Why Advertisers Shift Spending from TV to Digital

The WSJ reports digital ad spending jumped $3 billion in Q4 with $1.5 billion flowing away from national TV & local TV.  The talk of every AdTech conference:  digital devotees proclaiming the death of TV due to ‘cord cutting’ and the superior power of digital for marketers.

“That’s BS,” says Jeff Greenfield, Co-Founder of C3 Metrics, “the dramatic shift isn’t because TV doesn’t work…it’s because digital has numbers that a CMO can take to their CFO to prove what they’re doing is having impact.  TV networks, on the other hand, deliver the same standard, antiquated data they’ve been delivering for decades, ‘here’s your GRP delivery report’.”

An innovator of product integration and media measurement, we sat down with Greenfield to expand and dissect his thoughts.

“That’s BS,” says Greenfield, "TV Works"

“That’s BS,” says Greenfield, “TV Works”

Greenfield:  TV reporting hasn’t changed in the past 35 years.  In fact, if you buy TV today all you get is a delivery report that the ad ran – if you’re lucky, you get impressions or ratings which may have the infamous asterisk (sample size too small to be reliable) but that’s it.  Whereas with digital, marketers are overwhelmed with data and are able to connect the dots from spend to revenue. 

What caused this shift away from TV to Digital?

The shift occurred when CFO’s started talking to marketing in this tone:  Hey you can’t spend money unless you can prove cause and effect,” and with digital, that’s easy to do.  But with TV that’s impossible given the scant data that’s provided to the marketer.  So over the last 18 months, marketers have shifted money away from TV to Digital not because they want to, but because with TV’s antiquated data for the customer journey, it’s a forfeit to digital.   

What about the AdTech prognosticators, is digital really more impactful than TV?

Greenfield:  The reality is that TV is not less impactful, in fact, its more impactful. The clients we work with have seen a massive impact from TV.  Look at pure-play Internet companies who advertise on TV:  Amazon, Wayfair, Zulilly, PayPal, Adore Me…and this past year Google spent more money on TV than it spent on the Internet.  So all these companies whose DNA are digital:  you’d expect them to spend the most ad dollars on digital, but they actually spend more on TV.  At C3 Metrics, our DNA is digital too, but we spend more on TV than digital and experience the same results with our own TV campaign.  The problem is most marketers don’t have the modern tools to monitor the impact and marketing response from TV.  The marketers that have shifted budgets away from TV, have seen a decrease in both brand awareness and YOY sales.  Marketers need to be aware when they shift dollars, it can’t be a reactive shift to a CFO waving the checkbook around.

Any exceptions to losing sales and brand awareness when decreasing TV?

Greenfield:  Yes indeed:  creative.  In TV, creative is king…but today the bar is so much higher and here’s why.  Compare ten years ago to today, and the drastic difference in TV has nothing to do with was the mix of reality shows versus scripted shows, or even the DVR effect.  The drastic difference in TV today are the devices within arm’s reach while we watch TV:  the tablet and the Smartphone.  No longer do we “watch” TV, we go back and forth between our mobile devices and TV while the TV is on.  Most importantly, when we do this is at commercial break.  So in order to pull someone’s attention away from turning to a mobile device during commercial break, today’s TV creative has to be better than it’ ever been.  Particularly with audio, because audio is the stimulus that has to pull attention away from the mobile device.  Even with our own TV spots for C3 Metrics, we’ve produced 14 total commercials, and in our last round of creative with a minor difference between spots, we saw a 210% difference in cost per lead.  Creative is king in TV, and measurement of creative rules.

Are you seeing the same trends in Brand marketing?

Greenfield:  Historically, brand marketers buy the demographic, do panel measurement to demonstrate brand lift, and repeat next quarter.  The moment the first brand ad allowed a website URL, that was the death of ‘branding’.  Once the URL was in the TV spot, the marketer was going to be held accountable for faster results than ever before.  Now brand marketers are feeling the pressure from their CFO’s to be more accountable for the dollars that they’re spending.  Brand Marketers moving away from branding to more ‘accountable’ digital media may be jeopardizing the organization.  Some marketers come to us strictly to prove that TV works because their hunch tells them that it does.  What we find, is that with most experienced marketers, their hunch is correct–but we also find that TV’s success is not distributed evenly:  we discover the networks , stations, daypart, day, and creative that works down to the cost per lead or return on ad spend down to the spot level.  Then the TV marketer can shave inefficiency just like a digital marketer.

What’s aren’t Marketers standing up to their CFO’s?

Greenfield:  They don’t have a single source of marketing truth.  They don’t have the ability to connect their TV and Digital all together.  The clients at C3 Metrics are able to do that, and can stand up to their CFO to prove, and improve TV.