September 06, 2017

By Matt Collins

In 1935, Austrian physicist Erwin Schrödinger developed a thought experiment involving a cat, a flask of poison, and a radioactive element in a closed box. Without getting too deep into the quantum physics, Schrödinger posits that as long as the box is closed, we can think of the cat as being simultaneously both alive and dead.

Now apply that thinking to TV advertising. If a campaign delivered 50 GRPs but didn't have a mechanism for measuring ROI, did it simultaneously overperform and underperform? For years, marketers didn't have the tools to provide an answer. Today they do, but despite the emergence of reliable, data-driven solutions that reveal a campaign's true impact on sales, app downloads, website conversions, or other performance metrics, many marketers still rely on the inferred results derived from applying GRPs to a media mix model. To put it another way, maybe they're afraid that if they open the box, all they'll find is a dead cat.

For forward-thinking marketers who have already opened that box, the adoption of a performance mindset has resulted in both meaningful short-term gains and positive long-term changes that are driving company growth. The good news for more traditional brand marketers is that the pivot doesn't carry as much executional risk as they might think.

Across the industry, change is already happening. The April 2017 Credit Suisse report "The Future of Advertising" predicts that 60 percent of brand marketers will be spending money on data-optimized, targeted TV advertising within two years. Given how well it works, the other 40 percent probably won't be far behind. While GRPs are a useful benchmark, the future of TV measurement is data-driven performance.

Creating Immediate Incremental Value for Your Business

To help boost their ROI, some brands fall back on cheaper inventory, but with an audience-based approach and a performance mindset, brands can close the loop by measuring the impact of TV advertising on business results, increasing relevant reach, and creating a unified, multichannel targeting strategy.

Here are three things marketers can do to adopt a performance mindset and squeeze better results from their TV advertising.

1.  Learn What's Really Working — and What Isn't.

With data-optimized TV advertising, brands now can close the loop by matching ad exposure to action. Using measurement from their own CRM or third-party credit card transactions, brands can learn which audience segments drove the most conversions, the best time of day to reach them, and on which networks. One illustrative example is an e-commerce company that had a notion of who its best customers were, but wanted proof to be sure. The company tracked the conversion rates of 12 different CRM-based TV audience segments in a single campaign and were surprised to find that one shared trait among the most responsive segments was higher household incomes relative to the other segments. Following the data rather than instinct, this e-commerce company decided to optimize its approach and use household income as one of the key traits in future targeting effo

2.  Optimize for Relevance.

    One of the shortest paths to greater ROI is to reach more likely customers. In 2015, a big-box retailer decided to test an audience-based targeting approach to complement its contextual buy. The retailer used CRM data to identify customers who had previously made purchases from a specific department, and then created a lookalike audience with similar purchase propensities. New creative was released, and the target audience exhibited a 66 percent conversion rate lift compared to adults aged 25 to 54. This led the retailer to apply the same strategy across an additional five departments over the next two years. Each of these campaigns was optimized for relevant reach, and on average, the target audience demonstrated a conversion rate lift nearly 50 percent greater than the standard demo.

3.  Develop a More Cohesive Customer Journey.

    Another immediate benefit of data-optimized targeting on TV is that brands can target the same audience segments on both TV and digital media. From IRI ProScores Audiences to DLX segments from Oracle Data Cloud, brands have more options than ever to deliver messages to the same audience across multiple platforms. And when it comes to social, the Advertising Research Foundation has shown that marketers can increase ad effectiveness by as much as 57 percent by unifying their strategies with TV.

A Performance Mindset Leads to Growth

The single most important goal for any company is growth. Sustained growth requires a brand to know exactly how its marketing is performing. To get there, a brand must use first- and third-party data to better understand its customers.

Connecting purchase data with viewing data provides an essential window into the daily lives of a brand's best customers and yields a wide range of insights on the exact performance of a campaign. Over the course of multiple campaigns, brands can learn how their customers respond to different types of messaging, which, in turn, results in improved creative and more precise targeting.

TV vs. Digital: Getting the Numbers Right

Because they are different media, how marketers measure TV and digital don't equate. Here are the key differences.

All of this information is essential for long-term growth. The more a brand knows about its customers' behavior, the better it can develop unified strategies across multiple channels. This cohesion in a customer journey creates a better experience, more brand loyalty, and, ultimately, repeat business for years to come.

TV has been bought and sold the same way for years, so it's up to the next generation of marketers to bring a new mindset to their companies. Start the conversation about why ROI is more important than CPMs. Put a stake in the ground on why it's essential to follow the data. Inertia can be hard to overcome, but taking the first steps can yield immediate benefits — and the implications for growth are enormous. When resistance arises, remember Schrödinger's cat. Is it alive, or is it dead? One has to open the box to find out.

Matt Collins is the SVP of marketing at Simulmedia. You can email him at [email protected].

 

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