As any market evolves, it does so off the base from which it originated, keeping the parts that work best and improving on the ones that don't. Television is no exception. While advertisers and programmers alike are buffeted by the winds of change, in time we will see a harmonious video delivery ecosystem arise from this transition. In the meantime, there are certainties which remain.

·         TV will remain the #1 screen. ... television is the medium of choice for consumers, far surpassing all other mediums for its ability to reach massive audiences. TV conveys sight, sound and emotion, establishes credibility and builds brands. Considering that TV viewership remains at hundreds of hours per month while viewership of broadband and mobile video remains in the low single digits, it is reckless to proclaim that any great revolution is taking place.

·         Content is king. While individual channels may struggle to attract viewers (as seen by the decline of the broadcast networks), broadcast and cable networks overall are producing programming that consumers want to see. Building a wall around it will only lead to piracy. By providing consumers with the opportunity to view content on different platforms (e.g., Hulu, cable VOD, FLO TV) but still controlling when viewers can access the content (e.g. windowing), programmers can protect their linear channels, meet consumer demand and create new revenue streams.

·         Broadband and mobile video are audience multipliers. Rather than cannibalize television viewing, consumers are using emerging video platforms to supplement existing viewing. This increases the audiences for individual programs.

·         Brand-building and sales are not mutually exclusive. Success or failure is judged not by the strength of the company's brand but by top-line sales, margin, and profitability. Marketers must be caretakers for both sales and the brand, placing equal if not greater emphasis on sales in the marketing mix.

·         Advertising must be accountable. Metrics like brand awareness, ad recall, persuasion and engagement are insufficient measures of campaign performance. These metrics, while useful, fail to provide sufficient insight into campaign performance. In the end, the job of advertising is to generate leads and drive sales. This is the criteria upon which all ad campaigns should be measured.

·         Direct response creates brands. Regardless of whether it is a direct response commercial or a branding spot, every commercial brands. The challenges are leaving the right impression and doing so on purpose. Direct response advertising influences all those that it touches, not just those who respond.

·         Consumers want utility not glitz from ads. Consumers are not looking to be entertained by an ad, that is what programming is for. Rather, they want ads that demonstrate the utility of a product or service or solve a problem. Ads should contain calls-to-action and give consumers the opportunity to engage with brands.

·         Addressability comes at a cost. The downside of addressable advertising is higher CPMs. By definition, targeted ads are seen by fewer but more relevant households. This means that if CPMs remain the same, multichannel video providers and programmers are going to see less ad revenue - an unacceptable situation. To compensate, advertisers can expect to pay higher CPMs for addressable ads.

Recommendations   

·         Engage with the consumer. Regardless of whether an ad is delivered to a TV, online, or to a mobile phone, it must contain either a URL or phone number (or both) that allows the consumer to interact directly with the brand.

·         Focus on quality of leads. Cost-per-lead is a common marketing metric but it is highly dependent on all responses having the same value and conversion potential. This is rarely the case.

·         Make ads relevant. When consumers are in decision-making mode, they want to get beyond the sales pitch to explore features and benefits in order to determine whether a product or service meets their needs. If you fail to meet needs for deeper information, you will lose viewers' interest and the opportunity to turn them into customers. Your ad should demonstrate products, features, and expertise in a manner that compels viewers to learn more by taking an action such as going to a retailer, your website, or picking up the phone.

·         Track Marketing ROI. Market ROI is driven by four primary factors.

1)      Incremental customer value

2)      Lead-to-purchase conversions rate

3)      Cost-per-sale

4)      Total sales volume

·         Take care when measuring lift. Key steps for measuring lift include the following.

1)      Minimizing the impact of seasonality with a comparison to prior-year sales.

2)      Determining the amount of time during which the average is most predictive of the baseline sales and using that time period consistently.

3)      Removing high-variance data that may include select markets, products, customer segments, or sales channels that can distort the pre-post sales comparisons.

4)      Running Analyses of Variance (ANOVA) tests on your pre-post campaign results to determine whether your measured sales lift is above or below your margin of error.

·         Set clear objectives. Having clear objectives sets the tone for an advertising campaign. Objectives are the standard by which proposed concepts should be evaluated and a campaign's success measured.

·         Match your media to your objectives. If you are marketing a broad-based product, direct mail is probably not the way to go. It is too expensive on a per-thousand basis and takes too long to execute. Television and digital are better mediums. Once you have created and produced the spot, the cost of buying television can be as low as $10 per thousand. For niche or micro-markets digital, direct mail, the telephone and print advertising will yield better results.

Article by Michael Goodman, Senior Director, Research & Analytics, Mercury Media. In this role, he provides strategic vision, planning and actionable recommendations for all areas of performance-based advertising.