Commentary
Inevitable Impact Of TV-Derived Business Outcomes On This Year's Upfront
- by John Piccone , March 20, 2015
For TV media owners, the pressure is now on, with agencies turning up the heat. Media agencies are investing heavily in data to prove the impact of their choices. Their data-fueled, finance-driven, trading-desk tactics approach the TV negotiation table with the hope of upsetting today’s inventory packaging strategies, yielding a better set of media metrics for their clients. Some have gone as far as offering a guarantee on the business outcome of media. Can agencies do this? Can networks do this? Yes, in theory. In practice it may take a while.
The real winner of this audience data arms race will be the advertiser. As more audience-based ad schedules are offered alongside contextual offers, advertisers will be able to measure and compare individual tactics through their most important lens: the media's impact on sales. With data giving them a better view of this factor, advertisers will be able to decide how much to spend in advance, and how much to hold back in scatter. The goal of holding back? To optimize their media mix, and reward those sellers who beat the average return on ad spend (ROAS).
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This business-outcome battle will rattle the status quo of TV media buying and selling practices. The standard, safe and familiar tactics will be forced to prove they can exhibit a profitable return. As a result, important and hard-to-measure metrics such as awareness and intent to purchase might not enjoy the pole position they do today.
Closing the loop on TV advertising will require greater participation from advertiser and media analytics teams. They will be tasked with ensuring new measurement methodologies that complement today’s Nielsen-derived currency while adding incremental, actionable insights.
What won’t change this upfront? Bulk- and demo-based deal-making will remain in place, in part to keep year-on-year CPM fluctuations in check. But this time next year, when the impact of that bulk buying is measured on a business outcome basis, generic CPMs will have to share the stage with new ROAS (Return on Ad Spend) metrics.
Also not likely to change at this year’s upfront will be sellers of TV media not be able to prove how their media will move their advertisers' businesses. These sellers will be selling demo-packaged content that leave too many targeted audiences on the table. These valuable audiences will be swept into the pool of “remnant” despite their unique value, or sold by alternative sellers able to capitalize on that inventory at a lower price.
If buyers of TV media cannot measure the outcome of their purchased television inventory, they run the risk of misunderstanding the actions audiences took who were exposed to an advertiser’s message, versus those who were not.
We are at a tipping point for the impending upfront. One of two things will happen in May. Either the buyers of TV media who have invested in data will be ready to take a stand on the impact their media will have on advertisers’ business outcomes -- or the data will merely water the gardens of analysis paralysis, where status quo trumps risk and reward.
If we set aside the herculean task of developing a standardized measurement currency that a planner/buyer can look at and immediately understand their media's impact across Bravo, Spike, Roku, Youtube, and CNN.com then you're left with another hurdle to what you're suggesting. One, that in my opinion, is very real but underreported and underestimated - the generational or cultural difference between digital buyers and traditional tv buyers. This is a structural issue that each agency will deal with in their own way (because, I agree, advertisers will drive this bus) but nonetheless presents a hurdle to broader adoption.
Amazing, John, simply amazing. So, somehow, between this coming upfront and the next, somebody---the advertisers?, agencies?, networks?, cable channels?, syndicators?------is going to measure the total, all-brand impact of the TV upfront in terms of bulk demo buying as opposed to delivering customers ready to buy products, using a mysterious, yet-to-be-developed ,all encompassing viewer/product purchase "big" database. Moreover, once this rather vast analysis has been completed, TV time buying will---at advertiser insistence---be transformed into a system where data is as important as "content". For example, if a TV network tries to sell a Beer brand sponsorship of a major sports event, it will have to guarantee, not only that said sponsorship delivers a certain number of viewers aged whatever, but also the number of heavy beer drinkers who will watch. But even that isn't going to make the sale. Suppose the Beer brand's agency programmatic "trading desk" notes that daytime serials deliver many more heavy beer drinking eyeballs at half the cost per pair and funnels all of those sports bucks into day serials? Which wins "content-"--or "data"?The same question can be asked about all of the premium priced "quality"fare on TV, including many cable shows and entire channels as well as the broadcast TV networks. I'm betting on content, myself.
John, what you've laid out is holy grail but requires that both sides have access to the same yard stick for measurement.
Just as there are certain factors that the media owner will (and should) hold close to his chest, I’m not sure I see buyers providing full visibility into the same advanced data sets used to measure on the front and back ends.
