September 10, 2016

Slicing up Budgets in the World of Television and Video Ads

Varun Sharma, IAB Video Committee Chair, Head of Agency SEA, Google


In Singapore and around the world, all eyes are moving from television to digital video - and advertising budgets are following suit. For brands in Southeast Asia, the decision has already been made to shift from linear television to digital, but finding the golden ratio of how much we should spend digital depends on many factors.

Mastering this ratio between TV and online spend is both a science and an art form. The video ecosystem in Southeast Asia has changed rapidly - today, 65%* of time spent video viewing now happens on digital platforms. More than six in 10 digital consumers in SEA watch video through online sources, and in Singapore, nine out of 10 people have access to smartphones - the highest usage globally - which is leading to heavy consumption of digital video on the move.

In addition, according to the 2016 YouTube User Profiling Study by Google, 55% of respondents picked YouTube as their favourite video viewing channel.


Getting the golden ratio just right

This sweet spot is different for every marketer, so to get clarity you simply need to ask yourself some basic business questions and outline your planning objectives.

For example, the typical objectives of any media plan specifically for TV and video might be around effective reach and frequency, and cost efficiency. Marketing objectives would likely be around the impact on brand metrics - such as awareness, recall, intent, favourability - and the impact on business and sales.

Outlining these points will help you determine how much you should actually be allocating to digital.

Effective reach and frequency

Most media agencies have tools to plan for integrated reach using TV and digital video. In certain categories, digital video can be treated as the primary reach builder. For example, if a brand’s target audience is male and females aged 25-34 in markets like Singapore or Vietnam, digital video alone can deliver nearly the entire reach of the plan. Digital video reach is by far more accurate than most offline channels due to better targeting options.

Frequency delivery on digital happens more accurately as well, and exactly as per the requirement, which negates any spillover - unlike TV.
Add digital video to a point until it delivers incremental reach in the right target audience. Over time, digital video should be treated as the largest TV channel in any video plan.

Cost Efficiency

Digital video is often more cost-effective than offline channels. This can be calculated in terms or Electronic Gross Rating Point (eGRPs) and Cost Per Rating Point (CPRP).

Leverage cost-efficiency data such as CPRPs to identify pockets of your television plan that can be substituted with online video. Balance your TV budget with online video budget to a point, so the cost-efficiency makes sense for the overall plan. So for example, spend on Digital Video until the CPRP on Digital is more economical than TV.

Marketing and measurement

The effectiveness of digital investments are easier to track, whether it’s through independent brand tracking for brand attributes, or using Marketing Mix Modelling for impact on business and sales.

Engage your agency and partners. Marketers should leverage the empirical data and available benchmarks to model the likely impact and ROI of their digital investments. Many different digital video platforms offer add-on analytics to prove the effectiveness of their media. Brands should reach out to their digital partners and seek more support and information.

Digital video can add tremendous value to TV plans in terms of driving incremental reach, cost-efficiency and overall impact.

With digital, everything can be measured more accurately and achieved with flexibility. So, the next time you plan for a video campaign, don’t forget to ask, ‘How much digital are we talking about here?’

*Click here for Milword Brown study AdReaction 2015 

Glossary of terms

GRP - Gross Rating Point. A standard measure in advertising that measures impact. It is calculated as a percent of the target market reached multiplied by the exposure frequency. Thus, if a campaign reaches 30% of the target market with four exposures each, the GRPs would be 120.

eGRP - Digital equivalent of Gross Rating Points

CPRP - Cost Per Rating Point OR the Cost needed to deliver one GRP.

Effective Reach and Frequency - Effective Reach is defined as the percentage of audience reached with the desired frequency. Similarly, effective frequency is defined as the number of exposure needed to have the desired advertising impact.

Media Mix Modelling - Marketing mix modeling (MMM) is statistical analysis on sales and marketing time series data to estimate the impact of various marketing tactics (marketing mix) on sales and then forecast the impact of future sets of tactics.

ROI - Return on Investment

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