US linear TV audiences are declining – so how are national TV operators managing to wring higher prices out of ad buying agencies?
The secret has been in the emergence of TV as a performance channel, one which can be measurable enough to support clear campaign outcomes over and above mere branding uplift.
“Through the first half of this year … the market’s only off a couple of percentage, which is very strong, considering the large falls in audiences that the networks were experiencing,” according to James Fennessy, CEO of Standard Media Index (SMI).
He should know. Ad agencies give SMI their invoices indicating between 70% and 95% of all their spending, aggregated and anonymized. SMI then makes it available back to agencies, publishers and hedge funds as intelligence, to variously understand ad pricing, product trends and TV events.
“National marketers still believe that TV is a very strong medium, a safe, secure medium that delivers an exceptional ROI,” Fennessy adds. “What we’re seeing in national TV is the direct-to-consumer brands really flood into the marketplace. We have seen, through the upfront (TV ad sales season), pricing go up, while audiences are still under pressure.
“We know from our network clients that those dollars coming in are high priced because a lot of it’s performance-based and a lot of it’s based on ROI. They’re prepared to pay a premium for the inventory they’re buying.”
Standard Media Index is notable for “cleaning” almost $70 billion of US advertisings spend this year, piped straight from agency booking systems, Fennessy says.
Next up, though, is solving an ironic problem – the relative lack of transparency data on digital ad spending.
“TV’s obviously always had very strong benchmarks, and everyone’s been able to look at their pricing in the marketplace and understand where they fit against other,” Fennessy says.
“But because of the nature of digital and so many variables, it’s been very hard for brands and very hard for the agencies to get some strong benchmarks in the marketplace. I’m very heavily with the agencies at the moment to really improve the reporting capability around digital data.”
So Fennessy says SMI will launch new products in the next nine to 12 months that address the problem.
