By Dominic Charles, Head of Audience Intelligence and Marketing Science
“Broadcast TV is dying fast in the UK” — that’s the headline of a Forbes article last year. Coupled with the equally troubling tales last Summer of TV inflation driving incremental CPMs up by 19%, you’d be forgiven for thinking that TV is in an existential crisis. The obvious conclusion would be that brands should be looking to get their spend out of TV and into a new source of growth — TikTok, the Metaverse, NFTs. Insert a suitably headline grabbing innovation here.
In the current landscape, growth is getting harder to achieve due to the fragmentation of media, exponential complexity of technology, cost of living crisis, and decline in consumer trust. Prioritising a media touchpoint that offers cost-effective and trusted reach, consistent sales driving, and brand building opportunities with a much lower risk profile than other channels seems a wise choice.
Inflation is not unique to TV but is a reality for many channels. The average media inflation is 7%, and post-iOS14, social channels’ CPAs have increased by up to 50-70%, depending on targeting and conversion optimization. Additionally, there is a ‘hidden’ cost inflation in the procurement and onboarding of data to target specific audiences, where technology cost overlays can offset any efficacy gains and easily cause double-digit cost inflation to CPMs, attracting so much attention in TV.
TV is still the highest reaching video channel across all devices and audiences, even for 16-24s, where the margin between TV and other video platforms is narrower but still in TV’s favour. TV also commands the majority of viewing, with 43% of all video viewing on live TV, almost three times the next largest platform.
Whilst often viewed as a ‘brand’ channel TV can and does generate significant short-term sales effects. Research by Thinkbox indicates that TV generated 47% of all short-term sales effects from media, 365% higher than the next largest channel (search). This isn’t just for DRTV, this is for all TV. Though measurement is slightly less straightforward, with increasing adoption of MMM as the gold-standard and bespoke attribution solutions such as TVSquared and Viewer’s Logic, TV’s short-term performance is more clearly seen.
Though ‘spend a decent chunk of your media budget in TV’ is not the sexiest headline, it is a reliable and proven investment that should not be disregarded.
That’s not to say TV doesn’t also generate long-term brand building effects. TV generates a 2.29x long-term multiplier (for every £1 of sales in the short-term another £2.29 is generated over the long-term), which is over double the next strongest channel, according to Thinkbox. These effects are crucial for sustainably growing market share and protecting against price sensitivity.
In times of uncertainty, how predictable the payback in a channel is is as important as the potential upside. TV has one of the smallest variances in its payback whilst channels like paid social, with a high degree of variance, they can be spectacular, but equally poor in terms of their payback. Investing in TV will generally payback as expected, making it a more reliable investment.
While the advertising industry is often fixated on the new and shiny, maintaining a deep understanding of how real people in the real world consume media is crucial to unlocking growth. The average person in the UK today spends more than two hours (137 minutes according to Insider Intelligence) watching TV per day. That’s more than the time spent with YouTube, Netflix, Prime, Facebook, Instagram, Snapchat, and TikTok combined (129 mins in total).
TV remains a unifying channel that offers advertisers a moment when people come together. Last year, there were 397 shows that had more than 5 million viewers, which is valuable in a time of division and isolation. TV investment pays back as a scalable, effective driver of sales, both as a long-term brand builder and as a performance channel eliciting impressive short-term uplifts.
However, it’s ultimately about balance. Advocating for a 100% TV-focused plan is as wrong as advocating for one that is 100% digital. There is, of course, a role for testing new and innovative ways of reaching our target consumers and creating new experiences and interactions with our clients that unlock growth, but we need to recognise that our habits are not the same as our target audience.
Article originally published in The Media Leader.