The impact of TV advertising

Measuring the unmeasurable

While measurement of SEM and online advertising becomes ever more sophisticated, above the line marketing spend often seems to adhere to the old adage ‘you know that half of your marketing spend is being wasted, but you don’t know which half’.

Over the last few years this has changed significantly, driven by new monitoring technologies, analytical methods and the ubiquity of mobile internet which allows instant and trackable response to above the line campaigns.

As a result of these advances, more sophisticated measurement strategies have emerged. Companies are learning how to put a definite (or pretty close to definite) value on many forms of above the line marketing.

The area I will focus on is TV, as the largest above the line medium and the one which now offers the most potential for RoI calculation.

Measuring immediate RoI of an ad

If you like to keep a firm hand on advertising and marketing RoI, and you’re used to the clear and deeply evidenced stats served up by Google Adwords, launching a TV ad campaign may appear to be uncharted and unmeasurable territory.

However, most agree that it is simple to work out the immediate impact of a single advert, especially if there is a direct call to action. Visits to your website and downloads will spike in the short period during and after the ad airs. Also, you will be able to measure the activity on apps such as Shazam, which enable viewers to interact with your advert as it appears on screen.

One approach I have seen to measuring the direct impact of a TV ad is the “8+8+8 approach”. The theory is simple. You will know the time your ad airs (through services such as RapidApe and TVsquared), so divide the time around this into three buckets:

• Phase One: The first is the eight minute period before the advert airs.
• Phase Two: The second phase is the eight minutes from the start of the advert.
• Phase Three: The third is the eight minute after that.

During these three phases you monitor your KPIs (e.g. sales, downloads, enquiries). You would then take the averages of phases 1 and 3 to give you the baseline organic traffic level to your site. The spike above this in phase 2 indicates the direct impact of that specific TV ad.

This approach gives a good idea of the users reacting directly to your ad. However if you measure the success of your TV ad purely on the interaction and sales made whilst it is on the air, you would quickly conclude that television advertising is far too expensive.

TV ads also have a number of longer term effects, for example:

• People who take longer to react to a specific ad
• Brand familiarity increasing the click through rate of online advertising
• Brand familiarity increasing onsite conversion (“I can trust this company, I’ve seen it on TV”)
• Site visits which can be retargeted later

To fully understand the RoI of TV you need to measure the impact of campaigns.

Measuring the impact of campaigns

To discover if your ad campaign had a longer term impact, you need to gauge whether the campaign caused key stats (sales, revenue, organic traffic) to plateau at a higher level than before the commercials aired.

The graph below shows real data tracked by one of our portfolio companies, I’ll keep their identity under wraps for the purposes of this blog. The y axis is revenue from organic traffic (excluding users attributable to SEM) and the x axis is time measured in weeks. The light blue line is the organic traffic from 2013, the dotted line what we would have expected this to be in 2014 given baseline growth, the dark blue line is 2014 actuals. The ‘waves’ indicate three TV advertising campaigns, each of which lasted two weeks.

The graph shows a marked uplift in revenue during the eighteen weeks after the first two ‘waves’ of ads aired, with revenue levels above the baseline. The company used this to calculate an approximate RoI from TV, which was positive for them.

Measurement along the lines of the above obviously takes time, and is made more challenging by ‘noise’ factors such as seasonality, PR and even the weather. Google has an entire team dedicated purely to forecasting its traffic levels.

I should also say that TV is no panacea and that TV RoI levels across the portfolio have been mixed. For some companies it just doesn’t seem to work. Positive contributing factors include mass market appeal, a mobile app and responsive site, and a proposition that can be easily communicated in one sentence.

When it comes to monitoring and collating stats, you don’t need to do all of the hard work yourself. A couple of our portfolio companies use TVSquared (whose white paper makes very interesting reading) to dive into the analytics and performance behind their campaigns. There is a great story here, shared by the team at Lostmy.name, who worked with TVSquared to analyse the effectiveness of their campaign. They decided not to continue with TV ads in the end, but may not have been able to make such a confident call without the deep insight afforded.

In the UK (and US, and many other large countries) you can further optimise the performance of your campaigns through regional targeting. Sky and ITV are amongst the operators offering regionally targeted TV advertising. Not only does this reduce the financial barrier to entry, it also means you, as an advertiser, can perform some simple ‘a/b’ testing to compare your traffic in regions where TV ads run against a control where they don’t.

Furthering directly attributable engagement from TV ads

A number of techniques are currently being developed that allow more attribution of the impact of TV ads. I will talk briefly about three of these.

The first is cross channel tracking of users. A panel of users agree to have all of their web and mobile usage tracked, along with their TV watching. This allows detailed attribution modelling of the impact of TV ads alongside other advertising channels. A couple of providers here are Verto Analytics and Reality Mine. It is much cheaper for them to set up panels than it was for Comscore and Nielsen last decade, but they still face the limitations of these panels when it comes to measuring companies with low market share (e.g. most startups).

The second is very simple, offering a TV-specific discount code for your product. Anyone who remembers the ad will use the code, so you can track them more easily. However this ignores brand impact, and is harmed by the prevalence of voucher code websites.

The third approach is pushing users to interact directly with your TV ad even if they have no immediate intent to purchase. This allows you to track more users who have seen your ad and engage with them. The simplest approach here is a prize draw requiring online registration. A more friction-free alternative is to push engagement through a mobile app such as Shazam. Shazam’s team hold up the ‘Sony Playstation ‘God of War: Ascension’ campaign to illustrate how being able to Shazam an ad can drive between ‘8 to 16’ times the average consumer engagement. These are pretty amazing figures but, of course, not every ad campaign is as ripe for Shazam-ing as a computer game. The other question is whether engagement leads to purchase (this at least is trackable through online attribution tools).

In conclusion

There are many complexities in measuring the impact of TV advertising (and any other form of ATL marketing). However it is increasingly possible to glean insight and is only going to get easier to do so.

We are running an event for our portfolio companies this week going into more depth on this topic, which I will follow up from with more insights if possible.

If anyone has experience of TV campaigns for online businesses I would love to talk further.