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Digital Media’s Secret Weapon for Winning Ad Budgets (Why so Secret?)

2009 September 2

Everybody has heard the old saw, “I know I waste half of my ad budget, I just don’t know which half.”  It’s a great saying because it’s funny, not because it’s true.  Advertisers, at least those who spend a high proportion of their budgets on TV, know exactly where they waste their money; they just can’t do much about it.

Until fairly recently…

How TV Money is Wasted

In TV, more than half of an ad budget can be wasted on showing too many ads to a relatively small audience.  It’s a tough problem, because some people watch TV so much more than the rest of us it’s hard to reach the people we want without over-saturating heavy TV viewers and paying for the pleasure.

Moreover, these heavy TV viewers tend to be the worst consumers.  Generally speaking, people are in one of two places:  at home or outside the home.  When they are at home, they are very likely to watch TV.  When they are outside, they are mostly either  earning money or spending money.  People who spend a lot of time at home usually do not earn or spend much.

There is no mystery here.  This phenomenon can be measured quite accurately and the efforts to control the “frequency tail” effect make up a substantial part of any planning and buying process.

Maximizing coverage through controlling frequency has driven media planning for over 50 years. Marketers obsess over effective frequency (the amount of times a consumer must see an ad for it to be effective) and strive to reach the maximum effective coverage (the percentage of people in their target group who view the ad at the desired frequency). If this is done well, clients are won, careers are made and beers are bought at the local pub.
Why So Secret?

As Digital Media struggles to win ad money from the incumbent champion, TV, a variety of strategies, arguments and exhortations are employed, but most are more relevant to digital people rather than to traditional marketers (see What Do Advertisers Want?).

Very few Digital Media people have ever bought or sold TV.  Optimizing a coverage curve doesn’t figure into the Digital World’s regular routine of  CTR’s, PPC’s, CPA’s, etc.  They know that advertisers like TV’s large coverage and try to show that they have big audiences as well.

Whilst trying to compete against TV’s biggest strength, the biggest weakness is almost completely ignored.  In offline media the problem isnt reaching people, the problem is that you cant stop!

Controlling frequency remains important in the Digital World and is essential for effective marketing both offline and online. However, the method of controlling frequency in TV is remarkably different from how it is done in Digital Media.

How TV Buyers Control Frequency to Maximize Coverage

The currency of TV is GRP (Gross Rating Point), which can be defined as the percentage of people who see an ad campaign multiplied by the average number of times the campaign is seen (frequency). However, what advertisers really want to do is reach as many people as possible because, as we all know, it is difficult to meet new and interesting people but your mother can call you 50 times a day.

As the basic formula implies, for any given amount of impressions, the lower the frequency – the higher the coverage that will be achieved.

TV buyers build their career on their ability to control frequency. They do this by choosing the right channels (channel mix), time of day when their ad will be shown (daypart mix) and even by predicting which programs will be more or less successful in a given week. They put their ad schedules into sophisticated computer programs called optimizers which generate complicated charts such as coverage curves and discreet frequency distributions.

Over the years, TV buyers have honed their craft and technology has improved. Literally, billions of dollars are at stake. TV schedules are sliced and diced, analyzed and then re-computed. With all of the intelligence, skill and trading savvy TV buyers apply to their craft; I often have wondered why they aren’t on Wall Street making millions and crashing the world financial system.

In Digital Media, the process is so simple that nobody really thinks about it.

Check a box. Press a button. It couldn’t be more simple or more effective.

As the convergence between TV and Digital progresses, the advantages will become more apparent.

Digital Media owners could be much more successful if they stopped trying to compete with TV audiences and started talking about how much money marketers are wasting on the excess frequency they are buying to achieve that coverage.

Ironically, the thought never occurs to most Digital people because the problem has been so thoroughly solved in Digital Media.  Since so few Digital people have any TV experience they are unaware that excess frequency is even an issue.

Well, it is an issue, and a big one for most large scale advertisers.  The ability to control frequency is Digital Media’s secret weapon and I have no idea why it remains such a secret.

However, one thing is clear:  The ability of Digital Media to control frequency so effectively and with such ease will free up enormous time and resource that can be employed toward pursuits infinitely more worthwhile than managing coverage build.

Alas, that is a subject for future posts…

– Greg

14 Responses
  1. Vitaliy Gorduz permalink
    September 2, 2009

    Thanks a lot Greg! This is a very ease explanation of that presentation you have sent me earlier. Now (I think) I got it right and will use it against TV.

    V

    Greg Reply:

    Nice.

  2. Olena permalink
    September 3, 2009

    Great post. as usual. You know, this post is a good continuing of your one of your previous ones “Cultural Sanctimony: Can the Digital World Overcome its Arrogance?”. And continuing again the story with secret weapon…Yesterday I had a chance to visit #pr20chat on Twitter hosted ny @BethHarte. It’s really a wonderful idea to do these chats.Adds value to tha brand of mktg company who hosts the event, a lot of great ppl find time to meet and discuss hot topics. But while reading tweets it started to seem that the conversation is one sided. Not that the ideas were bad, but not so many ppl in Digital media have experience offline and this sometimes can help to see two sides of the coin. Everyone knows how great DM is, but not so many ppl can understand why it’s so great comparing to the offline media. What are the faults of offline media, that may be used as a secret weapon of Digital media.It made me think again, the same question I’m asking myself for a long time.There’re so many gurus in Digital media right now. Every day I meet ppl who have just published a book or are finishing to write it. All of them are young sucessful ppl, who know a lot abt digital media. But can you be a real Digital media guru without experience in offline media. Because sometimes if you have never bought TV, or hired an agency offline your vision will be one sided. SO are our DM gurus real gurus? IS it enough to work in DM for few years, have 2-3 thousand followers on Twitter/Linked, then write a book and BINGO ! you are a guru? Just keep asking myself. What abt old fashioned offline experience when CEO, CMO were working for 10-20-30 years and only then were wrote a book, a real book full of wisdom and great experience. Is the world so fast right now that 10-20-30 years transitioned in 5-7 years? I guess I’m in a slow lane.

