Television is a transformed medium in a rapidly evolving media landscape
In a multi-screen, multi-channel, Internet-of-things world, television is a transformed medium in a rapidly evolving media landscape. Consumers have more choices than ever before of where to find the news, information, entertainment and other content they want. And marketers face an increasingly daunting task of where to invest their marketing dollars – both online and offline – to maximize sales and achieve the best ROI.
With the advent of programmatic buying and other digitally-enabled technologies, marketers are shifting more investments to mobile and other digital channels due to their perceived efficiency. The decision of where to invest across different media, however, requires a more complex analysis than most marketers realize and must take into account a wide range of online, offline and non-media factors that create complex synergies and interactions between different media in an effective marketing plan.
In this new environment, how has the effectiveness of TV advertising changed—and how should marketers consider television in the context of the broader marketing mix?
Turner Broadcasting Company and Horizon Media engaged MarketShare – the global leader in advanced marketing analytics technology – to address this question through an analysis of the direct and indirect impact of TV marketing on sales, and television’s role in a marketer’s strategic budget allocation.
MarketShare evaluated data from thousands of marketing optimization models across a variety of industries that include Financial Services, Automotive, Telecommunications, Hospitality, Consumer Packaged Goods and Retail. The analysis included proprietary data generated from hundreds of studies of actual company marketing spend and business outcomes (not panel data) and informed “real-world” experience from extensive marketing analytics work in each of these sectors.
In addition, we examined decades of research and applied marketing science, and utilized MarketShare Benchmark, our planning and allocation software application that uses proprietary data to compare a company’s marketing allocations against its industry peers and to run what-if scenarios.
From this analysis, across the industries examined, television’s effectiveness appears to be undiminished over the five year period examined from 2010-2014. Our results show that television remains a highly effective marketing vehicle and a significant component of the optimal marketing mix across the range of industries MarketShare analyzed.
These findings show that television provides a direct and meaningful sales lift not only by increasing awareness and consideration, but also by increasing the effectiveness of other marketing vehicles further down the purchase funnel. Specifically:
- Across the industries examined, TV has the highest relative efficiency in achieving KPIs, when compared to other media drivers such as digital and other offline such as print and radio;
- In spite of the changes in consumer habits over the last few years, TV’s effectiveness at driving advertiser KPIs has not diminished;
- Marketers can use advanced analytic techniques to optimize TV spend more effectively. Our analysis indicates that marketers should not limit rapid-analytics driven optimization to digital marketing alone. Leveraging high frequency data to gain quick insights on performance to reallocate resources by TV type, network, creative, and day part can impact results materially;
- Premium online video from broadcast and cable TV networks is disrupting the digital media mix. Despite lower impression volumes, premium video content is clearly more effective than user generated and short-form content.
TV is consistently more effective at impacting KPIs such as sales and new accounts than are paid search, print, or online.
What follows are our findings addressing all four of the questions above. For more detail about methodology and technology applied, please continue to the Appendix.
Across a broad range of industries, TV has the highest relative efficiency in achieving KPIs at similar spending levels when compared to other media outlets. To better understand the role TV plays in an optimal marketing media mix, we used MarketShare’s Benchmark application to capture the relative lift (impact) of TV, online display, paid search, print and direct marketing advertising across the automotive, financial services, consumer packaged goods (CPG), retail, and telecommunications industries.
As shown in the chart below, TV is consistently more effective at impacting KPI’s such as sales and new accounts than are paid search, print, or online (display and social). These results have held true over the last 5 years, despite the explosion of digital media over that time. Based on this research, MarketShare has found that at similar spend levels television’s lift is consistently 7x paid search and 3x online for the industries described here.
In addition to its direct impact on driving sales, TV’s influence on the effectiveness of marketing communications throughout the purchase funnel is consistently the highest amongst media channels. MarketShare’s research showed that for two firms representing the financial services and automotive industries, the full impact of TV is not adequately captured solely by its direct effect on KPI outcomes e.g. unit sales. TV is also a major driver of consumer interest and desire. As such, TV is a major driver of indirect outcomes such as inbound calls, organic search query volumes and website visits—which, in turn, lead to direct outcomes, such as purchases or other significant conversions.
In spite of changes in consumer media consumption habits, ad products, and technology over the last few years, TV’s effectiveness at driving advertiser KPIs has not diminished.
For one example of these trends playing out with a particular advertiser, consider the following MarketShare study of a luxury auto manufacturer. Specifically, the study analyzed how the effectiveness of media has changed for the automaker over time, comparing 2012-2014 with the three year period immediately prior, 2009 – 2011.
