20% To 50% Of Media Spend Wasted In Siloed Planning Methods
- by Tobi Elkin @tobielkin, April 21, 2016
In a new white paper, “Cross-Screen Planning,” TubeMogul says the way marketers currently plan and buy media across screens is broken — and depending on the audience, anywhere from 20% to 50% of media spend might be wasted due to siloed planning.
The goal of the research, released Thursday, is to illustrate how far off a marketer’s plans might be if it’s not thinking algorithmically about its cross-screen planning.
The implications of the research are that marketers might be wasting money if they’re not using software to build their media plans. Media plans have cycles throughout the year, but planning is intrinsically an iterative process—plans must be optimized to maximize reach and other factors. Software can help.
Outside of upfronts, at least $10 billion is spent every year on reaching millennials with video, whether it’s on TVs, PCs or phones. Avertisers that plan in silos may be wasting more than $2 billion of those dollars.
For the white paper, TubeMogul created modeled plans based on a $10 million budget for a three-month period and assumed no preexisting TV, digital or mobile ad plans. Based on those plans, it found that marketers spend $1.43 to reach a single millennial male (18 to 34) through traditional, siloed planning methods. They could reach that same young male demographic for only 50 cents by using software-based planning. That's 186% more efficient.
On the other end of the spectrum, the company looked at a narrower audience like "Auto Intenders” and found it costs 26 cents to reach them through traditional methods, versus 17 cents to reach them through software. That’s 53% more efficient.
While the costs per individual are relatively low, once you extrapolate them across the millions of individuals in each audience group, gains of 186% and 53% represent significant savings.
Siloed plans are less successful because they don't consider the duplication across screens, or the viewing habits by demographics on a granular level.
The white paper states that planning across screens allows marketers to maximize efficiency by making sure each element of the plan adds as much reach as possible. "For instance, the first best way to reach your target audience might be to buy a prime-time TV show, but once that is bought, the best next step might be to buy digital video targeted at people who watch very little TV. A predetermined budget might force a planner to buy where they have remaining budget, not where they get the best incremental reach," it stated.
In TV the "best" way to reach your target audience at the lowest cost is in daytime or late, late, late night TV on any number of cable channels---not broadcast primetime, news or sports. In fact the last three would be rejected out of hand by any CPM-driven evaluation system, because the CPM differentials are so great between the dayparts and network types that they easily override the relatively small product buyer indicies that will be developed by "data". A mukti-show primetime buy may come in at a 105 index for reaching a certain class of car buyers and a few selected shows might up this to 120---if the sellers alowed the buyers to cherry pick them out of their total program schedules---unlikely---without charging premium CPMs. However, even if a daytime talk or game show indexes at only 79, the fact that its CPM is only a third of the primetime buy will make it far more attractive. Which means that other variables---such as reach attainment, whether the ads are actually seen, the merchandiseability of the buy, whether being in such an environment enhances the brand's image, whether there are too many competing brands advertising in the same show ( in different breaks ), the negative effects of too much general ad clutter, etc. etc. ----must be considered.
As for planning across screens---of course, that's the way to go, if using TV commercials to convey your ad message on all screens, not a variable mix of ad types----is the objective. Unfortunately, we don't seem to have a system in place that can measure "viewing" as opposed to device usage across platforms. Until that riddle is solved---if that ever happens----we are basing decisions on whether a device is in use not whether a certain person is using the device ---some digital venues like smartphones excepted---and, more important, we are assuming that the ads are "seen" with equal effect whenever any device is on. I can't buy that. Sorry.