Demographic-Based TV Buys Not Enough

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, said David Poltrack, chief research officer at CBS.

Poltrack will present new research at the UBS media conference this week, 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.

The networks must also focus on delivering more granular commercial viewing data to advertisers, who increasingly want to be able to track viewing of their spots on a second-by-second basis.

The report comes as network TV ad sales are expected to dip down into the mid-single- digit range next year with a recovery beginning in early 2010, per Poltrack’s projections.

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.

CBS has, for years, touted itself as the place to be to reach adults 25-54. Meanwhile, competitors like Fox and ABC have pitched the younger, more persuadable 18-49 crowd.

Today, Poltrack said, demographic-based ad buys are a “poor surrogate measure of product potential.” New techniques 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. It offers a service that combines second-by-second TV viewing data from digital set-top boxes with shopping behavior provided by frequent shopper cards from grocery stores and other retail chains.

Recent TRA trials indicate that ad buys can be made more efficiently for many brand categories when the buys are based on what Poltrack 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’ offerings, 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. It examined 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,” per an ARF statement.

Still, the first two quarters of next year “will be down significantly,” Poltrack said. But spending should level off after that and “we should start to see an upswing in the first quarter of 2010.”