January 21, 2012

Throughout my professional life, I’ve had the privilege of riding hundreds of steep learning curves, getting thrown into the deep end in a huge variety of industries, disciplines, and markets. My relish of these moments is perhaps unusual; after all, not everyone likes being completely ignorant when tasked with something new. As such, I thought it might be useful to share what I’ve learned this past year in one particular area: television advertising and, particularly, media buying.

Most of my experience in TV advertising is from the U.K., with a little bit of Google TV thrown in. I’ll cover both here; AFAIK, the U.K. stuff is pretty relevant to U.S. advertisers anyway.

TV airtime is purchased in “CPMs” (cost per thousand impacts). An impact is one view of a commercial, so as soon as your ad runs more than once, you might get overlap in your impacts. The number of total impacts tells you neither how many people viewed your ad nor how many times they viewed it.

The CPM system makes it easier to compare apples to apples across TV channels and times of day or week. I had always thought that they just charge an amount for a commercial, but really you know with reasonable precision how many people you’re going to reach. If you’re advertising something with a reasonably measurable response, you can get a pretty good sense of how TV advertising compares to, say, Adwords. The CPM thing means you can advertise on a smaller channel for very little, but it also means you’ll reach very few people.

In the U.K. (and possibly the U.S.? Anyone?) the standard benchmark for CPM pricing is based on a 30-second ad. 20-second ads are billed at a fraction that is cheaper than a full 30-second ad but more than 2/3. 10-second ads are billed at ? the cost of a 30-second ad. So in absolute terms it’s cheaper to run a 10-second ad, but in terms of total time on the air it’s more expensive. That’s why it’s good to have a mix of ad lengths; people get to see you more frequently, but you maximize the total value of your spend. In the U.S., ads are edited to 15-second increments.

CPMs fluctuate from channel to channel and month to month, and sometimes within a month, depending on inventory and demand (how many thousands of people are watching TV vs. how badly companies want to advertise during that time period). In December, the first third has high CPMs, the middle lower, and the last third very low, as advertisers have already spent their budgets trying to maximize Christmas sales -- but people are still on holiday and, therefore, watching TV.

It’s tempting to only go for the channel with the lowest CPM, but not always effective. You’ll want to consider “reach” and “frequency” -- how many people your ad reaches and how many times it reaches each person. You’ll also want to consider the buzz factor (the more people talking about your product, the more they’ll generate additional interest), the brand associations of the TV channel and program, and the target demographic. Obviously, you’re better off spending $2 to convert four viewers than $1 to convert one viewer.

The other thing is that, since there’s no way to know exactly how many people will watch TV next month, channels have to manage inventories throughout the month to suit actual results. They do this through a system of overdelivery and underdelivery. If lots more folks are watching TV than expected, you might get more exposure than you paid for at no additional cost. Of course, this also means you might get a bit of underdelivery in subsequent months as they try to balance it out. A good media buyer should aim to have a bit of overdelivery each month.

All ads in the U.K. have to be cleared for broadcast by Clearcast, which monitors for compliance with the BCAP advertising guidelines. In the U.S. it’s a self-regulatory process. In both countries there are also specific guidelines and obligations if you’re targeting ads to children. “Trafficking” is the delivery of each ad to the broadcast house.

In the U.S., you can use Google TV Ads to advertise on TV. Despite the confusing name, this is a way to use the Google auction system to buy remnant airtime on networks throughout the States. It gives you a high level of specificity about dayparts (segments of the day in which you want to advertise), channels, and programs, and lets you crank your advertising up or down with just a few days’ notice.

By Kaila Colbin
Kaila Colbin is CMO of minimonos.com, a virtual world for good green kids.
Courtesy of MediaPost

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