TV Advertising's Tipping Point

Change is in the air, and I don't mean the weather.

Last week at the annual convention of the Advertising Research Foundation (ARF), dubbed Re:Think 2011, both Nielsen Catalina Solutions and Kantar Media Research announced new media analytics solutions that I found extremely interesting for a number of reasons.

Nielsen Catalina, a partnership between the ratings mega-provider and a leading loyalty-marketing firm, proposed a new model for measuring TV audiences based on viewer-purchaser behavior, replacing demographics-based ratings (more on that in a moment). Kantar introduced a similar product, connecting set-top box and consumer-purchase data to try to help marketers better target their ads.

You may know that each of these solutions shares more than a few characteristics with that provided by my firm, TRA. Not that I'm even a little bit surprised.

The television advertising measurement system has been broken for a long time. Television remains the biggest ad bucket around, at more than $70 billion, yet there's never been a way for advertisers to measure the effectiveness of their ads outside of survey work and econometric modeling. There's never been a good way to know whether those exposed to ads are buying products, especially in the world of time-shifted viewing.



Until fairly recently, all any marketer had to go on was a hope and a prayer, tied to an age- and sex-driven demographic segment.

We've suspected those demos to be obsolete for a while now. But it wasn't until this week that CBS Research head David Poltrack confirmed the industry's worst fears. Age and sex, which have driven market segmentation for television advertising since its inception, have absolutely no correlation with ad effectiveness, he reported in his address to the ARF.  And while set-top-box data may provide more granular ratings, it's the matching to other databases that enables media buying and selling based on actual consumer behavior. Forrester, Delaney, Deutsche Bank, and Needham have stated as much in recent industry reports.

It's no coincidence that the TV industry is finally converging in the direction of ROI-driven, measurable, data-centric analytics solutions for audience measurement and targeting. Because to fix television advertising, the industry has to concede that it really isn't just about "ratings" anymore; it's about helping marketers target the right programs and networks, and finding the right audience for their products.

So the industry should continue using age and sex demo ratings, but supplement those with purchaser information to find the right audience and drive ROI.

It's an interesting pivot point for the media-measurement world, and an exciting validation of the analytics approach only a few of us have been touting for several years. Does the entrance of Nielsen and Kantar change the game now that the big boys have arrived? Sure. But as a lifelong street ball player, I know that there's nothing as sweet as getting an elbow in the eye and still winning the game.

So while the new players are talking the talk and making the mistakes that new players do, watch as  networks and advertisers "action" data from the existing players to actually make money (aka sell more ads and sell more products).

And remember, those who can, innovate; for the others, well, let's just say I see a nice parallel to Ayn Rand's "Atlas Shrugged" here.

5 comments about "TV Advertising's Tipping Point".
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  1. Mark Hughes from C3 Metrics, March 28, 2011 at 7:28 p.m.

    Well written!

  2. Rob Frydlewicz from DentsuAegis, March 29, 2011 at 11:03 a.m.

    At first I thought this was an archival article from 1995! May I suggest "Try, try again" as the tag line for this "new" approach?

  3. Aaron Hendon from Proceed Media Group, March 29, 2011 at 11:51 a.m.

    Really terrific post. The lack of accountability with traditional TV media spending rivals the wasteful practices associated with the worst of government spending. The accepted practice of spending millions of dollars a month on TV media based on the likelihood of it reaching people that could possibly look a little like people that may or may not turn out to be customers is crazy. We have been designing paired market tests that isolate the impact of TV on cross channel sales with remarkable accuracy and efficiency. The additional impact of not isolating TV is that online media regularly gets more "credit" for driving sales, when in reality it is simply capturing demand that TV has generated. Again, great work. Thanks.

  4. Doug Garnett from Protonik, LLC, March 30, 2011 at 2:38 p.m.

    Agree that TV needs accountability. But, it already exists.

    I've delivered accountable TV advertising for nearly 2 decades using direct response television on behalf of major advertisers (Lowe's, Rubbermaid, DuPont, ...) and retail clients.

    It doesn't fit every situation. But it works for far more than people typically expect.

    And the results are extraordinary. What's interesting to me is that the trackability is far better than web trackability. For all the hype about web tracking, it's only rarely executed at any depth.

    I'm a bit skeptical of the lovely theories expounded by these new vendors. Loyalty program members are a heavy skew and reflect only a niche of the audience. When we combine this with Byron Sharp's research showing the extreme limitations of loyalty programs and that big brands grow big because of their casual consumers, it adds a bit more to the skepticism.

    I'm concerned that even if these guys did everything they're talking about, the client would be left unsure if their advertising had the impact they desired.

    On the other hand, direct response television measures consumer action in response to TV ads then we can tailor the schedule to maximize that response. In generating retail impact, we drive numbers that are substantially better using this buy approach.


    Doug Garnett

  5. Mark Lieberman from TRA, March 31, 2011 at 4:20 p.m.

    We totally agree that direct marketing is terrific. Most of the top 100 advertisers use it but put far more money into TV ads designed to change buying behavior in stores where the lion's share of their sales come from. Some of the largest market leading advertisers have now validated that they can indeed make buys based on TRA to lift their return on media investment. Incidentally although some call them loyalty cards, 86 percent of supermarket purchasing is done with those cards.

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