    Greg Reply:

    Good point, Olena.

    Take care of yourself.

    – Greg

  3. September 9, 2009

    Your premise is flawed. Digital Media generally and mistakenly focuses soley on the sales funnel. Whereas TV and the consumers who so engage in the medium can be influenced well above the funnel. there is value in strategically implementing and managing both. When you use the proper formulas you will soon see as most of my clients have that there is far more to gain by exploiting a before during and after funnel campaigns.

    Charles Cantu

    “Moreover, these heavy TV viewers tend to be the worst consumers. Generally speaking, people are in one of two places: at home or outside the home. When they are at home, they are very likely to watch TV. When they are outside, they are mostly either earning money or spending money. People who spend a lot of time at home usually do not earn or spend much.”

    Greg Reply:

    Interesting perspective.

  4. September 20, 2009

    Greg. Some of the statements you are making in this article are sweeping and indeed too generalised, and can be challenged vigorously by traditional media and marketing experts. There is more to TV advertising objectives and science than you assert, and you are being simplistic by stating that mainly people who do not have money watch TV. I am not sure if you wrote this article just to be provocative, which I shall assume is the case. For the record, I have many years of experience in traditional marketing experience, so I am not responding out of turn and I prefer balanced articles and this one is not in my opnion . While I agree that TV advertising has an element of wastage, it is still the among the best forms of brand-building platforms to this day. So please be careful not to mislead people who may not understand the value of this medium by stating lopsided (and possibly untested) views on the effectiveness of this communication medium. A little bit of research will help to ensure you can defend your views and opinions.

    Greg Reply:

    Brawilly,

    I guess everybody has the right to his/her opinion. However, as one who has consulted for global media agencies and has bought millions of dollars worth of TV myself, I can assure you that there is no lack of rigor or experience on my part.

    The point of the article is that people who buy TV for a living spend a lot of time managing frequency distributions and in Digital this problem has been solved. Heavy TV viewers are known to be less desirable than light TV viewers. If you have any substantiation that either of these facts are untrue, please offer it.

    Perhaps you can be more specific? Maybe you can suggest a method of optimizing a TV campaign without controlling frequency or show me a frequency distribution of an actual TV campaign that doesn’t have at least half of the impressions not exceeding the desired frequency range. Perhaps you have research that shows that people who watch TV more than the average viewer have above average demographic characteristics rather than the opposite (as every piece of research I have ever seen indicates including this one)?

    It would help if you made an attempt to be more clear and coherent or at least try to substantiate you claims.

    As you said, “A little bit of research will help to ensure you can defend your views and opinions.”

    – Greg

  5. October 20, 2009

    As a newly interested party who is benefiting from these conversations and your blogging Greg, let me compliment your “frequent” efforts and say I am amazed at your focus! Maybe I’m just too inexperienced here, but please enlighten me on how DM can and does control frequency and based on what compelling events? Robert

    Greg Reply:

    Robert,

    There’s not much to it. It’s a basic option in Ad server software. As I wrote in the article, you check a box and click a button.

    However, there is a wrinkle. While frequency levels in TV have been exhaustively researched and are fairly well understood, Digital media planners don’t really have a clue about optimal frequency. So while TV planners know what frequency they want and can’t get it, Digital media planners can precisely set frequency but don’t know what they level they should choose.

    Irony.

    – Greg

  6. October 21, 2009

    I then am scratching my head! Isn’t what matters most is the over-saturation of advertising on either platform, and which really has the most efficiencies built in that balances impressions, actions and user acceptance, quality of experience (context) vs. backlash?

    Greg Reply:

    Robert,

    Apparently not. Advertisers seem to be willing to pay less money for less effective advertising. But what does that have to do with controlling frequency? Are you talking about the medium as a whole of campaigns?

    – Greg

  7. tequaz permalink
    October 23, 2009

    Very good article Greg! I agree in 100%. Frequency control is a great argument when you try to pull some cash from TV to the internet..

    However, simple frequency control in digital world is a little bit overrated by digital marketing specialists. To be honest – standard capping seems to work perfectly only in short-term campaigns… and it is not possible to sell this kind of campaign without a huge daily reach.

    Don’t believe digital media planers, when they try to guarantee you frequency 1 in 1 month period… the real frequency will be much, much higher. Let me give you an example of one of the biggest portals in eastern Europe… it generates more then 50M cookies / monthly. The quantity of real visitors is about 14-15M. In long-term campaigns frequency control works great only if you target registered users:)

    However… possibility of frequency control is one of the greatest advantages of digital advertising world. This argument is one of my favorites and it works… oh yes, it works:)

    – tequaz

    Greg Reply:

    Dzieki, Grzes:-)

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