Commentary
Time Out On Time Spent: Digital's Delta Is More Like Two Times TV's
- by Joe Mandese @mp_joemandese, July 2, 2014
“While we have long quibbled with the notion that time with media should equate to [ad] spending on media, it is worth noting that by our estimates, total spending on TV advertising amounted to $63 billion in 2013. Meanwhile, total spending on digital advertising amounted to $43 billion,” Brian Wieser wrote in a report to Wall Street investors this morning. Wieser, who is an analyst at Pivotal Research Group, and used to be the head of forecasting at Interpublic’s Magna Global unit, knows something about how and why advertisers allocate their ad budgets on media. His main point is that based on the most recent estimates from Nielsen, “digital” is actually reaping a disproportionate share of advertising relative to consumer usage.
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By Wieser’s estimate, digital ad spending currently represents 68% of TV’s total, but is generating only 35% of consumer time spent. “If time did equate to money,” he writes, “either too much is being spent on Internet advertising or too little is being spent on TV.”
But as already noted, Wieser says he doesn’t accept that premise, and instead recommends that a “more accurate” way of thinking about ad spending is that it's always a “function of ‘least-bad’" alternatives for a given marketer.
In this scenario, Wieser says demand for digital media is often driven by long-tail marketers -- small businesses and e-commerce marketers -- that view the Internet as delivering an effective ROI. Large mainstream consumer brands, by contrast, remain more focused on “engagement-based” and “awareness-based” goals that are unlikely to be surpassed by TV’s “perceived effectiveness in this regard, but also because of the relatively broader use of the medium and ease with which reach and frequency may be accomplished on TV.”
In other words, the allocation of advertising budgets is not a simple, one-size-fits-all logic. Different advertisers use their allocation of media differently, and much of the growth of digital ad spending is a function of brands that likely may not have used TV much, if at all, in the first place. The bottom line is that the sum total of all those allocations currently gives a disproportionate weight toward digital, not TV.
Joe Mandese is the Editor in Chief of MediaPost. You can reach Joe at joe@mediapost.com.
Coincidentally (or maybe Brian read my article in the June issue of the Journal of Advertising Research), I had come to the same conclusion -- but for different reasons. In my analysis, I showed that if one uses online survey panels to measure time spent online, one will end up with numbers that are 2X to 3X higher than actual. The reason is that online survey panelists are much heavier users of the Internet than the average person. You get the same overstatement if use online surveys to measure e-commerce vs. in-store buying. The solution is to use behavioral panels (such as comScore Blueprint) instead of surveys when measuring cross-platform activities.
Here's a link to my JAR article: http://www.comscore.com/Insights/Blog/The-Perils-of-Survey-Data-in-CrossPlatform-Measurement
If advertisers really allocated their media dollars based on how much time people spend with them----which is a ridiculous idea in the first place-----radio would get something like 20- 25% of all media dollars and magazines would get a mere 3%. The actual figures for national advertising is more like 18-19% for magazines and 6% for radio. Presumed advertising impact, merchandising opportunities and many other variables go into the mix. Time spent just about never comes up in these deliberations.
I should add that Gian is perfectly correct to be suspicious of audience measurement panels, which, thanks to low and declining cooperation rates are suspect as to their composition. It's not just a question of what is being measured----TV, radio or online usage----but also the amount of work that is required of the panelist. For example, if you are able to recruit a TV home to have all of its sets metered with each resident indicating whether he/she was "watching" whenever a set is turned on or a channel is changed, you are asking quite a lot. The question then arises whether those who cooperate in such a study, include more than the actual share of TV buffs----heavy viewers----and, if so, whether this inflates the resulting ratings and to what degree. The agencies are aware of this issue but, so far, they have assumed that even if an inflation of unknown proportions exists, it probably affects most channels and TV shows about equally----which means that the way their buys are allocated between contending time sellers wouldn't change. They may be right about this, however, what if they are wrong?
The whole notion of media budgets being allocated across media on the basis of the measure of time spent with each of them is spurious at best. But constant repetition of a delusional mantra like this tends to work for politicians so I guess we should expect the same for media analysts.
Like Gian this has long been a pet peeve of mine, as per this rant from Mediapost in January 2012 http://www.mediapost.com/publications/article/165570/why-media-revenues-wont-ever-be-driven-by-time-sp.html
Budget allocation in accordance with time spent is crazy, given the nature of digital media today (when done correctly): ease of online transactions, geo/demo modifications, quick/cheap testing capabilities, audience insights to improve your "next" campaign, etc., I find it impossible to follow this logic. There us something to be said for long-tail marketers tipping the scale toward digital, given the complete lack of barrier to entry.
The other issue is how should we define and then appropriately value "time spent"? If my wife and I are sitting on the couch watching TV and I'm checking emails and updating Facebook and Twitter on my smartphone as my wife sits next to me flipping through a magazine, do each of those media get credit for "time spent"? We talk about audiences, which implies that people are actually paying attention. It's more accurate to say that today consumer attention is everywhere and nowhere at once.
