ROI Remains True Measure of Ad Success

2017 05 16   Peter Feinstein   Advertising    

I really enjoyed reading through Ed Kim’s article; I hadn’t smiled or laughed out loud that much recently, other than while watching an episode of Grace and Frankie! Yep, it was that funny.

Look, I know Mr. Kim has his point of view, and that he’s entitled to it. And I get the fact that he’s trying to make his point by showing us the error in our ways. But he needs some help with persuasion. I don’t know where he learned that telling someone, or nearly everyone in this case, that they’re living their lives wrong is going to be welcomed enthusiastically. So I had to laugh because, in all seriousness, he’s got to be kidding.

No one likes to be told to stop doing something by some authoritarian figure; instead humans prefer, and actually take discernible action, based upon empathy. To wit, all the 12-step programs work because, among the people who belong, there is the common thread of experience and understanding.

Mr. Kim, unless he’s really being tongue-in-cheek, has strayed from this key point of human psychology. Moreover, his assertions seem fairly flawed.

The silos between digital, mobile and TV are not coming down in any meaningful way. The proliferation of ad-tech companies with something to peddle, and apparently customers aplenty willing to buy, assures the continued fragmentation and siloed nature of our industry. Even while there is a seeming convergence of video media platforms and usage, their measurement is stuck in silos.
Addressable TV does not have significant scale. And over-the-top (OTT) is as fragmented as media get, save for online. Quoting a figure of well under a billion dollars of addressable TV ads in 2016 to prove its validity doesn’t wash with me, or anyone looking at the big picture; it’s slightly more than half a percent of all the money spent on TV advertising that year. It doesn’t have scale and, even if it did, what makes TV advertising so effective is that it converts “waste” into cash for advertisers. It is not OTT’s itty-bitty scale coupled with hyper-targeting and narrowcasting that deliver return on investment (ROI), it’s mass reach so that those who aren’t in the market for something might be made interested. You can’t sell me on parsing out the waste when it’s literally the fuel that powers success!

Consider Value

And the argument that OTT and addressable TV deserve a place in my clients’ budgets is BS. Neither offers value relative to other options. They lack scale and actually may prevent sales by flawed hypertargeting. They are certainly not worth a premium – save for Hulu because of the way it calculates an impression. And Hulu has scale. Otherwise, the OTT/addressable audience is not better qualified, it’s merely segregated, small and likely incapable of delivering enough purchase power to result in a positive ROI.

All that said, there is some merit to Mr. Kim’s notion that we have to stop thinking of creative for OTT/addressable TV like we think of it for linear TV … except no, we don’t. I think Mr. Kim comes from someplace with unlimited creative budgets and creative resources; perhaps he should join the real world, get dirty and see that clients don’t want to spend another several thousand dollars on new creative. No, what we need is creative that can serve different formats and platforms through human genius, not the frivolous spending of client resources on an individualized ad experience by every recipient.

Why not?
It’s part of the power of TV for people to share and talk about the best/worst ads they saw earlier, last night or over the weekend. When you remove the shared experience, you take away part of the power of TV. You create even more silos instead of shared critical mass.

  1. Most clients can’t afford it.
  2. It’s practically a lock that there won’t be enough sales per viewer to ameliorate the cost of production.
  3. The human element – the shared human experience of people talking about the ad they saw during whatever show(s) they were watching.

And as for measurement, Mr. Kim gives us an epic fail. He bows his head gracefully and admits that the business he’s in is complicated and that his company’s kind of measurement doesn’t really matter. Huh? Oh, wait, he wants us to measure results. I agree. It’s the measure that matters, and the only measurement we use is ROI.

Then why do we need Neilsen?