In 1997, noted media researcher Erwin Ephron presented a paper titled "Learning to live in Lilliput, the media land where small is beautiful. Optimizing reach with low ratings and other thoughts on TV fragmentation." In it, Ephron wrote about the TV's growing audience-fragmentation problem and presciently saw what would happen if the media-buying community continued to focus the bulk of TV budgets on a declining pool of larger-rated shows without strategically dispersing a large volume of spots across lots of shows with small audiences.
Folks didn't listen then and -- in spite of fragmentation along the lines of Ephron's forecast -- apparently won't listen now. TV ad campaigns in the U.S. today deliver considerably less reach than they did in 1997, even though TV viewing is at an all-time high. Fifteen years ago, a heavy national schedule with average frequency would reach 80-90% of its target audience in three weeks. Today, most heavy multiweek national ad campaigns are lucky to reach 60% of TV viewers in their target audience.
The story is even worse when it comes to frequency distribution. Fifteen years ago, TV advertisers could expect 40% of their campaigns' impressions to be concentrated on the 20% of their target audience who were the heaviest TV viewers. Today, the frequency imbalance is almost twice as bad. According to both Nielsen data as well as Simulmedia's database of anonymous second-by -second set-top box viewing data of 30 million Americans, those 20% of target viewers who are heavy TV viewers now receive 60 to 80% of most national TV campaign impressions. This squanders advertiser money, needlessly accelerates the "wear out" of creatives and alienates target customers who feel bombarded by redundant messaging.
Don't believe me? Go ahead and run the data yourself with any of the national audience data systems: Nielsen AudienceWatch or Nielsen AMRLD or Kantar or TRA or Rentrak. You will see similar results.
How did this happen? It happened because TV audiences have fragmented dramatically over the past 15 years and the TV media industry has not adjusted its planning, buying and measurement tools and strategies to keep pace.
Twenty years ago, the average American household had access to 28 TV channels, and brands like Fox, Nickelodeon and TNT were babies. Today, Americans have 165 channels and watch networks like Military Channel, Investigation Discovery and BBC America. Twenty years ago, in an average week, there were hundreds of shows with a rating of 10 or better. Today, there are scarcely more than a dozen. Today, it takes four to five spots to deliver the equivalent media weight of one spot 15 or 20 years ago, and eight to deliver as much reach. That's an enormous change.
As Ephron's paper noted, "Fragmentation challenges the analytical capabilities of our research systems. … Our current approach -- using the program and day part as ways of organizing media value -- becomes less useful as audiences get smaller."
TV's ability to reach a lot of people in a short period of time, and to do it efficiently, is what has historically set it apart from all other advertising media. It is why national brand advertisers have to plan and buy it first and why TV has historically received the dominant share of brand expenditures. Neither radio nor print nor out-of -home -- nor even the internet -- has the capacity to efficiently deliver multiple effective advertising messages to tens of millions of target consumers in the space of a few days or weeks.
However, competition for media dollars is intensifying. Clients want to move more money to digital. They want to "jump into" social media. They are demanding more and better measurement and ROI. This is not a good time for folks in the TV media industry to undermine their core competitive advantage and sell and buy campaigns with such bad reach and frequency balance. And it certainly won't help the medium's ability to stave off calls to shift more money into digital channels.
Unfortunately, so much of the energy in TV buying today is spent chasing those declining dozen or so top-rated shows rather than developing the analytical chops to efficiently accumulate target audience across the exploding landscape of smaller-rated shows that attract relevant, passionate audiences. The problem, as all media researchers know, is that heavy TV viewers tend to watch all of the highly-rated shows, so buying more of those shows doesn't get you much more reach. Not so when you get into lots and lots of lower-rated shows.
Contrary to the opinion of many, strategically dispersing ads across many smaller audience shows is not mutually exclusive with buying those several high-rated shows which clients seem to prefer. They complement each other, and you get much more reach and much better balanced frequency. As we prepare for this year's upfronts, I do think it would be instructive to go back and read the concluding sentences to Ephron's paper:
Buyers will have to push for change. The TV networks are trapped by their own success with day parts. In prime time, more dollars chasing less inventory has increased prices substantially each year. But there is an issue larger than pricing. Day part thinking increases costs and limits reach which, in turn limits television's effectiveness. Smaller ratings need not cripple TV if we learn to use the entire medium.
Fragmentation is not the nemesis of mass TV advertising. There is a cosmic fairness to it all. Greater choice for viewers creates the fragmentation which in turn creates greater choice for buyers. If we are going to live in Lilliput, we should wake up and smell the little flowers.
What do you think? Is the industry ready to hear Ephron's nearly 15 year-old warning?
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