Beyond CPMs and GRPs

For some time, especially since the Writers Guild of America strike ended, there has been endless speculation in the press and on industry panels about the ultimate demise of the upfront. Mostly, the pundits charge that the upfront model is antiquated and that fundamental changes are needed in how the TV business structures and sells advertising time.

Some of this is true. We recognize that we’re no longer just selling gross ratings points on television. We’re selling much more — branded entertainment, entire marketing programs through our Unlimited division, ads on our Internet assets. There are additional opportunities with ABC’s full-episode player, as well as video-on-demand agreements still to come.

But the upfront will not go away. It may change and expand to include additional elements, but this industry is not going to toss away the simplest method of securing time on the world’s most powerful advertising medium.

The most important transition is a long-overdue emphasis on value. Agencies realize this, and advertisers are in sync. The reason they invest in advertising is that they expect it will propel revenue growth, and, to that end, they are willing to find the best value. That’s the media outlet which most effectively sells its products and services. As a result, using more sophisticated metrics and research, smart clients have become less CPM-oriented, and are instead defining cost-effectiveness as how it directly relates to advertising value.

This is not to imply that cost is not a factor; indeed, it always will be an issue. But let’s put it in perspective.

Advertising value is that which truly contributes to business growth. On the advertiser side it begins with using sophisticated research to identify the customer — those who will drive revenue, whether they are current users, competitive users, heavy users or any number of other definitions. The next step is to examine all advertising choices, using all available metrics, and choose those which offer the best value. Those are the ones that most efficiently and effectively reach key prospects and meet the qualitative levels that will impact consumer response. Finally, advertisers are increasing their demand for excellence in the creation of messages to enhance consumer responsiveness within each chosen media environment.

Have you seen the word cheapest mentioned yet? You won’t — not in this column. That’s because cheapest, in the traditional sense, is very low on the list of what propels business growth as a result of advertising.

Behind this value movement are rational issues connected to the art of talking to your best consumer prospects: Targeting with the right message leads to less waste and more consumer engagement, recall, conviction and, finally, action.

ABC is working on a formula that will generate an “Advertising Value Score,” which will examine the dozen or so qualitative items that really get at the heart of ad value and are most likely to drive sales. With this information, advertisers would be able to apply this method against their most important objectives.

For example, let’s take an advertiser which has strategically decided that its best marketing opportunity is to reach adults 25 to 54 who are upscale (with a household income of more than $100,000), live in homes of more than four and reside in top markets (because that’s where the bulk of their revenue is derived). The advertiser also wants its message to be seen and given attention, so C3 ratings versus program ratings are an important factor, as is viewer engagement. These factors can be analyzed by network, syndicator or cable entity right down to the programming level. An index, depending on each priority, can be agreed on, applied and combined. What this advertiser ends up with is true advertising value — that which is most likely to drive business.

This is just an example. There are at least six or seven other qualitative factors that can be considered: distribution, purchase influence, content quality (read percentage HD programming), reach, audience education, branded entertainment and so on. And we haven’t even mentioned the size of the audience, pod length or program environment. Each advertiser probably has four to six preferred strategic factors among these that can be prioritized and weighted by relative importance. In the end, the denser ad unit in each of these factors makes for greater value for the client — and for the media outlet offering it.

We want advertisers to take this approach because it’s the right thing to do and, frankly, it accentuates the strength and value of ABC and others whose delivery of these factors is strong across the board. When looking at the straight buying target, ABC may not have the lowest CPM versus certain cable networks or syndicated programs (an approach quickly becoming recognized as being too shallow to be meaningful), but when value factors are applied, the story becomes entirely different.

So when you plan your next advertising expenditure, think about who you really want to target. Make sure you understand the psychographic profile of your best consumer prospects, check out where they live and what influences their purchase behavior. Take a look at the qualitative factors that are most important to you, and develop your own efficiency adjustments to come up with your own advertising value score.

Ads are, after all, about growing businesses. When you take steps to develop a real advertising value factor and compare resulting cost efficiencies, you may find that we are all on the same page. And it’s absolutely the right place to be.

Mike Shaw is president of sales and marketing at ABC TV.

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