a scalable and repeatable methods for quantifying how well digital ads drive sales.
Better Effectiveness Measurement Can Drive Dollars to Digital
These recent innovations in digital advertising measurement are changing the way we think about effectiveness. Proper assignment of credit for digital ad campaigns plus improved granularity of analysis means a better gauge of results. A significantly improved ability to prove the impact of digital advertising means that branding ad dollars can be expected to continue to shift to the Internet.
via As Digital Ad Effectiveness Measurement Improves, Are Branding Ad Dollars Ready to Follow? – Search Engine Watch (#SEW).
- Published in Video Advertising
Advertisers To Spend $10 Billion This Week On Broken TV Model
This week, advertisers will sit down with the broadcast TV networks and hash out their “upfront” ad buying deals for the year.
The talks are one of advertising’s huge, dramatic set-pieces. As Ad Age describes it, “possibly as few as 40 people from the networks, agencies and brands will go into backrooms and decide how $9 billion of the $62 billion U.S. TV ad market will be spent next year.”
Networks are expecting, again, to see TV ad spending rise. CBS chief Les Moonves is bullish, and analysts expect the network may get 7-9% price increases. Some believe more than $10 billion will get spent.
Oddly, the networks want those increases even as the viewing audience itself dwindles. Goldman Sachs estimates that 17% of the 18-to-49-year-old demographic simply stopped watching broadcast TV in winter 2012-2013, the New York Times notes.
On its face, this doesn’t make sense: Why would advertisers pay more to get less?
The usual explanation is to do with supply and demand. Although TV’s numbers may be dwindling, it still has a massive audience. And with the fragmentation of the audience across thousands of different online and digital venues, there remain very few vehicles who can reliably deliver eyeballs in the millions, night after night. The supply of big audiences is getting smaller, in other words, and thus prices increase.
But there are signs that this won’t last, and that broadcast TV may be facing a crisis. The Times said:
“The networks are getting picked at from every direction,” said Jessica Reif Cohen, the senior media analysts at Bank of America Merrill Lynch. “This year was the tipping point,” she said, “when the television ratings really fell apart.”
Put that together with competition from Aereo, which reroutes free, over-the-air broadcast signals onto computers and iPads where people can watch TV without paying for cable. News Corp. has already said it will stop broadcasting Fox TV, and go cable-only, if it cannot extract transmission fees from Aereo. (Most people watch “broadcast” TV on cable or satellite, where stations get fees from subscribers.)
It’s not just Aereo of course. It’s Hulu and YouTube and Netflix and a hundred other alternatives to watching TV.
Think about that: The model is so broken that a major broadcaster has threatened to stop broadcasting in order to save itself.
It begs the question: With declining audiences, and dozens of new ways to watch shows without paying for cable, how long with these $10 billion meetings last?
- Published in Video Advertising
A Secret Cartel Keeps The Dying Broadcast TV Industry Afloat
The price of television advertising continues to skyrocket, even though audiences have dwindled as viewers have moved onto alternative, web-based video platforms.
There are up to 17% fewer TV watchers in some demographics this year, compared to previous seasons.
How, you ask, is this even possible?
The prices stay high because the TV networks act like a cartel and create the illusion of scarcity.
Imagine this scenario: Every year, a few dozen of the world’s top oil buyers and their clients — five major petroleum suppliers — gather in Midtown New York, enter a room that’s closed to the public, and agree on the aggregate price of oil for much of the rest of the year.
They don’t really know how much oil will be needed, but they can make a good guess. At least 15% of the U.S. oil supply gets priced in for the rest of the year in a series of gigantic contracts worth billions of dollars. Each buyer represents millions of American customers. The prices at which each buyer is getting his oil aren’t disclosed. And sometimes the suppliers aren’t even sure they can deliver enough oil to fulfill their part of the bargain.
If you were told that this is how oil gets bought and sold — through an opaque cartel that meets in secret — you’d be angry, and for good reason. There would be Congressional inquiries, antitrust prosecutions. Executives might even go to prison.
Oil isn’t sold like this, of course. Oil is traded on exchanges, and buyers and sellers can see the price of oil per barrel moving up and down in a fairly transparent manner.
But television advertising is, pretty much, traded like this, in what the industry calls the “upfronts.”
The upfront compresses what ought to be a yearlong buying season into just a few days. Advertisers are told “Buy now!” or face a severe disadvantage later in the season when all the good airtime is gone. All the networks agree to use the same week to make their pitch, even though they compete.
Last year, CBS kept the price of its upfront inventory high by refusing to sell some of it until later in the year — making its time even more scarce, and even more expensive for latecomers.
