Last week I commented on the fundamental challenge facing marketers today. Fragmentation of media is driving reach down and costs up. Intriguingly, however, this may offer an opportunity for big brands with big media budgets, because in spite of the prevailing opinion that TV’s days are numbered, new evidence suggests that today TV advertising may be gaining effectiveness, not losing it.
But before I outline those opportunities, let’s go back in time, to a simpler, easier marketing world in which TV reigned supreme among a limited number of media choices. In this world, people still paid attention to the banal blandishments inserted into episodes of MacGyver; in 1985, the average U.S. household spent an amazing seven hours and 10 minutes in front of the tube. (Click here to review annual figures from Nielsen.)
Little wonder then that McDonald’s, Burger King and Wendy’s were duking it out on the TV screen. In the first half of 1985, McDonald’s increased its already massive TV advertising budget by 40 percent, to $143.2 million. The previous year, Wendy’s had hiked television spending by 48 percent as part of its extremely effective “Where’s the Beef?” offensive. (Hands up—who remembers that? See ad below). Burger King responded to the McDonald’s blitz by increasing its own TV budget and rolling out new spots for the Whopper.
Now fast forward to today. Media options are legion. Consumers, armed with the remote, the DVR and the touchpad are in control. Funny thing though—people are still watching TV. In fact, according to Media Trends, they spent 16 percent more time with the TV in 2008 than they did in 1985: an even more amazing 8 hours and 21 minutes per household (including DVR playback).
“But what about those digitally distracted, multi-tasking teens?” you might ask. While teens are not watching as much as their parents, teen viewing hours are slightly up on 1985 as well.
Which is why, with new products to promote, McDonald’s and Burger King are back on TV in a big way. Traditional mass marketing still works well for traditional businesses like these, and TV still takes the lion’s share of their media budgets. According to TNS Media Intelligence, Burger King spent $294 million in measured media during 2008 and plans to ratchet up spending by double digits for its fiscal year beginning this coming August. TV will get the biggest share of the increase. Interviewed by AdAge, Burger King CMO Russ Klein underscored the broad reach of TV when he said “There is no way to replace television. So that’s going to get the largest single increase on the calendar.”
TV also forms the foundation of the cross-media campaign developed by McDonald’s to support its McCafe launch. Quoted in AdAge (article available by subscription only), Andy Donchin, director-media investments at Carat, suggests TV is still critical for share of voice, and even with fragmentation and smaller ratings, he said, it is “the tallest midget in the room.”
Of course, reach is the real difference between 1985 and now. TV’s reach is still unparalleled, but no one program will reach as many people today as its 1985 equivalent. To achieve those old levels of reach today, you must stitch together a much more intricate and costly media plan. But that does not mean the brand-building effectiveness of the medium has declined. Au contraire mon brave, the evidence suggests otherwise.
Joel Rubinson, Chief Research Officer at the ARF, led an analysis of 388 case histories from seven different research agencies and found that TV is not only as effective as ever, it is possibly increasing in sales effectiveness. The findings (click here to view) clearly highlight TV’s leading role in building brand awareness. However, data from IRI’s BehaviorScan, where test markets are compared to matched controls, suggests that the sales response to increased TV weight has improved over the last 10 years. Commenting on the report’s findings in BrandWeek, Joel Rubinson said, “(People) want to zone out and watch TV and relax and let the communications wash over them. It’s an extension of the brand experience.” Joel concluded that TV is still an effective advertising platform.
TV is still effective. But why might its effectiveness be increasing? Would it be too silly to suggest that the general migration of marketing budgets away from TV to online and in-store activation is the root cause? Suspend that disbelief a moment longer while I explain.
The ARF report suggests that TV is number one when it comes to building awareness. But what does that really mean? TV’s laid-back viewing experience causes people to engage with brands and “messages” which they might otherwise ignore. This primes the brand pump for later activation. As a result of seeing TV ads, people are more likely to notice brands in the store, click on search results and explore Web sites. So if your competitor decides to cut TV spend and go online, don’t sweat it. Keep spending on TV and get your brand established in people’s heads before they even think about shopping your category. Odds are it will pay off in the long run.
Of course, I can think of another explanation for why TV’s effectiveness is increasing. Perhaps all that nasty pre-testing is actually paying off after all…but no, that would be an even sillier idea wouldn’t it? What do you think?
(7 votes, average: 5 out of 5)
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May 18th, 2009 at 1:19 am
Hi Nigel,
Excellent.
Very good to hear the voice of reason among this whole barrage of people arguing against TV.
(I have the cynical view that since creative agencies and media agencies are now competing for the same budget they both have an incentive to promote non-standard media in an attempt to shift budgets their way.)
