The Future of TV Ad Planning: Audience or Index-Based?

This article originally appeared on Association of National Advertisers.

For brands looking to bring down costs per customer acquisition or costs in media, consider taking an audience-based approach when it comes to your TV targeting. Find out why with Simulmedia’s chief technology officer, Kyle Hubert, as he breaks down the difference between audience-based planning and index-based planning.

Some innovations catch on faster than others. Washing machines, color TVs, and smartphones each presented such clear advantages over the devices they replaced that it’s hard now to imagine life without them. Other innovations have required more time to establish their dominance. Consider the internet. The first message delivered over its earliest iteration was sent in 1969. It took more time for graphical user interfaces and bandwidth to enable the internet we know today.

One of the most interesting and innovative changes in the world of TV advertising involves the way marketers target audiences. Even though many brands now have a sizable database of customer information, nearly all their TV media is against indices and standard Nielsen demos, mostly adults aged 18 to 49. But there’s a new and, in many cases, demonstrably better approach called audience-based buying. It has evolved into a credible way to unlock the value of the customer data companies have acquired.

Deployed properly, audience-based targeting and planning allows brands to bring down both their media costs and their cost per customer acquisition. As with the internet, though, adopting this approach requires just the right combination of inputs, including technology, data, and talent. Fortunately, those resources are more available today than ever, making audience-based TV advertising accessible to just about every brand and agency.

For a marketer to maximize reach against the target audience within a given purchasing cycle requires a fundamental change in how spots are selected and purchased for a media plan.

In light of this option, marketers should know what method their plans use today and then ask themselves if there is a chance an audience-based approach could save the company money or generate better results.

What should brands do? Should they change some, all, or any of their TV targeting? Here’s what Simulmedia’s Chief Technology Officer Kyle Hubert has to say about it.

Q. What does an index say about the makeup of a TV audience?
A. An index tells you the relative difference of an audience’s composition within a viewing event compared to the average audience size in the television universe. If 17 percent of everyone in the TV universe is within the target a marketer would like to reach, and a program has an index of 140, that means about 24 percent (or 140 percent of 17) of the people watching that program are members of the target audience.

Really, an index is a way for marketers and their agencies to evaluate the value of a program against their target audience. It should be noted, though, that a higher index doesn’t always correlate to the best purchasing decision, because a lower-indexed program may be priced more favorably on a target-audience reach basis. Because of this, agencies typically consider additional factors like cost, context, and viewership when ranking the value of an inventory unit.

We don’t use indices because they can only tell you how high the concentration of your target audience is likely to be within a given program. And, it tells you nothing about the overlap of the audience between two programs. So even if you buy two high-indexing shows, it’s likely that you’ll be exposing some of the same viewers to your message in both instances, thus boosting your frequency of exposure rather than extending your reach to those who haven’t already seen your ad.

This wasn’t an issue when there were fewer networks, so everyone bought that way. Most still do because that’s the way their systems are designed. In today’s age of audience fragmentation though, there are literally hundreds of billions of other media plan options.

With numbers like that, there’s no way a person can develop the optimal media plan without technology to help. For a marketer to maximize reach against the target audience within a given purchasing cycle requires a fundamental change in how spots are selected and purchased for a media plan, moving from a relative composition index to a true audience-based method, where the viewing habits of specific audience members are accounted for.

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