How upfronts work
Right now, ABC, CBS, NBC, Fox, and some of the major cable channels, are holding their “upfront” buying events in Midtown New York. They do this every year: The networks put on crazy shows, featuring their big stars, trying to build as much buzz as possible.
The shows are for ad-buyers, not the public. Last year, Jimmy Kimmel did a set for ABC in which he mocked the NBC show “Animal Practice,” which featured a monkey. “This is the first time that NBC has had a star that throws its own feces since Gary Busey on ‘Celebrity Apprentice,'” he said. Then he added, “We know that you have 9 billion to spend this week, so don’t get all cheap-o, Secret Service on us” (a reference to the scandal in which a presidential security officer short-changed a prostitute).
Once the shows are over, the buyers and the networks literally enter a secret room, or at least a room that no one else is allowed into, and do their deals. About $10 billion will get spent this month. Ad Age describes it this way:
This is the time of year when the most powerful ad execs in the nation stand in line — line! — to get into Carnegie Hall and Lincoln Center to hear the pitch, see the clips and laugh along with the stars.
… after these big parties are over, possibly as few as 40 people from the networks, agencies and brands will go into backrooms and decide how $9 billion of the $62 billion U.S. TV ad market will be spent next year.
This is madness. No other billion-dollar commodity exchanges hands with this lack of transparency.
“Clients do not share their rates, and if they found out an agency was sharing their rates, that would be it,” said one ad agency CEO.
TV airtime is sold in chunks of 30-second units. At base, it’s a commodity. Some of it is more valuable, due to shows with larger audiences, or skewed demographics. But 30 seconds inside “Two And A Half Men” is mostly the same as 30 seconds inside “Big Bang Theory.”
Yet advertisers never really know the “true” price of any 30-second slot. Via their media-buying agencies, they must cut their deals with networks without knowing what other advertisers are paying. The system hurts new advertisers with smaller budgets. Big clients like Ford and McDonald’s have been advertising for decades and know all the tricks. They can build in long-term discounts. New advertisers lack that leverage, and don’t know how deep the discounts are that other buyers are getting on the same airtime.
Levi’s once had the boldness to ask what prices other clients represented by its own ad agency were paying — and people freaked out:
“That kind of thing is not done, and it’s because of the cloak-and-dagger nature of how rates are decided in this industry,” one agency CEO told Ad Age. “Clients do not share their rates, and if they found out an agency was sharing their rates, that would be it.”
Imagine trying to buy stocks, or flights, or concert tickets on the same basis — the vendor would tell you the price you can buy stock at, but not what price everyone else was paying.
The networks have actively resisted reform
And they’ve been successful doing it:
- In August 2012, Google’s TV Ads experiment, an online exchange for airtime, was closed. None of the networks gave Google any significant inventory to sell.
- NBC offered Google only its worst niche inventory, on obscure channels like Sleuth and Chiller.
- A company called Spot Runner died after failing to sign a single client or network to its online TV marketplace, and Microsoft gave up on its attempt to do the same thing.
- The cable networks also resisted an attempt by Wal-mart to form an online TV ad exchange with eBay — and Wal-mart is one of the biggest buyers of TV in the U.S.
It’s not that Google and Wal-mart were defeated by superior competition from NBC et al. This is a business where as late as 2009, Tracey Scheppach of Starcom Media Group (one of the larger ad buyers) complained that some TV deals were still conducted by fax. MediaPost noted that “hundreds of millions of dollars can get spent literally over a lunch and with no more contractual requirement than a handshake.”
The inefficiencies are built in for a reason. Networks aren’t about to make their own market more efficient if that would mean lower prices for buyers.
And the buyers themselves have a conflict, too. The big media agencies pool billions of dollars of their clients’ money to cut upfront deals, in hopes of driving down the aggregate price through sheer volume. If that job was done instead via an online trading exchange, someone might ask the awkward question of why media agencies exist at all.
Clients are trapped because TV buying is genuinely complicated, and companies need specialists to do it for them. It’s almost a classic rent-seeking scenario from economics.
I’ll give the last word to MediaPost’s Joe Mandese, who compares the upfront to a Vegas casino where the odds are structured in favor of the house:
… it could well be the only marketplace where the sellers ask the buyers to “register their budgets” with them beforehand so that they can price their inventory most efficiently. The networks say they do this, and media buyers comply with the request, under the auspices that it is the only way to ensure that all the advertisers and agencies will get all the commercial time in the shows they want. Not because it is a method for the networks to “count the house,” model demand, and optimize their yield based on it — as observers in most any other market might conclude from such practices.
- Published in Uncategorized