Despite digital media’s meteoric rise, TV continues to maintain its grip on advertising budgets, with TV advertising spend topping £5 billion in the UK for the first time last year. So why are brands still making significant investments in this traditional medium? Simply stated, because TV works. Research shows that TV advertising not only drives more sales than any other communication channel, but is also vital for long-term brand health.
But TV advertising doesn’t come without its challenges. In the era of increased marketing accountability, marketers must be able to understand the effectiveness and efficiency of the ads they place. Measurement, as well as in-flight adjustments, must be continuous in order to optimise performance.
Yet the traditional TV buying process forces advertisers to lock in deals a year in advance, leaving marketers idle for the duration of their campaigns with no way to make on-the-go adjustments. Moreover, TV effectiveness is measured using delivery metrics such as gross rating points (GRPs) and target rating points (TRPs), rather than efficiency metrics tied to business results that are so essential to demonstrating marketing accountability.
The Winds of Change
Back when there were fewer media choices, GRPs and TRPs were sufficient metrics for measuring the impact of TV advertisements. As long as publishers delivered the promised GRPs, brands and their agency partners were happy.
But today’s marketers think differently. The increased use of digital marketing channels and the granular, user-level data they produce enables marketers to quantify the contribution of every marketing pound spent on a measurable outcome. No modern marketer would accept the idea of only measuring the success of a digital campaign based on how many impressions or clicks were delivered – a sentiment that is quickly transitioning to TV. Today’s marketers are realising they need a new efficiency metric for TV measurement not solely based on impression percentages, but one that reflects the actual value each ad brings to a brand in terms of brand engagement, conversions and revenue, and at what cost. They’re also demanding more flexibility in how TV advertising is bought and sold, so they can make mid-flight adjustments to their campaigns as audiences and viewing patterns change.
The Future of TV Advertising: Flexibility & Efficiency
The emergence of programmatic TV is a key driver behind advertiser demand for a TV efficiency metric, and for changes to the structured way in which TV advertising is sold. Digital marketers are already benefiting from programmatic media buying across display, social and online video. They have the freedom to buy for tomorrow today, to constantly shift budget at a tactical level, and to use efficiency metrics tied to business outcomes like cost per acquisition (CPA), cost per lead (CPL) and return on investment (ROI) to guide their optimisation decisions. Only once efficiency metrics replace GRPs and shorter contracts supplant year-long commitments, will TV advertisers be able to steer campaign optimisations like their digital counterparts. Such developments will enable marketers to reallocate budgets to the networks, programmes, dayparts, and spot lengths that drive the most efficient CPA, on a much more frequent basis. Perhaps most importantly, they offer the potential for far greater return and accountability on marketers’ sizeable TV advertising budgets.
TV was, and still is, an important advertising medium. But antiquated metrics and long-term commitments have created challenges in measuring and optimising its effectiveness. As advertisers continue to demand changes to the status quo, and programmatic TV takes hold, look for new standards to emerge that will modernise the way TV is bought, sold and measured.