Commentary

Audience Versus Ad Efficacy: Moving Advertising To Digital Video

It seems not a fortnight goes by without a discussion on digital video ad efficacy, ad format standards and the debate on whether it's better to measure ROI through direct response, or if the harder-to-measure brand lift is more important. Many of us are charging hard to demonstrate advertising efficacy et al. within our solutions: CPC as the new and improved sales model, while NASA-like-quantification ROI models and reporting tools are at the top of our sales tools box. But are all these concepts and capabilities really the right way to go into battle today to win the war on moving television advertising dollars to digital video?

Over many years, television has been fruitfully selling audience. Agencies understand this concept, what they are buying, and how to sell audience to advertisers. Television advertising has no real ROI measurement, except the nebulous ratings-based one, and given that MSOs are really conglomerations of many independent neighborhood businesses -- despite all the noise about Canoe -- it is doubtful that there will be quantifiable Internet-style measurement as we know it for many years to come.

We know consumers watch online, but why are we still not getting the television ad dollars shifted? Why does television continue to be the favored medium for advertisers -- and what can we learn from that fact?

Television speaks a different language. Its representatives talk about audience and demographics, while we talk about CPC. Television tells agencies about the marketing value, while we tell agencies about the ROI. So who is right? The answer is: They are! The proof is in the dollars. Furthermore, digital video sites that are building successful businesses vis-à-vis ad revenue are selling a focused, coveted audience that specific advertisers want to reach. For example, Hulu and Break.com have attracted the coveted younger male with spending-power demographic. These very successful digital video publishers sell audience just as the cable networks do.

I'm not saying that ad measurement and reporting metrics aren't important. In fact, I believe targeting and ad efficacy will ultimately be the deciding factors in the war for television dollars. But the first battle has to be won by getting the dollars into digital video by selling audience to agencies and advertisers. And once we're selling audience, we're on a level playing field with television. Then, and only then, can we win the war and see the dollars flow more generously into digital video.

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7 comments about "Audience Versus Ad Efficacy: Moving Advertising To Digital Video".
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  1. Bruce Raisner from Venator Partners, February 5, 2009 at 2:34 p.m.

    As a veteran of the cable television industry, I would say this: be careful what you wish for.

    If you recommend competing for the same dollars and within the same parameters as broadcast and cable do, be prepared to play on the same pricing playing field. By that I mean CPMs starting in the single-digits. Maybe that works for an ad network. Not so sure that would make publishers as happy.

    Yes, each media property has its own qualitative story (hence the value of salespeople), but that's the road you must be prepared to go down.

    If your business model can scale and be sustainable against that premise, go for it. If you can't, maybe think twice.

  2. Mark Walker, February 5, 2009 at 2:46 p.m.

    Meanwhile, the TV folks are busy trying to figure out how to generate ROI and CPC models to compete with on-line solutins! It's a chicken-and-egg game that will eventually be won- by the meduim that delivers the results!

  3. Tom Cunniff from Combe Incorporated, February 5, 2009 at 3:54 p.m.

    In my opinion, we are not seeing a move to digital video for one simple reason: CPMs are too high.

    All the ROI and CPC metrics in the world are unlikely to change buyers' minds about this. In fact, if the world's experience with the internet is any guide, the more metrics you show the lower prices go. As it turns out, data that proves that consumers tend to ignore advertising makes people feel that it's less valuable. Crazy, ain't it?

    I believe the opportunity for video online and off is to find the sweet spot: just enough targeting to reach those likely to buy, with just enough waste to motivate influencers and those who didn't realize until a second ago they were likely to buy.

    Human behavior is maybe 65% rational behavior that fits neaty into predictive models and 35% random weirdness that makes a hash of it.

    To my mind, we shouldn't be looking at audience vs. efficacy as an either-or choice. We need both, and the sweet spot can give it to us.

  4. Tyler Willis from Involver, February 5, 2009 at 5:28 p.m.

    Steve,

    I think you've highlighted the opportunity for the switch, as more and more offline dollars move online there will be an opportunity who sell the new medium in a familiar way, but as time spans, the measured solution will win out.

    There may be a sweet spot for the next 3-5 years in following the strategy you've outlined, but afterward we'll see online solutions suffer if they don't have targeting, reporting, and measurement all nailed.

  5. Matt Kaplan from VisibleGains, February 7, 2009 at 10:55 a.m.

    Steve,

    Your point is valid for a select number of larger video sites (Hulu, ABC, Fox) who have massive audiences with premium content. They're job is to convince TV buyers that online video is "just like TV" (Look at the new Hulu super bowl spot, for example). But for a large majority of video sites with smaller audiences, CPMs just aren't going to cut it.

    Look back to when Cable arrived on the scene. They didn't try to compete on audience size with the networks, they did so on better targeting through niche content. The same must be true of even smaller video sites. They need to sell more value than simply audience and the shift to CPC and CPA models will be critical to getting their share of the TV ad spend.

    Matt Kaplan
    Chief Strategy Officer, PermissionTV

  6. Scott Broomfield from Veeple, Inc., February 9, 2009 at 8:03 p.m.

    Hi Steve -

    Time to chime in. You speak well regarding engaging with your customer. This is right on! Engagement is critical to efficacy and we believe the best model for engagement, as related to online video, is with immersive messaging. Immersive messaging is about making the video clickable. The clickable video elements must be relevant and at the same time non-intrusive immerse the viewer in the video experience: create a lean-in experience within the lean-in Internet medium. Then, or course, one needs to measure the results on-demand. Only then can one know whether their campaigns are working.

    Best,
    Scott Co-founder Veeple

  7. Peter Contardo from Endavo Media, February 16, 2009 at 5:36 p.m.

    Being a quality destination for a targeted message to a targeted audience is probably the best place to start, especially for the larger online video sites. But it's not just about taking a piece of the television ad pie, it's about how the pie can now be bigger.

    Great advertising opportunities are no longer only limited to those who traditionally could afford television buys.

    Emerging brands and companies are aligning with niche publishers who can also build passionate audiences around quality content. They then reach those audiences with takeovers, branded entertainment, product placement, sponsored contests and other creative ways in order to “own” the online video experience, and their target audience.

    It is these new entrants that will also be driving the need for more/better metrics to be developed.

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