Performance TV: Let The Product Determine The Channel

Performance TV, even compared to digital video, is very much an emerging technology. It won’t be right for every marketer, but it can be an effective complement to digital campaigns looking for conversions.

Ad spending on traditional TV is declining.

Magna Global’s recent finding that digital ad spending will surpass TV in the U.S. by next year was yet another indicator of the direction the industry is headed in—that is, toward formats that are more targeted, measurable, and geared toward delivering clearer ROI. These formats, referenced in this article as “performance TV,” have emerged as a direct response to this demand, but are still in relative infancy compared to the highly evolved advertising ecosystem that exists on desktops and mobile.

Because performance TV as a category is so new, I’ve noticed a fair amount of confusion in the marketplace: What is it? What is it capable of? How can marketers utilize it? And while we strive to answer all of those questions, another big one arises that we too often ignore every time a shiny new object emerges in advertising technology: Should you be using performance TV?

But first, what is it? Here’s a quick primer.

The Terms Of Performance TV

As I mentioned, performance TV is an umbrella term that incorporates the three primary ways that marketers can buy TV inventory in a more targeted and data-driven way than they would traditionally. These methods can be broken down as follows:

• Connected: The advent of smart TVs, as well as connected set top boxes (STBs) like game consoles, means that marketers can now deliver ads directly to those devices in essentially the same way they would on a desktop or smartphone. While these connected living room devices—like Roku or Apple TV—are functionally different from mobile devices, the real-time bidding process is analogous. Connected TV has a reach of approximately 50 million U.S. households with geotargeting available at the ZIP code level. Advance STBs with device ID, like Roku, allow for device-level targeting.

• Addressable: This refers to specific ad inventory that cable providers like Dish and Comcast work into their linear programming and video on demand (VOD). The advantage with addressable is that marketers can use cable providers’ data to target specific households with ads, but reach is still limited due to the small number of multi-system operators that offer addressable capabilities.

• Programmatic: Programmatic TV combines bidding (similar to the buying of connected TV) with the ad serving of linear TV programming. Marketers bid on inventory through sell-side providers that work directly with participating networks. The key here is using data to select the programs, day parts, and networks one should bid on. Programmatic TV reaches approximately 100-plus million households and more than 80 DMAs.

What’s Your Product?

Should you make the jump to these new platforms? It depends on what you’re offering. Performance TV as a category is appropriate for products and services that want to advertise on traditional TV and are looking for more granular targeting and measurable results. For truly mass market products, i.e. the Coca-Colas of the world, performance TV isn’t yet appropriate because the pure reach of traditional TV is preferable to targeted ads in brand advertising. In fact, while traditional TV is a very top-of-funnel channel, performance TV’s greatest advantage lies in the type of lower-funnel consumer activation more commonly associated with digital ads.

Performance TV is appropriate for your product if you are looking for specific business outcomes beyond branding and awareness. Want consumers in a certain area to visit your store? Are you selling high-value items like cars, where a relatively small percentage of consumers are in-market at any given time? These are marketing objectives that performance TV helps to achieve.

There’s also conversion tracking to take into account. With traditional TV, it’s quite difficult to determine if an ad influences an offline action, such as a visit to a retail location. More advanced offerings allow marketers to combine offline data—like in-store purchases—with TV viewership information to determine the actual returns on ad spend as you would digitally.

The most critical thing to keep in mind is that performance TV, even compared to digital video, is very much an emerging technology. It won’t be right for every marketer, but it can be an effective complement to digital campaigns looking for conversions. As marketers in general seek more accountability and ROI across all channels, keep an eye out for performance TV inventory to grow exponentially in the coming years.