Ask most industry experts about the advantage of advertising on streaming platforms, and chances are they will tell you “better targeting.”
It’s true that streaming TV offers much better targeting than traditional linear. The only problem is that most major TV advertisers don’t want better targeting; they want massive reach and frequency – and an effective way to achieve both.
For brands that spend hundreds of millions of dollars a year on TV advertising, the ability to increase the efficiency of their nine-figure buys is the real value of streaming.
The three types of TV commercials
TV advertising can, on a macro level, be broken down into three categories:
- Image ads, such as Nike’s “Just Do It” campaign, are designed to create a favorable impression of the brand. The goal is to keep the brand top of mind as consumers consider future purchases, even if those purchases happen several years down the road.
- Product ads, like a Nike ad for a new running shoe, are designed to create awareness of a specific product. In an ideal scenario, consumers will be so intrigued that they ultimately go on to purchase that shoe. Still, the goal is to create demand for the product, not to produce an immediate sale.
- Direct response ads are intended to drive purchases, as well as website and store visits. Think of Dick’s Sporting Goods advertising a limited-time Memorial Day sale on Nike running shoes. DTC (direct-to-consumer) ads are direct response ads, too, as the goal is to create an immediate purchase.
Better targeting can improve the effectiveness and precision of direct response ads and even product ads. But when it comes to image ads, reach and frequency are far more appealing than targeting.
That’s because the audience for an image ad is pretty much everyone. Even people who are not runners right now might decide to take it up in a year or two. Or they might positively influence the purchase decision of a friend or relative who is looking for new running shoes.
Advertisers looking to cast such a wide net are not worried about wasting impressions. For them, linear TV works just fine – with one caveat.
Eliminating inefficiency
Because linear TV ads are bought using broad targeting measures like dayparts and gross rating points (GRPs), they cannot be very well calibrated.
To continue the Nike example, this kind of broad targeting makes it hard to bump up frequency in areas where running is a very popular pastime or to turn it down in areas where it is not.
But streaming ads can be bought in a way that allows brands to increase exposure in areas where interest in their product category is very high or where the reach of linear TV and other media is very low.
This is the real value of streaming for advertisers: the ability to saturate the market with a high degree of efficiency. Streaming enables them to adjust their spend against different geographies and audiences so the brand can reach the most viewers most frequently for the least amount of money.
The future of TV ad buying
As more advertisers start to see the advantages, they’ll shift their budgets toward streaming platforms, where they can target specific audiences and measure the effectiveness of their ads in real time.
This streaming TV-first approach will allow brands to use data to inform their TV ad buying strategy and optimize their campaigns for maximum efficiency.
When it comes to reaching streaming audiences, advertisers are going to increasingly focus on precise geographic locations to ensure brand visibility across all DMAs and niche markets. For example, an e-commerce company can target its ads to specific areas where they know they have a high concentration of customers, while a local business can target its ads to people living within a certain radius of their physical location.
Streaming ads may soon resemble digital and social campaigns, with the added benefit of high-value, premium inventory. While national brands have traditionally looked at digital and social as lower-funnel tools that allow for more targeted engagement, they’re beginning to see CTV as a way of achieving the same and perhaps even greater success.
Eventually, advertisers will be able to use real-time optimization and measurement to track the effectiveness of their campaigns and make adjustments to maximize performance and ROI, making clear how streaming is on track to become a powerhouse performance channel.
This is just the beginning of the golden age of streaming. As advertisers embrace it, the opportunity will be vast.
“On TV and Video” is a column exploring opportunities and challenges in advanced TV and video.
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