It was strangely appropriate that the movie shown to cross-country fliers to CES -- thousands of them from the ad industry -- on American, Continental and United was "Moneyball," the story of Oakland A's general manager Billy Beane's use of computerized data-crunching to help his small-market team compete with the likes of the New York Yankees and their 300% bigger payroll. "Moneyball" was all about how smart use of data and statistics transformed baseball, a 150-year-old business long managed according to gut, instinct and near-mythical truisms, and brought it into the digital age and modern data-driven management.
As an ad entrepreneur trying to help bring the television ad industry into the digital age, I couldn't help but enjoy the irony of so many ad-industry execs watching "Moneyball" on their way to see the latest consumer electronics and, in particular, all of the new smart, internet-connected TVs and companion devices which will be so disruptive to the future of their businesses and jobs. Not only will these new TV's connect directly to the internet, but they will run web-based apps, link new cloud-based streaming services and also produce a treasure-trove of data and direct consumer-viewing measurements, which will open up TV advertising to Billy Beane-like transformation.
As I watched the movie, I mused that the world of "Mad Men" is about to be invaded by Moneyball, -- and that the answer to John Wannamaker's inability to know which half of his advertising is wasted -- is about to be solved, certainly for $70 billion spent annually in the U.S. on TV advertising. Billy Beane's use of sophisticated data analysis to identify which player statistics really mattered -- a player's on-base percentage rather than batting average, for example -- gave him a real advantage in finding players who were undervalued by his competition. Much the same will happen to our industry as agencies and clients begin to learn which TV spots actually drive the best results, and which spots have been historically undervalued by the marketplace and legacy rate-card practices.
Do I believe that the ad industry's sophisticated but gut-driven approach to advertising placements will be forever trumped by Billy Beane-inspired measurements? No. However, I do believe that Sterling Cooper Draper Pryce is about to get a new partner in the firm to handle the TV media, and that she will be a digital-savvy math-driven quant, not a smooth, sophisticated ad man from the Don Draper mold. Our fact-talking quant will use Wall Street -like data analysis to spot low-hanging fruit in the gut-driven world of buying and selling spots and will change the rules of the TV ad game. Here are some of the places where she will probably look first:
Wasted frequency. In most mass-awareness TV ad campaigns today, 80% of the spots end up being delivered to only 35% of the target audience, and a full 30% of the desired target receives none. Fifteen years ago, that 80% was spread to more than 60% of the target , and the size of the unreached target was very small. What happened? TV audiences have fragmented enormously and the planning, buying and measurement tools haven't kept pace. In the future, Billy Beane-like data analysis will be used to determine the exact makeup of a show's audience and to perfectly measure and manage the reach and frequency of TV ad campaigns with online-like frequency capping. TV advertising wastes a lot more than 50% of its spots today, and she will find and eliminate them.
Finding elusive audiences. Trying to find young males outside of sports programming? Or Hispanic audiences watching English-language programming? Or light TV viewers who you can't reach efficiently with broadcast-centric prime-time campaigns? Data will find them for her, just like data helped Billy Beane discover one of the major leagues' best relief pitchers, a minimum-wage side-arm thrower who the rest of the teams wouldn't touch because of his unconventional style. She will discover gold using data to aggregate valuable audiences from spots on morning shows, mid-afternoon reruns and on midsized cable networks.
Creative testing. We all know that a large portion of TV audiences channel surf during commercials. With second-by -second set-top box data from tens of millions of households, you can now know which viewers abandon your ads and which stay and watch them in their entirety. Not only will we learn which audiences actually like our ads, but we'll be able to test and optimize creative units in live environments. Think of the improved efficiency if we can get audiences to stick around and watch your ads because the data tells us which ads will stick with them (and with people like them).
Secondary measures and promises. Nielsen isn't going away. Macro audience ratings for TV audiences will be with us for a long time. However, in a Moneyball world, those measurements will be supplemented with micro-measures of exact audience viewing patterns which will be baked into ad campaign deals. Thus, you could imagine delivering your GRP's with set-top box data-based guarantees of specific audience compositions -- such as frequent moviegoers who like dramas, or Craftsman brand fans-- or guarantees of attributed sales by linking household-level viewing data with actual purchases.
You didn't have to attend CES to know that the "Mad Men"-like era of TV advertising is over, never to return. As romantic as it seems, we will never again see days of three phone calls in the morning, three martinis at lunch and a three o'clock train back to New Canaan. No. The Moneyball era is coming is our way. Are you ready?
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