It's Time To Face Some Advertising Truths

One of the weird dichotomies in today’s media world is that marketers spend a lot of time on the category whose actual impact on business results is not proven or at best questionable, while spending a lot less time on the area taking up the largest chunk of their advertising spend, with a far better track record of actually reaching consumers.

I’m talking about digital ad spend versus TV ad spend, of course.

The content side of TV is in great shape. Or perhaps we should say that video content creation is in great shape. We could in fact argue that we are living in a golden age of video content, while seeming to declare TV an advertising has-been.

I find that IF we talk about TV as an advertising medium, we talk about it mostly from a cost perspective. The question perpetually seems to be: “How do we get the cost per GRP or cost per thousand flat or down?”

Why is that? How did the TV industry let this happen?

According to numerous pieces of research from, for instance, Adobe/ and E&Y last year, marketers’ key objectives are factors like consumer engagement, mobile platforms and targeting/segmentation through (big) data. But that is not what the TV advertising conversation is about, as I just noted. TV is apparently not seen as an important part of those objectives.



Perhaps one of the reasons for the diminished place of TV in marketing strategies is that the TV industry raises prices regardless of audience delivery, and marketers (or marketing procurement folks) charge their media agencies to negotiate that price increase away. So the conversation focuses on TV advertising costs, and the main capability criteria for media agencies is negotiations results. It is a self-perpetuating cycle that seems impossible to break.

The digital advertising industry claims to be part of the objectives marketers says they care about most, and marketers’ perception is that this is true. The reality is, of course, that digital is still largely unproven as a true sales and brand value platform, and is full of highly dubious practices and costly middlemen.

Let’s be realistic: For marketers, ”doing” digital is essential. But at the same time, I think 2015 should be the year we accept the following three realities:

1.     Digital is everywhere, but its ability to build brands and generate sales needs a lot of work. We are in the Digital Middle Ages: We have strong beliefs but not enough science.

2.     TV advertising is still, and will remain, an important part of our media mix, but we must move the discussion beyond just cost. We should focus instead on how marketers can generate engagement and grow brand love and sales through the TV platform in all of its manifestations.

3.     Digital ad fraud. It doesn’t matter which percentage of fraudulent traffic you believe in, because any number greater than 1% should be unacceptable. We don’t accept ad fraud in any other medium, so why we do in digital advertising is inexplicable.

Our current marketing ecosystem is fascinating, but also full of very large holes. We must make it our joint mission to close those holes.

6 comments about "It's Time To Face Some Advertising Truths".
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  1. garrett perez from ASU, January 20, 2015 at 1:02 a.m.

    TV advertising has been one of the largest factors for the past few decades, however, there are a variety of factors I feel leading to the slow decline. First, as mentioned by the article, digital advertising is becoming more and more prevalent in the world. As a larger number of people become connected to the internet each day, the digital advertising reach becomes larger. Also, services such as Netflix, Chromecast, and the Amazon Firestick are pulling audiences away from classic TV. As society moves forward, the marketing world has to understand the direction it is inevitably headed. That direction being digital advertisement. Therefore, I disagree that the digital marketing world's significance is questionable at best. From my understanding, it is of the utmost importance for companies to understand and become well versed in digital advertising as soon as possible, or be left behind in the TV age.

  2. Ed Papazian from Media Dynamics, January 20, 2015 at 8:45 a.m.

    A most interesting article, Maarten. Many of those who keep complaining about TV networks "raising their prices" in the face of lower audience delivery, don't see, to realize that, often. their actual cost per announcement remains the same as before or even declines when the CPMs are calculated. CPMs are a function of audience size related directly to ad cost. If your audience per announcement drops by 6% and the price the advertiser pays remains the same, your CPM appears to rise by 5-6%----but you are not necessarily spending more per spot in an absolute sense. I should also point out that many marketers now give you less but charge more, as well. Just look at your favorite box of crackers. Same box and, perhaps, the same price, but now, that bag inside the package contains a third fewer goodies for you to munch on. There are, of course, much bigger issues, such as improving the way TV is planned and, especially, the incredibly simplistic way that it is bought. Here, improvements and a shakeup of the entrenched demographic "targeting" systems, plus the use of so-called "engagement" metrics, really requires a serious review.

