Media Usage Does Not Always Mean Ad-Reach Opportunity

Dave Morgan

Founder & CEO

Originally posted in MediaPost

Judged by their actions and words, it seems many industry folks believe that media usage is directly linked with a corresponding opportunity to reach those people with ads. On the contrary: The two things are not the same, and believing it won’t make it so.

Let’s say you’re a consumer marketer and you’ve been reading about the fast-changing media habits of Millennials: how they spend all of their time now looking at screens, no longer go to malls, no longer hang out with friends, no longer watch TV. We read those headlines every day. Anecdotally, we observe Millennials obsessed with messaging, posting photos and videos, and watching on-demand video from Netflix and Amazon on any number of different devices.

How would you adjust your media mix to ensure that you’re reaching this important target audience with your ads? The simple conclusion arrived at by many is to shift budgets to wherever users are now spending media time. On a regular basis, we read statements from top industry execs proclaiming that they are now going to put X% of their ad spend on emerging digital channels like mobile or digital video because that’s where the people are now.

If only it were so simple. It’s not – and here’s why:

Media usage comparisons are misleading. Most media usage research we read about incorporates many activities that don’t support ads, at least not in a very meaningful way. For example, a massive amount of Americans’ digital media time is spent on email and messaging. Yes, those media are trying to find ways to integrate ads. However, thinking that mobile messaging provides ad-reach opportunities similar to network TV doesn’t work. It’s like looking at time spent typing on a typewriter as an ad reach substitute for time spent reading a glossy fashion magazine. They are nothing alike as a possible advertising medium. All they share is that users use them.

Emerging digital media deliver far fewer ads than legacy media. This is a simple but critical point in the evolution to digital media. Though to some extent on-demand video services like Netflix and Amazon, and even Hulu and YouTube, are replacing TV viewing time, on-demand video’s ad reach is not a substitute for TV’s reach. The vast, vast portion of video viewing is ad-free, and what does have ad support carries an ad load thats a small fraction of what network TV delivers. For example, as David Bank of RBC Capital has found, CBS delivers more audience ad minutes to Americans in one 30-minute episode of “The Big Bang Theory” than YouTube can deliver in an entire week across all of its videos.

Ignoring substitutable ad reach when shifting budgets can bring undesirable consequences. That digital advertising is facing massive issues with viewability and bot-driven fraud is not an accident. It’s a natural result of folks creating – artificially, if need be – increased digital ad supply, aiming to meet announced demands for more cost-effective, buyable digital ad units, particularly in video.

Of course, it doesn’t help that we’re seeing creative business models for structures like trading desks, preferred vendor deals, reverse tech licenses and undisclosed rebates – all a way to try to generate profits in this era of marketer-led cost-cutting. This only creates perverse incentives to drive even more revenue through particular channels and vendors, whether or not real ad reach is there to support it.

How can we fix this problem? First, folks need to take the time to truly understand the ad-delivery and audience-reach capacity of each medium, look past overly simplistic usage stats, and stop focusing on press-release-ofthe-week tactics. Second, for purposes of ad spend, we all need to do a better job objectively comparing channels and properties by their true capacity to deliver target audiences and desired outcomes. Finally, on a strategic level, if the industry thought about advertising more as a profit center to be exploited, rather than a cost-center to be cost-managed, wed all be in better shape.

To be clear, I do think it’s a good idea for companies to take chances and invest in emerging digital channels well before they can provide optimal audience and ad delivery. But folks need to have their eyes wide open when they do this.

What do you think? Am I being too hard on those who want their ad spend to follow the users, whether or not ads can actually reach them?

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