Digital Media’s Secret Weapon for Winning Ad Budgets (Why so Secret?)
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 isn’t reaching people, the problem is that you can’t 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…