Is “Incrementality” the New TV Currency?
Over-the-top digital video ads are driving incrementality with untapped reach & frequency, but many challenges remain.
The past decade has seen people flock to online streaming services. Conventional TVs are quickly disappearing from the living room, viewers are abandoning cable subscriptions in huge numbers, and traditional broadcasting is all but obsolete. With the home entertainment sector undergoing an enormous transformation in recent years, it’s perhaps no wonder marketers have been lamenting the death of TV advertising.
Only TV advertising isn’t dead at all. It’s just changed; evolved much like any other advertising medium. People are now consuming more video content than ever before, thanks in large part to the rise of on-demand streaming services like Netflix and Amazon Prime. Instead of conventional TVs, people now have connected TVs (CTVs). And we’re not just talking about those in the living room — Over-the-top is now everywhere, in the form of smartphones, game consoles, computers, and anything else with an internet connection and the capability of playing videos.
Over-the-top and CTV have rightfully earned their place as the holy grail of video advertising, and it’s growing fast. But there’s a big caveat: there is still no universal measurement currency for helping marketers measure audience size and composition across multiple apps and devices. Without access to cookies or device IDs, many advertisers continue to stay clear of over-the-top video advertising in the fear that they may end up wasting massive amounts of money. On the other hand, things are changing fast, and the standardization of measurements is starting to gain momentum.
Marketers have watched audiences flee to streaming lamenting TV’s death, but rationalizing the status quo, thinking streaming lacked the scale to warrant changing a process that worked for five decades. Leaders in the video advertising space are now looking towards a holistic future that allows greater accountability and the assessment of business outcomes across all forms of video advertising. Incrementality testing is where it’s happening. Over-the-top supports to find the best placements to reach target audiences across all relevant forms of video: traditional Tv, addressable linear, streaming, and online video. This flexibility opens considerable opportunities in the new era of TV advertising.
In doing so, three challenges emerge.
Challenge #1: Identifying your target audience
Beyond choosing the network to advertise with and the time of day, traditional TV advertising is limited when it came to targeting options. That’s why it was primarily used by those in far-reaching sectors, such as consumer packaged goods (CPG), rather than niche industries. Although conditions are changing fast with the continued proliferation of over-the-top, and the lack of interaction testing with the consumer means there are fewer opportunities to identify target audiences. For example, when someone registers with a media company, they provide necessary information about themselves from which they can extrapolate demographical attributes such as income estimates.
Today, many media companies have databases that allow advertisers to target campaigns based on factors such as consumer purchase history and age and gender categories. Precise identification of your target audience is critical for minimizing risk and ensuring the success of your campaign. While TV advertising is still a long way from becoming as targeted as social media, the situation is improving. There’s a possibility that some of the world’s most essential streaming services, which are currently ad-free networks, start offering ad-supported packages to remain competitive. If that happens, we can expect a raft of new opportunities as these web-based services hold a great deal of audience data for precision targeting.
Challenge #2: Quantifying your reach
Once you’ve identified your target audience and the best mediums for reaching them, you’ll need to understand how your chosen platforms enable the discovery of new and practical ad placements. Of course, budget considerations have the most significant impact on your reach and the number of ads you publish. But to support incrementality testing, advertisers need to calculate the reach they currently have by establishing the baseline. Afterward, they need to establish the desired business outcomes by calculating the desired reach and ad frequency across the full range of placements — including traditional and connected TV.
Establishing the correct cross-channel coordination is essential: if you’re running multiple TV advertising campaigns on different media and networks, it can be much harder to figure out which one is bringing the best return. Media fragmented makes it challenging to figure out which one is delivering the best ROI. You need to compute an unduplicated reach and frequency across all forms of TV and video. Sophisticated marketers now access granular data sets to adjust for optimal success continually. It is becoming clear that these technics are bringing an unfair advantage to those who adopt it.
Challenge #3: Measuring your impact
The health of your TV advertising campaigns depends a lot on your ability to identify target audiences and quantify reach correctly. As the pressure mounts on marketers to deliver a decent return on investment in a world full of multi-touch attribution and opaque conversion models, incrementality testing is precious. It’s the only truly effective way to measure the effectiveness of both traditional and non-traditional TV advertising. Determining the ROI comes from comparing the two control groups, the first one defining the baseline, and the other being the spikes in numbers you’ll see if your TV ads get a high response rate.
When choosing a TV advertising platform, you must measure the business impact of your campaigns. The incrementality measurement is the ultimate way to address the shortcomings of legacy models. Advertisers need to know how their reach and frequency impacts their business outcome and what is driving performance lift. However, it might be some time before the TV industry evolves to the point of standardizing and enforcing these new methods, in part because it’s a complicated process and one that might inadvertently make campaign performance look less impressive than it may otherwise. Ultimately, it is the sequence of media attribution weighted against the business conversion that drives the future value of the media and the audience.
Incremental lift may indeed become the new TV ad currency.
