This must change. Here's why:
Demographics are a lousy surrogate for purchase. As CBS’s president of research Dave Poltrack has been telling us for years: “Age/sex demographics do not have a good relationship with advertising value…No one has ever proved that age/sex is a good surrogate for any product usage."
Audience fragmentation makes broad demographic brackets practically meaningless for TV planning and buying. Today, 75% of national TV audience time occurs on shows with an average rating under 0.5. Yes, the vast majority of TV viewing occurs on shows whose audience scale would have been considered insufficient 15 years ago. However, since total TV viewing hasn’t declined much, this viewing is now spread among thousands and thousands of different shows and all dayparts.
Categorizing dozens of shows by a handful of broad descriptors worked well in the past. Trying to meaningfully describe the 250,000 different national TV spots that run every day by the same few descriptors adds practically no value to the planner or buyer trying to truly differentiate one from the other. It would be like trying to sell all of the hundreds of different colors of Crayola Crayons in opaque packages labeled only by descriptors “red,” “yellow,” “blue” and “other.”
Pairing demographics with GRPs only makes it worse. The gross rating point (GRP) used to work together splendidly with demographics as its "other half." However, the GRP today has become as dysfunctional an effective tool of marketing objectives as broad demographics.
GRPs measure the “weight” of TV media delivered by one or more spots, nothing more. When we only had three TV networks to worry about, buying weight meant -- by default -- buying reach. Viewers didn’t have many choices, so if you bought a lot of TV you bought a lot of viewers.
No more. In a fragmented world, buying TV according to GRP weight is now a great proxy for buying low reach and high frequency -- and, without meaningfully granular audience descriptors far beyond basic demographics, it’s hard to fix that problem.
TV planning and buying needs to shift to people and purchase-based descriptors as its primary currency. Digital has taught marketers the power of granular audience segmentation, defined by thousands of different and valued characteristics, from media behavior to purchase-based definitions to life stages.
Unlike broad demographic descriptors, people and purchase-based descriptors can scale efficiently across TV's fragmented landscape. In fact, the more audiences fragment, the more valuable and helpful granular segmentations become.
Most critically, people and purchase descriptor are the most effective at helping marketers make efficient media buys. Who wants to buy GRPs of “women 18-45” for a laundry detergent campaign when they could buy campaigns with a known reach and frequency of “heavy detergent buyers” or “lapsed Tide buyers” or “new, first-home purchasers”?
I used to think that demographics would remain TV’s primary currency for the next seven to 10 years, and that purchase and people metrics would only be used as “secondary” currencies. I no longer believe that, largely because it's becoming more and more apparent to TV networks that they are leaving massive amounts of money on the table pricing and selling their inventory on demographics and GRPs instead of deep target audiences who represent real, self-evident value to marketers.
To borrow a quote again from CBS’s Dave Poltrack: “The fact is that if I’m an advertiser with a particular product and service, the current pricing of the television business has no relationship whatsoever with the value of that inventory.”
That is about to change. The folks with the most power over that decision -- the TV networks themselves -- have already started the ball rolling with their recent audience-based selling initiatives, from NBCU’s billion dollar allocation to audience to FOX, Turner and Viacom’s OpenAP.
Get ready for the “after-demographic” world of TV advertising.