One point on the media fragmentation. In theory the cost per spot is determined by its indivdual reach. The free market system sort of ensures this. So, as the reach of a spot declines its cost should decline. Thus, for the same dollars you can get exactly the same reach, just using more spots.
The benefit to you will be that since these spots have less reach they each also should have less wasted audience, i.e. your media schedule will be much better targeted.
What a silly idea to think that pre-testing would make the advertising more effective against this increased good targeting in the media schedule!
Erik.
May 18th, 2009 at 4:58 am
Good analysis - even as a big new media booster (who hardly ever watches TV) I think the “death of TV” argument is absurd.
But one slight quibble - isn’t the definition of “multi-tasking” doing lots of things at once, not just doing lots of things? So no surprise today’s youth spend more time watching TV - the question is: what else are they doing while watching? (And how might TV advertisers take advantage of it)
May 18th, 2009 at 5:02 am
“To achieve those old levels of reach today, you must stitch together a much more intricate and costly media plan.”
Nigel, I think you asked and aswered your own question.
May 18th, 2009 at 7:28 am
Good morning! Thanks for the feedback.
Erik, surely your cost per spot theory only holds good if demand is static. I may be wrong but I believe that demand for TV spots in the U.S. was on the increase until last year. Anyone out there know for sure?
Tom, good point.
Miro, couple of thoughts. I suspect the only more costly thing in terms of time taken than stitching together a TV media plan is stitching together a credible alternative using new media. Besides, effectiveness and efficiency are not the same thing. Impact per impression seems to be holding steady but the cost efficiency is going down.
May 18th, 2009 at 7:28 am
[...] of the “Path-2-Purchase” philosophy I’ve been flogging) has a good article looking at TV’s effectiveness. He asks the question of whether TV is becoming more effective or [...]
May 20th, 2009 at 6:59 am
true enough Nigel,but isn’t this a problem of first principles:
what is the brand trying to accomplish behaviorally/attitudinally
what customers is it reaching out to to accomplish that
what media/mediums does that translate to
what media cost/affordability
what timeline to achieve some quantifiable/qualifiable assessment of impact
all of those questions will steer you toward a mix of media to support the objective.
For some Mass/TV is the right (cost effective) foundational media- others will require a different pallet. And if you broaden the definition of media to include other communication types (call centre, billing statements etc…), customer experiences and purchase offers - the pallet becomes polychromatic indeed.
and lest we forget - there is also the issue of defining the immediate message and the longer-term brand story as the message and its anticipated effectiveness impact will go a long way toward defining viable media options.
thxs for the question
cheers
miro
May 20th, 2009 at 7:17 am
It seems somewhat unlikely that TV advertising could die out in the face of increasing demand for TV spots. We need only worry if the demand were to start falling and in that scenario so too would the cost. As long as people are still watching TV the abundance of channels represents only an opportunity. Media plans may be more costly and time consuming, but would any advertiser really prefer the alternative of buying out ad space on a quarter of the channels at any particular time slot they decide to utilise?
May 20th, 2009 at 9:31 am
Hi Miro and David, thanks for the comments.
Miro, you seem to assume that I am espousing TV as the only communication channel. Wrong. What I am suggesting is that for many, many brands it is still the best medium by which to seed the ground for other brand building activity. As you suggest, that could take a number of forms. We all know that the brand objectives should define the media choice. What I find of concern is that many people seem to forget that fact in face of the hype about new and social media. They feel they ought to be using these channels whether or not it makes sense for their brand.
May 20th, 2009 at 1:01 pm
[...] dead. It never has been. In fact, it more alive then ever. Nigel Hollis suggests that it might be even more effective, since it’s getting more and more crowded. But that’s still about getting new [...]
May 29th, 2009 at 9:43 pm
[...] at Millward Brown – Nigel Hollis has also been asking questions (see here, here and here) regarding TV commercials making the point that despite media fragmentation it remains a [...]
June 8th, 2009 at 4:53 pm
Hi,
I think that TV ads won’t be effectiver than today in the future. Ok. It could be effective today because of the global economic crisis. The prices for TV commercials are at the minimum niveau and people will enjoy more time with their TV. That’s always the same at times like this. It will be effective in the future, too. But it won’t be effectiver than today. Consumer Generated Content, Consumer Generated Media will be more and more effective. It is too easy to write something negative or positive about a product that had or hadn’t satisfied us. And whom uf us isn’t looking at the web before buying something. We can see at the researches that people trust more to friends, families or people who have some experience with the product that they want to buy.
It’s right that e.g. McDonalds, Burger King etc. are making their ads at TV because they have to be seen there. There is no effectiver media for them. Nobody is looking at the internet for experiences with burgers etc. But on other products I think CGM will be more and more important.