Advertisers and their media agencies as well as media sellers are moving quickly to use these new data sets to plan and buy TV schedules that target audiences with more precision than ever before. They’re also taking the data to the natural next step of measuring the results and business impact of the targeting. If we know that Sephora shoppers over-index on CNBC and Bloomberg, then a heavy CNBC and Bloomberg TV plan should increase the number of shoppers and sales at Sephora.
Such campaigns have been so effective that some media agencies and media sellers are entering into agreements that tie business results for TV brand campaigns to the media contract. This type of risk-sharing model should bring incremental value to both sellers and buyers. If sellers are willing to take on the added business performance risk, then buyers should allocate more of their scarce media budgets to data-driven TV campaigns. In theory, buyers should allocate up to the point that the ROI becomes break-even. Risk-sharing should also more closely align the incentives of the buyers and sellers, so that pricing negotiations are focused on a common goal.
While the concept is positive, these risk-sharing agreements can become very complex very quickly. Often, the devil is in the details. Years ago, I worked for a management consulting firm that had become so adept at improving efficiencies in its clients’ businesses that it began to write contracts guaranteeing certain business results. After all, if we were willing to “put our money where our mouth was,” we were answering clients’ skepticism about the value of our consulting projects.
While these projects often started off with a great sense of unity between client and consultant, that unity too often flipped when it came time to take credit for results. Frequently, a major unforeseen change happened in the market that affected the client’s business, so it was nearly impossible to isolate and measure the benefits of a consulting project.
It’s critical to be forward-looking with such arrangements, with a clear understanding of how results will be evaluated. Factors that could affect business results outside the control of the TV brand campaign should be delineated, such as a competitor's response or a change in spend in other media. Further, a great deal of information on business results must be shared by the advertiser, a process that could be sensitive.
It seems to me the best solution to address these complexities is to have an independent third party conduct the measurement and attribution of results. That third party must also be truly impartial and transparent about any commercial biases — so the buyer and the seller should likely finance the third party together. The good news on this front is that a number of digital measurement and attribution companies are making moves into TV, and existing TV measurement companies are investing in more sophisticated capabilities. We may soon see a new body of standards emerging for measuring data-driven TV campaigns.
Doubtless creating shared incentives between media sellers and buyers for business outcomes will bring new value to the TV advertising ecosystem. With the abundance of data at hand, it is now possible to credibly measure business results from TV brand campaigns. But we can’t underestimate the complexity involved in getting this right -- not only in the correct logic of the measurement techniques, but also in avoiding any commercial bias from the results.