• by Jack Loechner , Staff Writer @mp_research, August 2, 2012

Tech savvy consumers represent a rapidly growing segment of the population who have converted some portion of their viewing time to a digital screen. This complex marketplace has posed new challenges for advertisers and agencies, whose overarching goals remain unchanged: maximize persuasive effectiveness and reach, and optimize frequency to garner the greatest ROI from their TV ad dollars.

According to a new study by Comscore, online video began gaining real traction and attention in 2006, growing by 73% from 71 million to 123 million monthly unique viewers in one year. Using Geoffrey Moore’s “Crossing the Chasm” model of technology adoption, this “early majority” group paved the path for others to follow in incorporating video into their online experience. The “late majority” audience took hold around 2009 as another group of newcomers entered the online video viewers.

While the monthly audience for online video content is steady at around 180 million people, the degree to which users engage with online video has increased dramatically in the past year, says the report. In fact, 30% more Americans now watch online video content on an average day than they did a year ago. The average user spends more than 21 hours per month (up 47%) watching more than 200 content videos (up 20%). Americans’ growing interest in long-form video content is evident from the growth in the average time spent watching a video, which has jumped 23% in the last year to 6.4 minutes.

Despite the high reach and growing engagement for online video, there is a surprisingly large disparity in the number of ads running within the format when compared to TV. In March 2012, 98.5% of time spent watching online video was spent with content, leaving ads as the remaining 1.5%. The average viewer could watch more than an hour of online video content and see only one minute of ads. while TV content makes up approximately 75% of programming, the remaining 25% is allotted for advertisements. 

 There are many questions that arise as media buyers consider digital video formats. And there may be some skepticism as to whether digital video is finally worthy of a greater portion of marketers’ advertising budgets. The study has taken a quantitative approach to analyzing the conventional wisdom around digital video advertising to separate myth from reality.

The first commonly held myth, says the report, is that advertising in short-form online content is not as effective as advertising on TV. This thinking may derive partly from advertisers’ comfort level with the TV medium, and uncertainty about whether or not the smaller screen can deliver the same impact.

To confirm the effectiveness of advertising in all online formats, the study performed an analysis that compared the lifts in CPG brand sales in retail stores following exposure to TV ads and, separately, following exposure to online ads (including banner and rich media in addition to video). The short-term offline lift in CPG brand sales from online advertising matches the longer-term impact of TV advertising (8%). These results indicate that digital ad formats are very effective at driving short-term sales, and are on a par with the impact of television advertising over one full year.

Digital ad formats are very effective at driving short-term sales, and are on a par with the impact of television advertising over one full year.

The second myth is that digital video ads should only be used after reach and frequency have been optimized through TV ads. To evaluate this thinking, the study used i a campaign case example illustrating the classic principle of diminishing returns, which shows that television advertising reaches a point of diminishing returns, where it becomes more and more expensive to build incremental reach. A brand trying to reach its target audience through TV alone will eventually hit this plateau, where investing more dollars mainly increases frequency of exposure rather than builds incremental reach.

Using comScore’s cross-media databases, which contain media usage from multiple platforms for the same households, the study showed that the use of online video can build reach and effective reach when advertising dollars are invested in the TV and digital platforms.

In the case example, continuing to allocate the bulk (i.e., 90%) of the advertising to budget to TV and allocating a portion (i.e. 10%) to a digital component increases the campaign’s reach by 5%age points over what could be achieved without the allocation to digital in the media plan.

To better understand the precision of cross-media campaign targeting, the study aggregated the delivery of TV and online ad impressions across several campaigns and segmented them by age group. This data demonstrates digital’s unique ability to reach target audiences online, whether behaviorally or demographically targeted. TV ads are delivered more broadly, but online can be targeted based on several factors, meaning less waste from impressions delivered outside of target. 

Agregating the results of several campaigns, the frequency distribution shows that Multi-Screen consumers are exposed with approximately the same frequency overall, with marginally higher frequency among Multi-Screen consumers for persons 18-34 and persons 18-49. TV-Only consumers are obviously getting their exposure frequency from TV.

Adding a digital video component to a brand’s TV media plan offers a number of compelling advantages, says the report:

• It can increase the effective reach of the campaign in a very efficient manner
• It delivers increased reach and frequency, especially among the advertiser’s target audience who are extending their TV consumption to include online video
• Digital is more effective in changing brand preferences among Millennials
• Ads can be delivered in 15-second commercials in either long-form or short-form video

The report concludes by noting that “... television is definitely not going away, and will remain a centerpiece of the media mix for many years to come. But... through the development of new digital technologies and platforms... TV lives and breathes in a multi-screen environment... cross-media consumers represent an emerging segment of the marketplace...

For additional information and the full report, please visit comScore here.