the case for spot a tvb presentation produced in collaboration with erwin ephron

The Case for Spota TVB presentation

Produced in collaboration with

Erwin Ephron

“ nline advertising companies are increasingly desperate to use geographic targeting tools to reinforce their client's faith in Internet marketing...

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“In short, for a growing number of companies, this will be the year when the borderless Internet economy becomes an outmoded concept.”

NEW YORK TIMES, MONDAY, APRIL 2, 2001

Revitalizing geo-targeting Revitalizing geo-targeting in the current mix of media in the current mix of media strategies, is Local Broadcast strategies, is Local Broadcast Television’s challenge to Television’s challenge to Advertisers and Agencies.Advertisers and Agencies.

For 30 years, media plans have been driven more by tight budgets than new ideas.

The building-blockshave been:

• EFFECTIVE FREQUENCY• TARGETING• CPM

Today we wonder why.

Is based on a rehearsed learning model (like memorizing a script).

Effective frequency

There is good evidence that repetition alone is not how advertising works to influence consumers.

Demo-targetingIs often over-valued at the expense of other targeting criteria.

CPMIs a one-dimensional measure of media performance.

It focuses on exposure not communication, persuasion or sales.

In short, many of theplanning tools we use are less useful.

In short, many of theplanning tools we use are less useful.

And some familiar tools we neglect, now have greater value.

The aim of this new look at media planningis to create a moreaccountable process.

It is a point-of-viewbased on best practices.

And although the focusis on TV, the principles apply to all media.

We begin with an old joke . . .

"I've got enough money to last me the rest of my life."

”Provided I die at 3 o’clock."

The media planner’s version is heavier . . .

“I've got enough money to run an effective campaign.”

“Provided it’s 16 weeks.”

There’s never enoughmoney to advertise:

• at effective weight

• to all of the country• for most of the year

That defines the planner’s assignment.

Allocation.

Spending a limitedresource for greatest total effect.

Think of the budget as . . .

A beautiful pie . . .

And media planning as . . .

Dividing-up the pie . . .

The pieces are. . .

WEIGHTWEIGHT

TARGETINGTARGETING

CPMCPMUNIT SIZEUNIT SIZE

GEOGRAPHYGEOGRAPHY

WEEKSWEEKS

The size of the portions determines the media plan.

And the size of each slice will determine the size of other slices.

1. WEIGHT LEVELSTRP’s, reach and frequency

Use moderate TRP’s and run more weeks.

We know advertisinghas its greatest effect when a consumer is “in the market.”

It works by influencingwhich brand is purchased.

For that reason, whena person gets a message isoften more important...

…than how manymessages a persongets.

It is as if there isa window infront of eachpurchase...

The job of themessage is toinfluence thatpurchase.

The job of media is to putthe message in the window.

message

Because products are bought every day...

Brands need to remind people of their nameand value every day.

This argues for more weeks of advertising.

Continuous Presence, not Effective Frequency.

These new ideas arecalled Recency Planning.

Since purchases are made continuously,

but we usually don’t knowwho is ready to purchase . . .

REACH

The idea is to talk toas many target consumers as possible

Over as many weeks as possible

C O N T I N U I T YC O N T I N U I T Y

REACH

REACH

PRINCIPLE

Today the goal is “reach and continuity,” not “reach and frequency.”

2. TARGETING

Demographics, user, usage

It’s easy to over-estimate how much demographyis worth to a brand.

Example

The target group isWomen 18-49. It has a purchase index of 115.

A smaller target, likeWomen 18-34 in 5+households, might indexhigher. . .

But it would not account for enough of a mass brand’s sales tobe useful as a target.

That is the TV targeting paradox.

Small targets don’tconcentrate enoughsales.

But large targets don’tconcentrate salesenough.

The reason is most TVbrand demo-profilesare relatively flat.

That said, there are stilltargeting approacheswhich have great energy.

Recency, receptivityand geography areall powerful targetingtools.

Targeting ToolsTargeting Tools

Recency - Putting a message Recency - Putting a message close to the purchase opportunity.close to the purchase opportunity.

Receptivity - Reaching consumers Receptivity - Reaching consumers who are in the market for a type who are in the market for a type of product.of product.

Geography - Identifying markets Geography - Identifying markets with greatest sales potential.with greatest sales potential.

PRINCIPLE

Look well beyonddemography totarget potential brand purchasers.