While we may never get to the point where TV deals are guaranteed on "number of soup cans that move from the shelf," where there are opportunities for both sides to loosen the blinders, those should be taken and everyone wins (or at least comes closer to winning)
Not that the creative, competitive activity, product pricing, macro-economic shifts or product performance etc etc etc have any effect on whether media spend against the audience to the program yields sales results.
It's not even a holy grail, Jason. What John and others are preaching is not that data should be considered to a greater extent but that data trumps everything. The plain fact is this. For many advertisers, content, not data, rules. Moreover, there are many branding campaigns that can not---and should not---be evaluated by product sales alone. Also, unlike digital, where there are countless and often unknown venues where one can advertise and many of these publishers don't have their own sales staffs---hence the rise of low balling "networks"---this is not the case with national TV. Where a computer based system can perform a useful function by examining all of the myriad of digital ad buying opportunities, using some form of fixed rate card as a start, plus various performance metrics, national TV, by way of contrast, is far easier to purchase and evaluate.Most national TV ad buys are made in negotiations with a relative handful of selling organizations. What's more, there are few demographic or CPM unknowns in TV. And the assumed vast differences in product user "targeting" that are assumed to exist between one TV channel and another, and one show or another, are not nearly as great as is believed---providing the buyer does a little homework and looks at the data that is already available. Of course, if you are a male oriented brand you don't advertise in a TV show that only reaches women----if such a show exists--- and the reverse. But that's rather obvious, isn't it? Finally, one of the underlying assumptions in the new schematic that John is touting is that the advertiser rules and that the selles will buckle down to almost every advertiser or agency whim. Not so in TV. Indeed, there is a very fine balance of power between buyer and seller in TV and the latter often control the "marketplace", not the former. If the sellers see that a particular program or program genre is in great demand----even if the demand is programmatic generated-----they will simply raise their ad rates on such content to the point where any edge the buyer's "trading desks"think they are gaining evaporates.
Hi Ed. So that we are clear, without content there is no need for data. The opportunity in front of us, thanks to the latest advances in big TV data, is that we can now understand the impact of the respective content an advertiser chooses, as well as the creative, (thanks Dorothy) to further optimize media choices. I agree that sellers will not buckle down to advertiser's whim's". I see the opposite happening. I see a marketplace developing where the sellers will realize they have been commoditizing their inventory to date, and further clarity around program level audience behavior will increase their revenue yield per program, network and day part and many combinations thereof.
John, thanks for your reply. I get your point, however, the big data sources you refer to---even when this approach is indicated----are not ready yet. They rely on set usage, not viewing, which is an extremely misleading metric for determining who in the household is watching. Here's is what I mean. In a typical younger household with kids you, typically, have many more people who may be using a TV set, hence there is much more set usage in these homes. However, the likelihood that the actual consumer target in such homes is in front of the TV screen when it is in use is probably around 40%. In older homes with 1-2 residents, set usage is considerably less, however the likelihood that one or both older residents is watching when the set is in use is very high---around 75% or higher. As a result, set usage ratings from a big data source may tell us that younger homes are bigger viewers of Show A rather than Show B when, in fact , the latter delivers more female homemakers aged 18-49 who buy the product to the advertiser by a wide margin. Similar, but less severe contrasts of this nature also exist in the various income and educational strata, due, mainly to household size. It may well be that the big data folks come to an agreement with Nielsen to use its set usage and viewing data to make the required adjustments so meaningful distinctions can be drawn, using independent purchase information, on a show by show and telecast by telecast basis. But, as yet, no such deal has been made and even if it does take place, it will take time---2-3 years at the least-----to approach operational status. So even if you are correct and all of the major time sellers as well as the buyers agree immediately to go programmatic, using big data ratings melded with product purchase and Nielsen viewer-per-set ratios as their "currency"---a big "if", by the way---- we are talking about something that is not in the cards for years....not next year.
Just my two cents -- with media agencies measuring (or threatening to measure or trying to measure) every last bit of data, one important part of the equation seems relegated to mere commodity value: creative.
It seems sort of dumb for anyone not involved in the creative process to guarantee any sort of results? The best audience in the world will still be dead as a doorknob in front of some really obtuse, boring, cliche, irrelevant or plain bad creative.
To close this gap, the media agencies would then have to develop some sort of metrics for grading creative (hey, don't laught, we did that once at FCB for the SC Johnson Wax company) and apply it as a factor.
It would be so much simpler for advertisers to simply broker re-integration.