Study: Prime-Time Spending Wildly Inefficient

Spending accounts for 54% of dollars and 34% of impressions

A new study from advertising consultancy Simulmedia suggests that there's a large disparity between prime-time ad spending and the actual return on the investment. In the two-week period measured, more than half of TV ad dollars (54 percent, or about $91 million) were spent on the four-hour block between 8 p.m. and midnight, and yet only 34 percent of all measurable impressions were logged during that time.

Mind you, that's still a lot of impressions—certainly disproportionate to its share of the programming day—but conventional wisdom has had it for years that the most bang for your buck to be had was in prime time. Now, that's appearing to be less and less the case. Outfits like TiVO's TRA and PrecisionDemand—the latter run by former Nielsen CEO Jon Mandel—exist solely to parse consumer TV viewing and buying habits until there's a complete picture of a client's target user. It's a complicated process that involves a lot of data mining—PrecisionDemand works in concert with Little Rock, Ark.-based data giant Acxiom, but there are several other companies that do this sort of thing at work today—and at the end of it, they usually recommend buying a counterintuitive programming block such as, say, four hours on the Game Show Network in midafternoon.

The data in the Simulmedia report bears out other growing concerns with the TV ad world. The work week, for example, has become so fluid that networks can't count on viewers to be at home at the same time, resulting in more time-shifted viewing and more over-the-top media consumption via Netflix and Hulu.

"By the end of 2012, there will be an estimated 78 million TVs in the U.S. connected to the Web," wrote the authors of the study. "With penetration expected to grow to 147 million sets over the next five years, advertisers need to accept that linear TV is no longer the sole platform viewers use when they lean back on the couch to watch."

Granted, some of this is self-serving. Simulmedia offers guidance to media agencies and clients trying to buy the most valuable GRPs, so it has a vested interest in pointing out flaws in the traditional ad buying process. But they're not making the flaws up. Media agencies, too, are looking for more effective ways to reach advertisers, and with an increasing amount of data at their fingertips, it's bound to grow more specific unless something else intervenes first.