3. CPM VALUE

Reach, environment, attention

This is the twilight zoneof media planning…too many conflicting theories.

Clearly there has been amove to cheaper media.In TV this has meant lowerratings and cable.

But as we gain in costefficiency are we losingvalue?

There are reasonable arguments on both sides.

On the face of it, Recency Planning supports the use of low ratings . . .

. . . Recency says reach isbought with dispersion, not high ratings.

Optimizers have supportedthis for national television.

Multi-tasking andrepeated commercialsresult in less attention for all TV, regardless of rating level.

And some new data suggest rating size does not appear to affect message recall.

Yet research with NielsenQuads suggests attentionmay be a function of rating-level.

And agency researchshows that viewingduration (which favorshigher ratings) predictsattentiveness.

CPM value is still verymuch under study.

PRINCIPLE

Be aware of the new dataand be wary of CPM as a sole measure.

4. UNIT SIZE

30 or 15 second messages

Choice of unit is a creative decision, forcedby pricing and budget. 15

15’s comprise close toone-third of national TVweight.

But, there’s a paradox.

Research usually findsshorter units are morerecall effective.

But sales tracking shows15-second commercialsare less sales effective.

Source: Adworks 2

The conflict may be inthe way 15’s are planned.

Even if two 15’s providegreater recall than a 30...

One 15 is still worth less.

Yet plans are written“60 TRP’s/50% 15’s by weight ”which sounds like 15’s areequal to 30’s.

Sixty TRP’s, half 15’s is at best 50 points in communication value.*

* This assumes a 15 has 65% of the effect of a 30.

Don’t plan 15’s to make a budget appear biggerthan it is.

PRINCIPLE

That does not help acampaign.

5. WEEKS

Scheduling and weight

Research indicates increasing returns as weeks are added to a schedule.

Source: Adworks 2

This suggests theoverwhelming value ofcontinuous advertising forConsumer Package Goodbrands.

Recency theory also supports more weeks of advertising.

The recency goal is to intercept sales with a brand message.The best schedule interceptsthe most weekly purchases.

PRINCIPLEA moderate weeklyreach goal results ina better performingschedule.

It intercepts morepurchases, because itallows more weeks ofadvertising.

6. GEOGRAPHY

National, spot or some combination.

Before we look at Geography, lets review what’s happened to the pie.

WEIGHTShould be moderate togenerate more weekly reach.

TARGETINGLook well beyond demography to target potential brand purchasers.

CPM’SBe wary of CPM as a

sole measure.

UNIT SIZE15’s should not be used to make a budget appear bigger.

WEEKSHave become highestpriority in planning.

Both weeks and weeklyreach are key recencyplanning goals.

But most brands can’tafford both when costs are increasing fasterthan budgets.

The old trade-offs forbuying more weeks

• Less weight• Smaller units• Lower CPM’s

Have been pushed to the limit.

The remaining option is to target Geography.

And that is spot planning.

“ ne of the most basic pieces of information that Web sites often lack is a visitor’s physical location.”

O

THE NEW YORK TIMES, MONDAY, APRIL 2, 2001

6. GEOGRAPHY

Targeting with spot

Every brand hasgeographic areas ofopportunity.

These are spot marketswhere advertising ismost likely to producesales.

They can be identifiedby BDI, CDI, brand share,growth or absolutevolume.

Let’s begin with the mostfamiliar measure, BDI, the market’s per-capita indexof brand purchase.

BDI is calculated bydividing a DMA’s share of brand sales by its share of US population.

A market like Dallas,containing 3% of a brand’s sales and 2% ofthe population wouldhave a BDI of 150.

For most brands, marketscomprising a third of theUS, will have a BDI index of 130 or higher.

This is far greaterselectivity than demosprovide.

Here are a few examples:

Pasta Sauce

Source: IRI Infoscan special tabulation/MRI

The best 1/3 of the US indexes at 135The best age demo only indexes at 112

Chevy Blazer

Source: Polk Special tabulation/MRI

The best 1/3 of the US indexes at 156 The best age demo only indexes at 122

Financial Planning

Source: MRI Special tabulation

The best 1/3 of the US indexes at 140 The best age demo only indexes at 114

Barbecue Sauce

Source: IRI Infoscan special tabulation/MRI

The best 1/3 of the US indexes at 133 The best age demo only indexes at 106

And there’s a bonus.

