What Television Advertisers Can Learn from Newspapers in the Year 2000

Michael Zimbalist

Chief Marketing Officer

Originally posted on Fortune

We can see the future coming, but we’re not exactly sure when it will arrive.

In the year 2000, the newspaper industry celebrated its most spectacular performance ever with advertising revenues reaching an all-time high of $67 billion. But there was little cause for joy in the executive suite where many feared, correctly, that the cash cow of classified advertising was being led to slaughter by free services like Craigslist.

To make matters worse, circulation was down for the 15th year in a row. Audiences were fleeing the platform, and there was no end in sight.

Ebullient ad revenue, declining audiences—this sounds a lot like the situation Network Television finds itself in today. No matter how this year’s Upfront pans out, almost everyone agrees that much like the newspaper business at its peak, the current situation is not sustainable. The TV business is on the brink of radical transformation.

TV, however, has always served a different purpose for advertisers than newspapers, which at their peak and even still today, have relied on transactional categories such as real estate, automotive, and circulars. TV is a medium to build awareness quickly. TV drives reach, and it also drives results. Any mass marketer will tell you that when they run national TV, the cash register rings.

That brings us to the nagging problem of declining audiences and this year’s Upfront. The ratings of primetime broadcast TV have been cut in half over the past 10 years, even as measurement ploys such as Live +3 have been instituted to prop them up. Audience erosion implies that if brands are overly reliant on placing Upfront bets on popular shows and networks, results are bound to suffer. Brands need a better way to use the scale of linear TV to keep the cash registers ringing.

The good news is that there are new TV strategies for marketers to use in this environment of perpetual ratings decline. In fact, the problem posed by primetime’s declining audience can be solved in the near term by television itself. This solution requires that marketers take a page from the digital playbook and apply it to linear television. The key insight is this: Context matters, but audiences matter even more. This is intuitive for digital advertising but disruptive to the contextual mindset and workflow of traditional TV buying.

Audience buying on TV entails finding people in unexpected places, and the practice is designed to preserve reach and results in the face of audience fragmentation. For example, consider the category of over-the-counter pharmaceuticals where Target, Walmart, and Walgreens all compete. The default strategy for TV—call it the contextual strategy—would be for these brands to buy the most popular shows and most familiar networks to reach the maximum number of potential customers.

In contrast, an audience strategy begins with actual purchase data to determine where brands can find the right people within the highly fragmented TV-viewing landscape. Who are the right people? That depends on the campaign strategy. It could be people who have shopped the brand before, people who shop at the competitor, or people who have lapsed from the category altogether.

Digging into the Nielsen data reveals some interesting, non-intuitive places for these retailers to advertise. It turns out that the networks with the highest composition of pharmacy shoppers at Target are MovieMax, Great American Country, and Rural Free Delivery. For Walmart’s pharmacy, they are Rural Free Delivery, Univision, and MeTV (Memorable Entertainment Television. Walgreens shoppers are more evenly distributed across several long-tail networks in places such as Hallmark, Azteca America, and Smithsonian.

Going a level deeper, we can find the shows where these shoppers are most likely to be found. Who would have thought that the show with the highest composition of Target pharmacy shoppers during the month of January was the 3 a.m. airing of the Vanilla Ice Project on the Do-It-Yourself channel? But it was! By dialing back on primetime and reallocating spend against these audiences who matter, Target, Walmart, and Walgreens can maximize reach to grow their
business.

Brands who adopt audience-based buying on linear TV today will be smartly positioning themselves for the inevitable convergence of TV with digital video, where audience buying is already the norm.

These days, all brands need to run campaigns across many more networks and programs to restore television’s reach muscle. The critical innovation is to use data to buy audiences rather than context. Holding back some Upfront commitments for this data-informed, audience-centric approach is also much more cost efficient.

Quite simply, the long tail of television is cheaper to buy as this example, using data from Nielsen and Kantar illustrates. The cost to reach 1000 Target shoppers on DIY’s 3 a.m. airing of the Vanilla Ice Project would have been $3.47. Compare this to 60 Minutes on CBS, the regularly scheduled primetime show in January with the highest raw number of Target shoppers, where the cost-per-thousand reached would have been $99.23.

Linear TV audiences still dwarf digital video viewership by all comparable measures. For the foreseeable future, consumer brand marketers will need linear TV to create and retain customers.

But the old strategies for linear TV aren’t producing the same results anymore—and we all know why. Audiences are fragmented across a multiplicity of networks and programs. More important, the inexorable migration to digital platforms and social networks for our daily dose of television continues apace. Brands who adopt audience-based buying on linear TV today will be smartly positioning themselves for the inevitable convergence of TV with digital video, where audience buying is already the norm.

Much like newspapers in the year 2000, we can see the future coming, but we’re not exactly sure when it will arrive.

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