Joe, president of advertising revenue at Fox Networks Group, is not shy with opinions, and has emerged as one of the strongest voices for change in the advertising industry.
He's also not alone in his criticism of recent trends to sell TV ads based on marketers’ desired business outcomes, not just traditional media delivery metrics like gross rating points and cost per thousand.
Specifically, Joe asked how a TV company could sell outcomes to competing advertisers -- and also, whether it’s really possible to provide true attribution for sales of some products. In particular, he questioned the validity of whether any one spot or campaign for a car can really be tied to specific short-term sales of that car.
I’m sure you all might have opinions on what the answers are -- but here are mine:
Outcome selling does not work for all consumer categories. There’s no question that TV advertising’s ability to drive attributable short-term sales varies widely from category to category. With large-scale databases of person impression-level TV set-top-box data, it’s quite possible to have very accurate attribution for retail sales of consumer packaged goods, and be able to predictably sell those outcomes.
The same cannot be said for high-ticket, longer-term considered purchases like cars and trucks. I don’t believe that category will be very easy to attribute or sell on outcomes.
Selling outcomes to competitors means they bid up ad prices by results rather than opportunity to be seen. Selling outcomes is not how most TV companies like to operate, but that doesn’t mean you can’t sell outcome guarantees to both Walmart, Kroger and Amazon at the same time.
In the future, all TV companies must do so. It’s how Google and Facebook operate, and how they drive such great profits. They sell marketers want they want -- results -- with little risk. Those companies bid against each to get those results and keep those “acquired customers” away from each other.
That means higher prices and more inventory yield for the media owner. Adopting a performance-pricing model over time is a good thing for TV.
There’s no question that embracing outcome-based selling represents a difficult transition for TV companies. It requires different metrics. It is typically a client-direct sale. It requires different types of sales skills and sales personnel, and different accounting.
This change will be wrenching, but the end result will be good. TV companies will get much better prices than they do today, since they will be fully valued for their contributions to sales and will reshape all pricing, packaging and inventory allocations for maximum result.
This won’t happen overnight, but it will happen soon. What do you think?