TV Advertising 101 For Digital Marketers

Throughout my professional life, I’ve had the privilege of riding hundreds of steep learning curves, getting thrown into the deep end in a huge variety of industries, disciplines, and markets. My relish of these moments is perhaps unusual; after all, not everyone likes being completely ignorant when tasked with something new. As such, I thought it might be useful to share what I’ve learned this past year in one particular area: television advertising and, particularly, media buying.

Most of my experience in TV advertising is from the U.K., with a little bit of Google TV thrown in. I’ll cover both here; AFAIK, the U.K. stuff is pretty relevant to U.S. advertisers anyway.

TV airtime is purchased in “CPMs” (cost per thousand impacts). An impact is one view of a commercial, so as soon as your ad runs more than once, you might get overlap in your impacts. The number of total impacts tells you neither how many people viewed your ad nor how many times they viewed it.

The CPM system makes it easier to compare apples to apples across TV channels and times of day or week. I had always thought that they just charge an amount for a commercial, but really you know with reasonable precision how many people you’re going to reach. If you’re advertising something with a reasonably measurable response, you can get a pretty good sense of how TV advertising compares to, say, Adwords. The CPM thing means you can advertise on a smaller channel for very little, but it also means you’ll reach very few people.

In the U.K. (and possibly the U.S.? Anyone?) the standard benchmark for CPM pricing is based on a 30-second ad. 20-second ads are billed at a fraction that is cheaper than a full 30-second ad but more than 2/3. 10-second ads are billed at ½ the cost of a 30-second ad. So in absolute terms it’s cheaper to run a 10-second ad, but in terms of total time on the air it’s more expensive. That’s why it’s good to have a mix of ad lengths; people get to see you more frequently, but you maximize the total value of your spend. In the U.S., ads are edited to 15-second increments.

CPMs fluctuate from channel to channel and month to month, and sometimes within a month, depending on inventory and demand (how many thousands of people are watching TV vs. how badly companies want to advertise during that time period). In December, the first third has high CPMs, the middle lower, and the last third very low, as advertisers have already spent their budgets trying to maximize Christmas sales -- but people are still on holiday and, therefore, watching TV.

It’s tempting to only go for the channel with the lowest CPM, but not always effective. You’ll want to consider “reach” and “frequency” -- how many people your ad reaches and how many times it reaches each person. You’ll also want to consider the buzz factor (the more people talking about your product, the more they’ll generate additional interest), the brand associations of the TV channel and program, and the target demographic. Obviously, you’re better off spending $2 to convert four viewers than $1 to convert one viewer.

The other thing is that, since there’s no way to know exactly how many people will watch TV next month, channels have to manage inventories throughout the month to suit actual results. They do this through a system of overdelivery and underdelivery. If lots more folks are watching TV than expected, you might get more exposure than you paid for at no additional cost. Of course, this also means you might get a bit of underdelivery in subsequent months as they try to balance it out. A good media buyer should aim to have a bit of overdelivery each month.

All ads in the U.K. have to be cleared for broadcast by Clearcast, which monitors for compliance with the BCAP advertising guidelines. In the U.S. it’s a self-regulatory process. In both countries there are also specific guidelines and obligations if you’re targeting ads to children. “Trafficking” is the delivery of each ad to the broadcast house.

In the U.S., you can use Google TV Ads to advertise on TV. Despite the confusing name, this is a way to use the Google auction system to buy remnant airtime on networks throughout the States. It gives you a high level of specificity about dayparts (segments of the day in which you want to advertise), channels, and programs, and lets you crank your advertising up or down with just a few days’ notice.

Hope that’s helpful! Feel free to comment with questions or if you’ve got additional insight into the U.S. system.

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5 comments about "TV Advertising 101 For Digital Marketers".
  1. Joe Kavich from SuperPages.com , February 17, 2012 at 11:54 a.m.
    I often wondered about the TV model. Thanks for sharing.
  2. Paula Lynn from Who Else Unlimited , February 17, 2012 at 5:41 p.m.
    Back in the day pre digital and even pre cable, especially outside of NY, media buyers bought all forms of media as in generalists rather than specialists. Radio was all CPM's. TV was CPM's, but more like GRP's via Neilsen and Arbitron. Some shops used one or the other and other shops (i.e. agencies) used both. It took a salesperson from the station or rep firm to get on the phone to sell extra inventory, but then again then inventory was much more limited. The better the salespeople knew what their clients like and would buy, the more commission they made before some other salesperson got the sale. Ears for rems were at high alert. When a buyer is able to get a good deal for their client, the better chance that salesperson will get on the avails list for the next buy. (Reading other stations avails upside down on a buyers desk was mandatory - joke, sort of.) There were no conversion numbers, just post buys done by hand and then bad computers. Many things have upped the game now, but the measuring ..... beyond CPM's and GRP's ....to clicks, impressions, conversions do not seem to be able to translate smoothly yet.
  3. John Grono from GAP Research , February 17, 2012 at 6:54 p.m.
    Hi Kaila. I got a giggle from your "A good media buyer should aim to have a bit of overdelivery each month." Well that was until media auditors turn up the heat. I remember an audit where we overdelivered on GRPs, exceeded the reach goals, and were a smidgin under budget (like a few hundred dollars). What could possibly go wrong I thought? Well, we were criticised for wasting the clients money because we could have delivered the targeted GRPs and saved spend! (We didn't do that as we wanted to maintain share of voice as our competitor was also capitalising on the good audience delivery.)
  4. Marla Goldstein from Around The Bend Media , February 17, 2012 at 9:52 p.m.
    In my experience, TV/Radio are bought on CPP (cost/point) and media are evaluated across different forms on a CPM (cost/thousand impressions) basis. Using CPM across media makes them easier to compare, but nothing is absolute. TV has sight, sound, motion and is more intrusive than, say, radio which is sound only. Or print, which is sight only. No one knows what audience size will be in future months. That's why networks offer up ADUs (audience deficiency units) when there's a shortfall. You buy a schedule, if the over/under balances out, then it's all good. If not, ADUs are offered as compensation.
  5. Kaila Colbin from Ministry of Awesome , February 19, 2012 at 4:28 p.m.
    Hey guys, thanks so much for the extra info! There's always so much more to learn... Keep sharing! Cheers, Kaila