By Nazrul Shaikh
The landscape of when, where, and how frequently video advertising content is being consumed is changing rapidly. This feeds the need to rethink how video advertising content is planned and distributed. Though a lot of video advertising content is still being consumed over television (TV), an increasing amount is now being consumed online, and some content is being delivered both online as well as on TV.
TV generally offers higher reach and lower targeting while digital media channels offer higher targeting and lower reach. Now, there exists a continuum of targeting and reach that can be traversed using the right mix of TV offline and online media.
Market Fusion Analytics (MFA) has developed the means and methods to quantify this continuum based on identifying the differences in (a) retention rates and the need for frequency across channels, (b) support level that leads to the onset of saturation, and (c) the effectiveness of the same content presented to an audience over TV vs. online.
Our findings concluded that digital video advertising is in fact more efficient than TV. The reach is narrower and more targeted, driving greater sales per impression at lower execution costs, thus generating higher ROI. However, the efficiency decreases rapidly as investment levels behind digital video advertising increase. The impact of digital video advertising saturates early and companies need to account for these diminishing returns within their media strategy.
Given the narrower reach of digital video, the maximum potential from TV is significantly higher. For moderate to low levels of spend, digital video still proves to be more effective and efficient. To utilize digital video most effectively, companies need to spend on digital video advertising, but not exclusively. Rather than take a head-long plunge into digital, companies should develop a media strategy that balances investment in both TV and digital video to reach full potential.
While corporations and advertising agencies are debating the split of their media budget by channel (i.e., TV vs. digital, and within digital — display vs. search and social), we argue in favor of a split that gives more weight to the different tactics to reach a consumer, i.e., videos, banners, incentives, keywords, etc. and treat the channels as a medium of delivery to control for reach and frequency.
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