Proving ROI on television advertising is “still in a fairly primitive state,” amid massive network audience declines and rising CPM’s. It’s a paradigm that Tom Rogers believes cannot continue much longer.
Buying TV broadly on demographics without being able to match exposures to purchases leaves little opportunity for measuring spending efficiency, says Rogers, who is Executive Chairman of WinView Games and Chairman and CEO of TRget Media.
Since the financial crisis, most companies have implemented spending cutbacks and increased productivity to help drive profitability. Yet with more than $70 billion spent on TV, it’s been an overlooked line item.
“You would have thought by now that we would have a marketing sector that was infinitely more steeped in being able to deliver ROI based on television advertising expenditures,” Rogers says in this interview with Beet.TV at the recent Beet.TV Leadership Summit titled Outcomes and presented by Eyeview. “And we’re still in a fairly primitive state.”
He recalls that when he was President and CEO of digital video recorder pioneer TiVo, Procter & Gamble was among the first major advertiser to recognize the value of minute-by-minute set-top box data that could be matched with purchase data.
“That’s the future,” says Rogers, given the long downhill slope of linear TV audiences.
For the last 25 years, broadcast network audiences have been dropping by a compound annual rate of about 3% each year, according to Rogers. Since 2014 alone, the traditional linear TV world has lost about 581 billion impressions—or roughly an 18% decline in audience delivery.
“Yet when you look at pricing over that same 25 years, you’ve had compounded annual growth of CPM’s at about 2.5% a year,” he says.
The only way TV networks can adapt is being able to show the value of reaching audience segments based on sales results, or being able to deliver an addressable ad “that can really be connected to an outcome.”
Without such a tool, “pricing I think is going to be dramatically diminished. This will finally light a fire under both networks and ad agencies.”
Even with the rise of video providers like Facebook, Hulu, Netflix and others, “they haven’t filled the bucket of the 581 billion we’ve lost,” says Rogers. “So we’re still dealing with a bit of scarcity relative to total television audience impressions.”