Demo-Based TV Buys Not Enough

NEW YORK For decades the major TV networks have based their sales pitches to advertisers on demographics — primarily age sex and income characteristics of the audiences that watch their programs. But that’s no longer enough, says David Poltrack, chief research officer at CBS.
Poltrack, who says network TV ad sales will be down in the mid-single digit range next year on a percentage basis (with a recovery beginning in early 2010), presented new research at the UBS Media conference today compiled by the Advertising Research Foundation that shows network TV advertising is just as effective as it has ever been. But in order to remain that way going forward the networks must start providing metrics to advertisers that tie TV viewing patterns to buying behavior, he said. He will also suggest that the networks must focus on delivering more granular commercial viewing data to advertisers, who, increasingly, want to be able to track viewing second by second through their spots.

Each upfront season the networks jostle for position with marketers, contending that their audiences, based largely on measurements from Nielsen Media Research, are the best targets for brands because they are men or women or single moms; more upscale, or younger skewing, or are empty nesters with more disposable income, among other characteristics. (Adweek is a unit of the Nielsen Co.)
CBS for example, has for years touted the older-skewing demo of adults aged 25 to 54 (which comprised a big chunk of its audience) as the one in the best position to afford the products offered by many advertisers, while competitors like Fox and ABC have pitched the younger more persuadable 18 to 49 crowd.
But now, Poltrack says, demographic-based ad buys are a “poor surrogate measure of product potential” in the face of new techniques that allow marketers to link their ad purchase decisions to the buying behavior of the viewers watching their ads and the programs in which they are placed.
For the past year CBS has been working with market research and ratings company TRA Inc., a service that combines second-by-second TV viewing data from digital set-top boxes with shopping behavior provided by frequent shopper cards for grocery stores and other retail chains. Poltrack presented UBS attendees with some of the first results of broad-scale ad tests the network has conducted with TRA.

According to Poltrack, recent trials indicate that ad buys can be made more efficiently for many brand categories when the buys are based on what he called a “target rating point,” such as carbonated soft-drink buyers, versus gross impressions.

“They have moved the measure of planning and execution of TV ads to a direct product usage basis,” Poltrack said of TRA. “You can now measure for the first time whether the people who saw your ads were more likely to buy your product than the people that didn’t see your ads and therefore provide that return on investment variable. This is what TV measurement should be moving toward.”
But it won’t happen overnight, he said, stressing that demographics are likely to remain part of the TV research process, but integrated with product purchase data. TRA’s system would also have to go through the accreditation process overseen by the Media Rating Council in New York, before it could used to buy and sell ads in the marketplace.
And while purchase behavior data will add accountability to the networks’ offering, the ARF concludes in a new study that with or without such data, TV advertising remains very effective. The research organization looked at seven different databases, accounting for a total of 388 case histories, that looked at results from advertising weight tests, marketing mix modeling, copy testing, return on marketing analysis from quasi-experimental design, and media planning tools. “The evidence we studied leads us to conclude that TV appears to be as effective as ever,” the organization said.
As to the 2009 ad spending outlook, Poltrack said indications are that the first two quarters of next year “will be down significantly.” But spending should level off after that and “we should start to see and upswing in the first quarter of 2010.”