  3. Mike Einstein from the Brothers Einstein, January 20, 2015 at 9:33 a.m.

    Fewer choices produce greater scale. That's why TV, despite it's own fragmentation problems, still outperforms digital's limitless bandwidth. Brands need audience scale, which is, and always will be MIA in a digital medium that has more places and reasons to avoid ads then there are people to avoid them! The TV guys have the good and common sense to cede complete control of their audiences to paying advertisers one at a time. For 30 seconds at a shot, advertisers own the joint, lock, stock, and barrel.

  4. Mike Einstein from the Brothers Einstein, January 20, 2015 at 9:55 a.m.

    One more on the subject of why digital is a mess... just had to comment on an ad placement in today's e-edition of the Chicago Tribune. Adjacent to a story about, and directly below the accompanying photo of Boy Scout molester, Bill Bricker, appears an ad for male enhancement featuring a saucy young lady and copy that reads: "OLDER MEN GOING NATURAL- Researchers in Boston have found a natural way to boost testosterone. Try this weird trick and take your performance to the next level." Looks like the Tribune already has!

  5. Maarten Albarda from Flock Associates (USA), January 20, 2015 at 4:43 p.m.

    Thanks for the comments/context everyone.

    Ed: To your point about crackers, I had a paragraph on Cadbury Egg-gate in the UK: parent Mondelez recently decided to remove one egg from the previous 6 egg package, and to charge more per egg for 5 eggs, while at the same time changing (cheapening) the chocolate formulation. Outrage and online petitions were the result: But I ran out of words for it to be included (I can only submit 600 words per column).

    I think, in the end, my point is that I firmly belief TV will continue to play a role in the touch point mix. But relative to the size of the budget it enjoys, the discussion on how to use TV as an advertising medium is very limited in both debate time and content. It does not get its fair share of the touch point debate when the plan is presented, and the focus seems to be mostly on cost.

    Digital on the other hand gets an enormous amount of attention, even though it carries much less weight in budget share and as a medium (in France it takes 6 months of digital video advertising to get the same reach/frequency as 6 weeks of TV advertising - per Carat France), and as yet has to really deliver data to demonstrate it can build brand love and market share for brands the same way TV can.

    So the focus of most TV planning and buying discussions between marketers, the TV buying agencies and TV sales houses is centered on "negotiate a lower price". I say this based on what I hear when twice a year I spend a few days with EGTA, the global organization of TV and Radio Sales Organizations based in Brussels (the ANA of TV and radio ad sales if you like). I literally did so again over the last two days.

    I think one of the reasons the cost focus happens is that when the prices go up, the marketers (or procurement) charge the agency with negotiating away any price increase, real or perceived.

    If this goal is accomplished, it adds up to them realizing their bonus/pay-for-performance pay-out. If I were a conspiracy theorist, I could even think that the reason why all agencies are always eager to report media cost increases (perceived or real) is because by doing so they establish a benchmark for negotiations which in part secures their bonuses.

    In a way, the marketing/procurement/media buying agency triangle have created the perfect ecosystem that stands in the way of change, because change would force the participants to reinvent or redefine the definition of success that they can link to Pay for Performance contracts. They have no incentive to do so as the current system works well (for the participants) and is accepted all the way to the C-suite and board room.

    I belief that the disruption to all of this is going to be TV sold through Programmatic/RTB. Which has already started and is irreversible.

    Perhaps I should ask for more column space to make my points...

  6. John Grono from GAP Research, January 21, 2015 at 9:21 a.m.

    Maarten, Ed, Mike. Applause. Mind you now that 'premium' online video here in Australia often has a higher CPM (and lower reach) than TV, some debates about its cost effectiveness are surfacing.

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