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Does programmatic TV work?

Opinion, 11 August 2017
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It’s hard to believe it was only 20 years ago since the UK launched its fifth TV channel with a little help from the Spice Girls.

Back then, advertising campaigns kept ITV, Channel 4 and Channel 5 afloat and were still looked upon as being innovative and cutting-edge. How could we forget Budweiser’s Wassup campaign or the incredible engineering feat that blew our minds in Honda’s Cog advert?

Just a few years later, digital channels and social media, with advertising on Facebook and YouTube, started to seriously compete and, some might say, outperform TV because it could be dynamic, flexible and measurable.

The result was that TV advertising money started leaking to online channels.

Yet TV can still reach millions in one 30-second slot. What’s more, people who are experiencing these adverts are doing so in context, with the programme they’ve chosen to watch, at their convenience.

The facts speak for themselves: television accounts for 94 per cent of all video advertising time. In addition, the viewing experience has never been better with some 56 per cent of TV advertising consumed on screen sizes greater than 40 inches.

There is also evidence to show that TV drives viewers online, with online businesses now the largest category of TV advertisers, growing their TV spend by 8 per cent per year[1].

How can TV align itself with the digital advertising experience?

Google and Facebook’s real power is their ability to automate the process that connects an advertiser’s goal to analytics to advertisement. Control of data, analytics and media enables Google and Facebook to create a virtuous circle that programmatically optimises advertising performance. 

TV attribution solutions enable advertisers to move from measuring audience delivery to measuring response metrics. Metrics that have driven digital advertising growth are now available for TV advertising and TV spend can be related to results: cost per click, cost per conversion and return on investment.

The good news is that these building blocks are already in place for the biggest comeback since, well, Man United against Bayern Munich in 1999.

Challenged by Facebook and Google, TV rested on its laurels for a little too long, but there is now technology that ensures TV advertising can align itself much more closely to the online experience. Dynamic and flexible, it can switch advertising creative in real time, based on website responses, replacing the weakest performing creative with the strongest.

Go Compare Success

Only recently, we partnered with a number of organisations to deliver a trial of programmatic TV to a number of organisations, including price-comparison site Go Compare, to find out whether our solution could be optimise a TV campaign, autonomously and in real time.

In trials on Sky, over one month, Go Compare broadcast a total of 13,790 spots using four different creative spots. The worst performing ads were replaced programmatically. It led to some 17 per cent increase in spend efficiency and 15 per cent fall in cost per referral (CPR).

The programmatic decision engine combines the results of attribution modelling, statistical modelling and, combined with the campaign goals, predicted a cost per response for each of the four Go Compare spots.

It showed that Go Compare’s Gondola ad was performing worst and replaced it with its Flying High creative. Once that programmatic optimisation was applied by Sky Media, the results showed that after two weeks, £86,000 of spend on the ad with the highest CPR (the Gondola ad at £34.57) was transferred to the one with the lowest CPR in the period (Flying High at £26.37) and this saw its CPR for the following two weeks slightly increase by 18 pence to £26.55 despite taking on the extra spend. This suggested the performance had not been held back by people seeing it to many times.

So with £86,000 worth of media spend optimised, the efficiency gain was £15,845.76. As a proportion of the optimized spend, this represents an 18.4 percent gain.

If we extrapolate the gain to an advertiser spending £10m per annum, and assume that half of spend was optimised and half of ef´Čüciency gain was obtained, this would equate to a gain of £460K.

The 18.4% efficiency gain showed that even a simple optimisation can deliver genuine value to TV advertisers with more sophisticated optimisations likely to generate more value.

The value to each stakeholder in the chain (advertiser > media agency > media owner) is derived from the value that automation brings. It is just not possible to manually optimise campaigns with the same level of speed and accuracy; the time and resource costs alone would quickly erode any gains.

[1] Nielsen 2015 v 2016

About the author

David Cloudsdale is sales director at Adalyser, a TV advertising optimisation product
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