IAB: You’re Not Spending Enough on Digital

Study also finds post-roll video ads surprisingly popular

Is your campaign digital enough? The Interactive Advertising Bureau this morning published a study that doesn't just tell advertisers to move more dollars online; it tells you how much to reallocate. The IAB, which commissioned Nielsen to do the study, further says that retention increases when you use the same creative across both digital and linear platforms, and that the order in which the viewer sees the ads matters. Ideally, a viewer will watch an ad online first, which will boost retention when the ad comes on the air.

With funding from several of its members, the IAB has been able to amass enough Nielsen campaign data to prove pretty convincingly that moving up to 15 percent of your TV budget to digital can increase your reach by up to 3.4 percent for CPG clients and up to 6.2 percent for non-CPG clients. The study, “A Comprehensive Picture of Digital Video and TV Advertising: Viewing, Budget Share Shift and Effectiveness,” was shared at the IAB Annual Leadership Meeting in Phoenix.

"If you are a company with multimedia assets, this study shows you how to leverage them across the board," said Sherrill Mane, IAB's svp of research, analytics and measurement. "This is not a kill-TV study in any way shape or form." No wonder, then, that online ad spending continues to grow rapidly.

One reason the study is unique is that it parses extremely complex and expensive Nielsen data. With Microsoft and Yahoo as its primary sponsors (though many companies contributed funding), IAB took a survey that averaged 18 different real schedules across some 700 brands that ran on TV. If you've ever looked into reallocating a real schedule, you'll know why this is worthwhile information: The process is extremely expensive.

While it's true TV and online advertising aren't entirely interchangable, the IAB learned that strategically moving your dollars to digital increased reach without increasing spend. Part of the increase is simple arithmetic; as reach increased, CPMs went down.

"The TV-only CPM is $11.17; [when you move] 5 percent [to digital], it goes to $10.82. At 15 percent, it goes to $10.19," Mane said.

Many of her findings were counterintuitive. Post-roll video advertising (which airs after you've watched a video online), for example, scored surprisingly high rates of completion. "To me, post-roll means you're done watching," said Mane. But that's not true. "The short-form average is 71 percent, and the long-form average is 79 percent." No wonder there are so many companies guaranteeing online views.

The decrease in cost per reach point is also considerable. For CPG, the price went from $67,600 to $63,000, and for non-CPG reach points (which tend to be quite a bit more expensive than CPG, since non-CPG target consumers are generally lighter TV viewers), the price decreased much more dramatically, from $153,000 to $135,700.