• by Thiru Arunachalam , September 10, 2014

The TV networks spend upwards of a billion dollars every year to get viewers to watch their shows. Surprisingly, almost none of that can be directly connected to driving actual viewership. Nearly every other industry has joined the interactive revolution speeding toward full ROI accountability -- at least for a healthy portion of their ad spend, if not every dollar spent.

But ask a TV network marketer to tell you the value of an incremental viewer--let alone the cost of acquiring one--and you’ll only get silence.

This may come as a surprise to those who have watched the content side of the business grow technologically more-and-more sophisticated in the last few years. TV and digital are rapidly converging. Viewers can now not only time-shift their programming, but can watch these recorded shows on any number of mobile devices.

Cable providers are trying to keep ahead of the curve by offering Netflix-like video services within their bundles. On the measurement side, Nielsen is offering to connect up with any mobile app or website that wants to make it easier for a TV marketer to buy audience share.

Despite this convergence, digital thinking has yet to penetrate the marketing side of TV. Every e-commerce company from Amazon on down to tiny mom and pop online retailers know the cost of acquiring each customer and the revenue each generates. Calculating lifetime value (LTV) and cost per install (CPI) is the life’s blood of every mobile app developer. Even Netflix knows the cost of winning a new subscriber to the penny.

Why is TV so different?

The math is very similar: “x” TV viewers drive “y” dollars in advertising which equates to “z” dollars in affiliate revenue for the networks. Part of the answer is probably a little like why most of us are still using our dusty old plastic remote controls. It’s been working fine for the last five decades, why upgrade it now? But there are also real challenges to connecting the dots between dollars spent and eyeballs returned. The fact that so much promotion is simultaneously going on intra-network--using one show’s commercial airtime or Web site to promote another--certainly muddies the water.

But that’s no excuse not to move forward to try to whittle away at one of the last great advertising market inefficiencies. To bring TV marketing into the 21st century, TV marketers can help by doing two things:

1. Push their internal data folks to help them figure out what the value of a TV viewer is so they can move to more of an ROI-based conversation.

2. Push publishers to better establish the linkage between an ad buy and its impact on TV tune-ins and thus determine the cost of a new viewer.

What will happen next?

Vanity spends on full-page newspaper, bus and subway ads likely to be viewed by TV execs will be replaced by smarter digital buys that get actual viewers to add shows to their calendars, program a DVR, or better yet tune in right from their digital device.

Who will win in this scenario?

The networks, obviously. But also the smart digital agencies, and forward-thinking TV marketers who pay attention to cost of acquisition and work with publishers offering more transparency. They will look like heroes for driving down the cost of tune-ins, allowing their employers to be more competitive in the fast-changing digital TV landscape. And how nice to finally have an answer when someone asks: How much is it costing us to acquire a viewer?