Since geography and demography aren’t linked, the benefits are cumulative.

A brand with a BDI of 115 for Men 18-49 and 130 forBoston...

Will index at 150 among Men 18-49 living in Boston(1.15 x 1.30).

When demography is coupled with geography, brand sales benefit.

“ f baseball fans are your target, you may want to consider geo-targeting your online advertising to Cleveland, Atlanta and Boston.”

I

JUST AN ONLINE MINUTE, APRIL 4, 2001

Using BDI spot is one dimensional.

A brand, depending on it’scircumstances, should consider targeting...

• Category sales (CDI)• Competitive vigor (share)• Brand growth (% change)• Brand volume (dollars)

Alone, or in combination.

An example:TVB was supplied withreal sales & marketing data for a DTC allergy relief brand.

DTC Allergy Relief

Source: IMS prescription data, MRI

The best 1/3 of the US indexes at 148 The best age demo only indexes at 111

This brand has 50 high BDI markets with an average index of 148.

Source: IMS prescription data

Index 148US Average

100

These are markets where brand sales are strongest.

Source: IMS prescription data

Index 157

US Average100

This brand has 100 high CDI markets with an average index of 157.

These are markets wheresales potential is greatest.

Source: IMS prescription data

Index 132

US Average100

This brand has 50 high share markets with an average index of 132.

These are markets wherethe brand is mostcompetitive.

Source: IMS prescription data

US Average100

Index 164

This brand has 80 high growth markets with an average index of 164.

These are markets whereeverything seems to beworking.

The planner can mergemarket lists to identifyDMA’s which meetcomplex criteria…

>>

…in order to focus on marketswhich have the greatest probability of responding.

In our DTC example:6 markets meet 4 criteria 42 markets meet 3 criteria 20 markets meet 2 criteria

Resulting in a 68 market customized geography.

These 68 markets represent34% of US population, but 48% of brand sales.

POPULATION

Geographic SegmentationDTC Brand, 68 spot markets

Balance US

66%

Spot Area34%

SALES

Geographic SegmentationDTC Brand, 68 spot markets

Balance US

52%

Spot Area48%

Providing a spot area sales-to-population index of 141*.

*48% sales/34% pop=141

In the past most spothad been used to heavy-up GRP’s in highBDI or CDI markets.

There is evidence thatspot should also focuson high Share andGrowth markets.

And that it should be used to add weeks,not weight.

This is a far more advanced approach to spot planning.

In our DTC example, taking national dollars to buy more weeks in these 68 spot markets will significantly improve the media plan’s performance.

It will place a brand message close to more purchases.

Today spot CPM’s are roughly comparable to network, especially when planned to maximize local daypart and program opportunities.

The selected 68 DTC markets comprise a third of the population.

So, one week of nationalTV will fund roughly three weeks of spot.

And since the value of these spot markets is 41%greater than the national average…

Spending 20% of dollars 41% more effectively willproduce a significant performance gain for the brand.

The value of spot targeting becomes even more evident when we calculate a CPM based on brand purchase potential of the consumers reached.

Consumer CPM

(This is the same kind of CPM data that is used to plan magazines.)

Using the DTC example, weUsing the DTC example, wecan assume equal Network and can assume equal Network and Spot CPMs. Spot CPMs.

$15.00$15.00CPM target

SPOTNETWORK

The 68 spot market grouping The 68 spot market grouping delivers 41% greater sales delivers 41% greater sales potential than the national potential than the national average.average.

141100BDI

$15.00$15.00CPM target

SPOTNETWORK

When you apply this advantage, When you apply this advantage, the Spot CPM is dramatically the Spot CPM is dramatically reduced, relative to Network.reduced, relative to Network.

$10.64$15.00CPM Sales

141100BDI

$15.00$15.00CPM target

SPOTNETWORK

Even when demo CPM’s are similar, Spot’s ability to target geography results in a far more cost-efficient buy than a national TV schedule.

DMA market-value datafor spot planning are nowwidely available.

• IRI for CPG brands• Polk for automobiles• IMS for DTC drugs

And MRI special tabs for awide range of products andservices.

TVB can help you locatethe data.

CONCLUDING PRINCIPLE

Spot should be used inhigh potential marketsand be planned toadd weeks, not weight.

When demography is coupled with geography, brand sales benefit.

GEOGRAPHY

Is the missing strategy for many brands.

Thank YouThank You