Top Agency Group Says Move TV Dollars to Video Ads
Video advertising has been buzzing around the brand agency world for a few years now, pestering account supervisors and media buyers who, in large part, have brushed it off since video ad technology and metrics didn’t quite fit into the way things had been done for decades in the single-screen TV advertising ecosystem.
Lately though the buzz has become more of a roar as the audience has stampeded over to multiple screens, and programmatic technology has enabled much more precise targeting and buying—all for fewer dollars and better audience insights.
Now, the Wall Street Journal reports that Omnicom Group is advising its clients to move 10% to 25% of their TV advertising dollars to online video advertising.
This is significant because Omnicom, the parent company of major agencies such as BBDO, DDB and TBWA, is one of the top two marketing groups in the world and oversees more than $50 billion in annual advertising spending for major brands such as Apple, McDonald’s, PepsiCo and Visa.
We may have just reached a tipping point in the shift to multi-screen video advertising:
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Other large agencies that already include some video advertising in their media mix likely will begin to follow Omnicom’s suit and recommend shifting TV dollars that way. Because the advertising industry is so competitive, no major agency wants to be at a disadvantage for long—regardless of whether it’s perceived or real.
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Still other agencies will probably feel pressure to begin experimenting with online video advertising for their clients in the coming months, as the word spreads about successful campaigns and the proven multiplier effect video ads have on other marketing media, including TV advertising.
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By the same token, advertisers will hear more about the benefits and readily approve shifting spend to video advertising spend—perhaps even push for allocating greater percentages of their TV ad dollars to online video ads.
So, Why Now?
As far back as late 2011, video ad network YuMe and Nielsen ran a study that allocated 19% of a major CPG brand’s $2.6 million TV campaign to online video advertising and showed that (in TV vernacular):
- Reach increased by 7%
- Frequency increased by 31% to 52% and
- Cost per eCPM fell by 11%.
(Dual-Platform Campaigns: Using Online Video to Enhance the Reach and Performance of TV)
If the benefits of video advertising were apparent back then, why has it taken three years for the ad industry to come around?
Lack of Knowledge and Ingrained Habits Slowed Adoption
Aside from the educational challenges associated with adopting new technology—understanding what it is, how it works, what the benefits are—advertisers and agencies have also struggled with how to square video ad campaigns with ingrained TV commercial production and media buying habits. There’s comfort in the familiar and so the tendency has been to try to make the new technology look and operate like the old systems.
For example, comScore released its vCE Video analytics in late 2012, which sought to “better align video campaign measurement with TV,” according to its executives.
However, as happens in every paradigm shift, more and more participants are beginning to embrace the new technology measures because they add significantly more value. What advertiser wouldn’t rather have data about how many actual targeted viewers watched their full commercial vs. a guesstimate based on an extrapolation from a miniscule sample of the viewing audience?
Omnicom’s CEO of media operations echoes this, stating that marketers today are very interested in measurement: “I think that we’ve seen a surge in the desire to measure the effects of advertising. The desire for more measurement and accountability is getting higher and higher.”
That’s one of the fundamental differences in the video advertising paradigm. Every advertiser receives detailed data about how many people watched their commercials to completion, and how many watched, say, 75%, 50% and 25% of them before skipping.
Advertisers have gotten a taste of what it’s like to deliver their messages to their precise target audiences then get those valuable insights in return—and they want more.
Where’s the Money Come From?
Another major obstacle has been budgetary. Do video ad campaign dollars come from digital media budgets, TV budgets or some other bucket? For the big brands and agencies it appears that it makes the most sense to allocate a portion of the TV ad budget to online video to start. Because online video content comprises some TV content that migrates to multi-screen, the thinking is that TV ad dollars should also migrate.
To some degree, this perspective again views the new medium in terms of the old. However, online video content is a quantum expansion of TV content: a rich, multi-faceted sea of information and entertainment, much of which has no TV counterpart. In it’s recent investment analysis of the online video advertising market and specifically YouTube, Jefferies Equity Research summarized it this way:
“Content serves a different function for YouTube than it does traditional media, because YouTube wins regardless of the production values as long as it meets a sufficient level of quality and popularity to drive audience attention and to deliver advertising.”
(Jeffries Franchise Note, The Future of Online Video Advertising (v2.0): A Focused Deep Dive on YouTube, September 3, 2014)
As agencies and advertisers gain experience with video advertising, their comfort levels will rise with targeting the audience vs. targeting the content as a proxy for the audience. Objectionable content can easily be excluded from any video ad campaign to ensure brand integrity. With the new technology, it’s merely a campaign setting; delivering the right message to the right audience is the primary objective.
The Audience Can’t Be Ignored
The monthly online video-viewing audience is 196 million strong in the U.S., spanning all demographics, lifestyles and interests. Americans now watch more than 50 billion videos and 35 billion video ads each month.
During the cable TV revolution of the late 1970s and early 1980s, the emerging audience’s rallying cry was “I want my MTV!” Today, the new audience’s refrain is, “I want my YouTube!”
Omnicom likely sees the inevitability of this shift and smartly has gotten out front of its competitors. Now, other agencies and advertisers will begin to follow their lead and shift TV dollars to online video advertising in the current planning cycle. Over the next several months, impatient advertisers will possibly move to agencies that are quick to adopt video advertising and more TV dollars will shift to the new technology.
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