Tom, you are quite right about attentiveness. We are just completing a report that tracks time spent by media for TV, radio, magazines, newspapers and The Internet, going back to the pre-TV days in 1945. What we find is that only about half of the average adult's media time is what could be described as "quality time", in other words, fully attentive time. We also dis some very interesting work on advertising exposure by day by medium, with some surprising results----it's not the huge "barrage" of ads that some will have you believe.
It makes sense that Wieser's perspective would find welcome acceptance with MediaPost’s editor, Joe Mandese, who has always been an old school foot dragger when it comes to waking up to the full realities of the digital revolution that is taking place right under his feet. In a 2009 interview Joe said the following about digital media:
"I've always covered interactive media, but I wasn't immersed in it the way the digerati and the digital junkies are. I always felt like people were putting too much emphasis on it – because, relative to all the money that's spent in media, it was commanding a disproportionate share of our mind in the industry."
Joe will be saying this right up until the time when the digital migration has overtaken every conceivable media industry. Our company has researched and cataloged major facets of the historic digital transformation that is taking place in just about every segment of society. And one pattern we see repeatedly is that when a digital tipping point takes place it accelerates and tips so fast that it can disrupt the old analog bulwarks and past conventional bastions so fast that it literally kills as much as it empowers (Kodak, Borders, Nokia, Blockbuster, HMV, et al.). Why people who have been around the ad industry as long as some of these guys have (and with a front row seat none the less) are unable or unwilling to see this is a total mystery to me...and to many of my colleagues. One thing I do know is that a select number of those “digerati” and “digital junkies” that Joe dismisses in his cavalier manner are already on their way to becoming the leaders of a new business era...and will overtake and supersede ad news dynasties like MediaPost as fast as search engines overtook Yellow Pages...and for the same multiple, valid and obvious reasons. You can also bet that each of those reasons will be detailed in prolific, articulate and well supported content that the public will be eager to consume in mass. Just watch...the ground is already separating.
@ Thomas Rozof: Ahem, a little context from this foot-dragger, please. The statement you cite was made to point out that I consider my role as a trade journalist to be neutral and impartial about the media I cover, whether people call it "digital," "traditional" or anything else. When I wrote about Brian Wieser's analysis, it wasn't to champion TV vs. digital, it was because I believe Wieser has a valid perspective on the underlying value media has for advertisers and agencies. He is not championing one over the other. If you would like to read things that simply reinforce your own expectations and beliefs, you don't have to read what I write. MediaPost is an equal opportunity publisher and we publish plenty of other perspectives on media, including the ones you just made in your comments.
@Thomas Rozof: I disagree that Joe Mandese is a foot-dragger. Rather, I find him to be a realist. Your mileage may vary, but he (like you) is worthy of respect. We can disagree without being disagreeable. In any case, the history of media is abundantly clear: new mediums do not destroy old mediums. Newspapers did not eradicate billboards; magazines did not eradicate newspapers; TV did not eradicate radio, etc. Instead, new mediums create new fragmentation. The notion of media being a zero-sum game is completely unsupported by data. (Indeed, it would be easier for marketers if this was true, but sadly it is not.) The question of which media properties are ascendant at the moment is interesting, but in the end not terribly relevant. This year's digital world-beater is next year's digital also-ran. What marketers *should* focus on are the twin questions of a) epic levels of fragmentation and b) splintering of consumer focus. How we can sell to people who are no longer willing or able to pay attention is the central question that every marketer ought to be asking.
The religious zeal of some of digital media's more fanatical advocates leads to extreme, self-defeating overstatements and outright contempt of anyone perceived to disagree. Tom Cunniff is right to point out that such dialog is best conducted in a civil manner---assuming, of course, that the intent is to have a dialog, not merely to vent one's rage and frustration. Regarding the impact of "new" media upon "old" media, the evidence is clear. When a truly new medium----like Television----bursts upon the scene and takes over the existing entertainment and informational functions of the old medium----radio----the latter suffers a traumatic shock, loses audience tonnage and must recast itself to survive---as radio did, quite successfully in the mid-1950s-1960s. When cable arrived in 1980, many media gurus considered it to be a "new" medium and predicted the demise of broadcast TV ,which was supposed to disappear by 1990. It didn't. Why? Because cable was simply another platform for TV. It caused broadcast ratings to fragment, but it did not eliminate the public's appetite for what the networks were offering. Given more choices, people simply spread out their TV viewing time among more channels. They still watch broadcast network fare but they do so less frequently than before when alternative choices didn't exist. One of the common digital ad sales spiels starts off by claiming that you simply can't get reach using TV----due to rating fragmentation---so you must go "digital" or face the consequences. That's nonsense and most advertisers know it. If you want a certain level of reach attainment and believe that TV is the best way to communicate your message, then your solution to the reach "problem" is simple. Instead of buying time on one or two channels, as in days of yore, you spread out your buy among enough channels to garner the reach that you desire. There's a lot to commend about digital media, especially its targeting and interactive response capabilities. Why not focus on these and other positives and stop bashing the other media?