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April 28th, 2011

Is TV Dying in the Age of New Media?

By now, we all know that all media are substitutes and work together to a large degree. But we also know that each media or communication vehicle (Paid, Owned, Earned) exhibits diminishing returns to scale at some point. In this regard, TV isn’t immune. But is it accelerating towards its own inevitable point of diminishing returns given new media options?

All media and their impacts can and should be measured using response elasticities.
These measure the percent change in outcomes from corresponding percent changes in spending behind each media or other driver. There are benchmarks or norms for these response elasticities developed over time which guide our expectations for how TV should work as part of a broader media mix, or as part of a broader marketing mix. These meta-studies have shown that sales response (and upper funnel metrics like awareness, consideration, and preference) to different media vary mainly according to the characteristics of the brand – for example B2C vs. B2B, consumable vs durable, new vs. established brand, premium or competitive price, etc. There are approximately 40 such conditions.

In addition, each media type has its own capacity to carry or deliver the different elements of persuasion – affect (A), cognition (C) and experience (E). TV has a unique capacity to deliver affect, image and emotional appeal. Print and the Internet deliver information for cognition. In-store sampling, location visits, video downloads, social media and others help confirm the brand experience and reduce risk for customer decisions.

Against this backdrop, it seems pretty clear from our recent research that:

#1) TV lifts continue to matter…a lot

In our studies, TV lifts (elasticities) have continued to be amongst the largest overall driver of persuasion for most brands which require affect in their strategy. And via the proliferation of channel options, content options, and media forms (15’s, 30’s, etc.) the ability of TV to improve targeting for reach also has improved.

#2) TV actually improves the effectiveness of new media

Response models regularly show that TV drives lift for new media such as Paid Search as well as owned media and earned/social media. Essentially, TV and its broad reach secure the attention of consumers, who then search for more information using the internet. Display, paid search and social commentary then help convert attention and information to buying actions either online or in retail stores.

#3) New social media are amplifiers of persuasion and not a replacement for TV

New social media, despite large user bases, do not deliver broad reach.

Further, social media and WOM are regularly found to be driven or earned in response to other elements of the marketing mix such as TV, PR and sponsorship.

#4) Tablets will support TV content and video consumption

We expect tremendous growth in the usage of connected devices and tablets. Already, these devices are driving growth in video downloads. Connected ad networks such as IAd will expand dramatically and bring new methods of interactions across TV and the internet and more. We expect increased use of addressable targeting including user “context and intent” as well as location.

#5) Smart TV and out-of-network solutions will expand

Global industry players such as Google, Intel and Cisco will challenge cable and satellite providers with new technologies.

#6) Mega-TV sponsorships can deliver mega-lifts

Experience modeling events such as world cup soccer and past Olympics suggests that sponsorships which involve scale and TV seem to deliver solid pay-backs despite the sizeable investments involved.

#7) TV drives upper funnel metrics

Our studies continue to show that TV is a major driver of brand awareness and brand perceptions, especially relative to competitors and share of voice.

So it appears that, at least for the time being, TV is still a very worthwhile part of the marketing mix for many if not most broadly distributed products and services. Used together, TV makes the new digital and social media options work harder. And given the low cost of these other elements, the overall cost of marketing effectiveness is actually DECLINING in many instances where the tools are being deployed wisely.

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