The study found, for all media analyzed, an 11.5% decline in media effectiveness across the board— likely due to the splintering of media channels brought about by the new digital landscape. However, TV is the only medium that retained its relative effectiveness, as compared to the other channels, over that time period.
In this new environment, we wanted to learn if TV advertising changed its fundamental role as a branding and reach medium. Other offline channels, by comparison, have been challenged significantly by digital competitors. Thus, per our analysis, an investment in offline spend exclusive of TV yielded approximately 20% less in 2012-2014 than in the prior period. Meanwhile, the value of many digital channels has been eroded by such factors as ad-blocking, click fraud, and visibility issues. With nearly 50% of display ads lacking viewability, for instance, broad reach online channels have experienced a decline in effectiveness.
To be sure, TV spend allocations are not one-size-fits-all. Specific spending recommendations will vary by advertiser—depending, in part, on where a marketer’s media spend lies on the outcome response curves for each advertising medium, and the interaction effects between media channels.
High-frequency consumer interactions, such as inbound calls and website visits, are important data sources to guide the TV mix. Because TV advertising drives measurable actions such as inbound calls and online searches, TV advertisers can leverage these interactions as key data points to evaluate TV effectiveness. Leveraging indicators such as these on behalf of an online subscription service, for instance, MarketShare’s MarketShare DecisionCloud™ software was able to recommend a very granular reallocation of the TV budget across channel group, daypart, and ad length. Putting these granular recommendations into effect drove a nearly 3% increase in sales for the brand. (See chart on right for example of daypart recommendation.)
Because TV advertising drives measurable actions such as inbound calls and online searches, TV advertisers can leverage these interactions as key data points to evaluate TV effectiveness.
Due to TV’s impact as an indirect sales driver, decreasing TV spend by too much can also have serious consequences. In the example on the right, if the same telecommunications advertiser had reduced its television budget by 20% and reallocated those funds into online display, the advertiser would have experienced a 7% decrease in sales.
While there are several reasons for the lower effectiveness of media plans that over-index on digital, one that clearly stands out is the loss of reach. While online and mobile popularity have grown tremendously, TV is still the “best giant megaphone” to convey a message to a large audience of consumers.
Premium online video from broadcast and cable TV networks is disrupting the digital media mix. Digital video is an exploding segment of the digital media mix, projected to erode ad spending share from traditional online display and search advertising in the coming years. MarketShare examined the effectiveness of online video using a year’s worth of data from the hospitality, retail, and financial services industries. The study examined the ROI across four groups of video publishers:
- Group 1: Distributors / User Generated – e.g. Hulu, Crackle, or YouTube
- Group 2: Exchanges – e.g. TubeMogul, Tremor, or YuMe
- Group 3: Premium – e.g. Broadcast and Cable TV network online video sites
- Group 4: Highly Targeted – e.g. TripAdvisor, MLB, or Bloomberg
(We defined ROI by determining the attribution of each of these video groups to revenue, and dividing spend for each group by the fraction of revenue the group drove. See appendix for more methodological background.) Our findings are illustrated in the graph on the next page.
While the results should be considered directional only, there is a notable ROI gap between premium outlets and targeted outlets versus the ROI of distributors and exchanges. Indeed, the latter two groups underperformed their peers in ROI despite having 2-7x the amount of impressions. There are many possible reasons why this is the case, including differences in content quality, ad inventory quality, and user experience across the various types of online publishers. To offer a sense of what types of content create high-quality video inventory, consider sports.
Within Group 3, sports content performed particularly well since it is long-form, brand friendly, and appeals to two of the most sought after advertising segments, men and millennials.
Leading media sellers, for their part, seem increasingly aware of the value of high-quality content (and of the fact that brands will always follow the audience). For instance: in 2014, YouTube launched Google Preferred, which allows advertisers to buy ad space next to only high-quality, professionally-produced content, such as The New York Times and Vice Media.
After evaluating the data from thousands of marketing optimization models, considering decades of research and applied marketing science, and utilizing the Neustar MarketShare, we found that TV is still the most powerful business driver for advertisers, outperforming multiple digital and offline channels at driving key performance metrics. The analysis also reported higher ROI for TV networks’ premium online video properties when compared to short form video content from non-premium publishers.
When making marketing allocation decisions and evaluating the use of TV as an advertising medium, marketers should consider: the strength of television’s effectiveness for their industry; its synergistic impact on other marketing vehicles; and the need for consistent, adequate and optimally-timed TV spend.