• by Ed DeNicola , Op-Ed Contributor, January 19, 2024

Many advertisers might think that it would be great to only have to pay for impressions that convert. While this sounds well and good on the surface, conversions are a poor advertising-currency choice.

TV advertising is becoming more and more like digital. Connected television (CTV) continues to grow, and the largest media players are creating their own walled-garden advertising platforms to mimic the success of Meta and Google with small to mid-sized advertisers.

New alt-research companies vying to become new TV ad currencies have large datasets that include TV set-top-box and smart TV data that may be blindly matched to purchase information for conversion reporting. In addition, the digital nature of CTV lends itself well to the use of digital tracking methods.

To be fair to legacy research companies like Nielsen and Comscore, they also have access to massive TV set-top-box and smart TV datasets. Conversion reporting is not exclusive to new alt-research companies.

There is a perception among some in media that conversion metrics are the future and that they are the new black.

There is some truth to this perception. According to Google marketing, they do offer advertisers the option to pay for conversions rather than clicks for display ad campaigns.

However, based on experience running ads, conversations with reps at DMPs, and Meta marketing information, most digital advertising is still traded based on impressions or clicks.

There are some marketing agencies that are paid by advertisers based on conversion, but if they are using advertising to drive conversion, it’s not usually how the ad inventory is bought and sold.

For instance, a sports marketing firm might be paid by a sports betting company a set amount for each person that subscribes to their app (a conversion), but if the sports marketing firm is buying digital ad inventory to drive conversions, they’re usually paying for it based on impressions or clicks. These companies often use their own in-house websites to drive traffic to clients’ landing pages.

Although Google offers it -- and TV companies may also have to offer it to remain competitive -- one could argue that a conversion-based currency is bad for publishers and TV providers because they have no control over most of the marketing levers that affect sales outcomes.

These include:

* The quality and demand for the product

* How much the product costs and whether the price is reasonable and/or competitive

* The quality of the creative and whether it persuades people to buy

* Whether or not the creative is well aligned to target audiences

* Where and how the product is distributed and sold?

* What is the shelf placement for the product in stores?

* If the product is well branded and supported by advertising on other channels

If any of these variables are inadequate, it will harm the campaign -- and any publisher or TV network guaranteeing a price on an outcome will suffer the consequences.

The reality is that all publishers and TV networks can do is provide a good advertising environment and put ads in front of target audiences enough times for the advertising to be effective -- but they cannot guarantee sales. It is unfair to hold them to a conversion-currency standard.

If you’ve ever done any business-development work, you would know that business models are designed to make companies money.

Therefore, any conversion-based business model introduced by a publisher or TV network would have to build in the risk associated with the marketing levers that are outside the publishers’ or TV networks’ control.

The result of including built-in risk means higher prices for advertisers even if the advertiser is doing a great job as it relates to the overall quality of the campaign and its components.  

Despite the hype and that Google offers display advertising based on conversions, it doesn’t mean that publishers and TV companies should follow suit or that a conversion-currency is good for the media industry.