Two Decimal Points: The Difference In Effectiveness Between TV And Online Ads
I've finally found a way to quantify the relative effectiveness of TV and online display advertising. It's two decimal points. That's how much more effective TV ads are, relative to online display ads on an impression basis.
This conclusion is certain to be controversial, so I will tell you how I arrived at it. At least 25 times over the past few months, I have found myself presenting charts to either clients or partners or industry leaders detailing directly measured results of TV ad campaigns and individual spots delivered against designated objectives. Most of the campaigns involved TV networks placing program promotions on other networks to drive audiences to their shows.
My charts delineated the actual conversion rates of viewers presented with ads and measured at the set-top-box level across a "panel" of more than 30 million U.S. viewers, measuring the rate with which those viewers actually took the promoted action within several days of the ad delivery. The vertical axis scale went from zero to 25% in 5% increments.
The data points plotted on the graphs, which measured the actual conversion rate for each spot delivered, tended to range from lows of 4% to heavy clusters around 10% to top performers in the 20% range. In all of the cases, those viewers not exposed to ads tuned in at rates between 1% to 3%.
Yes. You understood it correctly. The TV spots converted an average of more than 10% of the viewers who saw the ads, a lift of more than 200% vs the control groups.
Having spent 18 years in online advertising, seeing lifts of 200% from targeted ads is not surprising to me. That is not unlike what I saw in my time at Real Media, TACODA and AOL. However, seeing conversion rates of 7%, 12% and 20% to "purchase" is. In the world of online display ads, "view-thru" conversion rates typically have decimal points that are two places to the left.
Certainly, program promotion is a somewhat special category of advertising. It has long been known that nothing sells TV like TV, and viewers when polled almost always credit TV promotion as one of the most important drivers of their viewing decisions. However, I think that there is something bigger at play here, and I think that it is critical for us to understand it, as we see TV become more Web-like and the Web become more TV-like.
Here are the factors that I believe drive the exponential difference in relative measured conversion rates between TV ads and online display:
- Online display delivers lots of impressions, but limited unique reach. Online display advertising has some well documented challenges. The medium delivers an extraordinary number of impressions cluttered -- and clustered -- in uncoordinated packs on fast-loading pages on sites that deliver frequency easily, but are very challenged to deliver the kind of fast-cuming reach and audience of the scale of TV. CBS, for example, delivers almost 5X the number of audience minutes every month in the U.S. as Facebook.
- Incomparable creative impact. TV delivers interruptive, lean-back sight, sound and motion in 15-, 30- and 60-second increments. One ad at a time. The creative mostly has high production values. It's a great format to tell stories. Projects like IAB's Rising Stars, AOL's Devil and Web video ads are delivering superior formats, but are still quite nascent and sub-scale.
- Attributable sales impact. In categories like movies, consumer packaged goods, beverages, insurance, quick service restaurants and big box retail, marketers know that TV ads drive sales. Spending more or less on TV ads typically correlates directly to increases or decreases in the short-term sales of their products. Online display is not yet in that ballpark.
I believe that as the Web and TV come closer, the decimal points differences will shrink, but there's still a long way to go. What do you think?