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Digital TV and the Future of Media Buying

Digital TV and the Future of Media Buying

Written by enCOMPASS Agency

When it comes to marketing, the temptation is often to spend more money; a greater ad spend will yield more desirable results, or so the thinking goes. This isn’t always the case, however, and a more prudent goal for marketers is to spend the least amount of money possible while still getting great results—in a word, improving marketing ROI.

Of course, it’s not difficult to understand why so many marketers have adopted the more-is-always-better mindset. They’ve been conditioned by years of TV dominance, where buying more ads in better ad slots was the single best way to gain visibility for your brand.

Today, however, TV isn’t the be-all-and-end-all that it once was—though more ad bucks still go into television than into any other channel. A potential game-changer is the advent of digital TV, which includes many tactics including YouTube, Pre-Roll, Mid-Roll and the newest tactic, Advanced TV, which includes Over The Top (OTT), Addressable TV, and Addressable Video on Demand (VOD).

The Digital TV Revolution

As digital TV becomes more and more commonplace, it’s likely to change the way marketers think about things—how they think about their ad spend, and also how they consider audience reach.

Here’s how you should think about audience reach with regard to traditional versus digital TV. In traditional TV advertising, audiences are largely understood in binary terms. For example, you can shell out money for an ad that will reach a lot of 18-to-34-year-old males—but an individual is either in this group or isn’t. There’s not much more fine-tuning that can be done.

A more nuanced way to think about things is that every individual falls on a spectrum of likelihood to buy—meaning they have somewhere between a zero percent and 100 percent probability to purchase the product in question. There are a lot of gradations here, and the specific probability is directly related to that customer’s overall value to the marketer.

How does this impact marketing budgets in practical terms? Well, say Jim has a 70 percent chance of buying the product. The marketer’s job is to pay the right price to place ad content in the right place to move Jim higher in that 70 percent side of the equation.

Marketers who really understand the possibilities of digital TV will see that, through programmatic buying, they can hand-select the consumers who represent the best value for them—the highest probabilities of buying the product in question. This allows for a much more judicious use of ad dollars—potentially better results for a lower price, and with less waste.

To put it another way, you may balk at the idea of spending $100 to show an ad to a consumer if you don’t know anything about that consumer—but if you know that the individual in question has an 89 percent probability of buying the product, and if you can track and measure the results of the ad, then suddenly it starts to look like a much better deal.

The Future of Digital Ad Buying

That’s largely the promise of programmatic ad buying and digital TV—a way to more precisely target consumers and to move beyond the more binary options and limited accountability of traditional TV advertising.

It’s something we very much have our eye on here at enCOMPASS, and already we’ve been able to guide our clients into some smart programmatic ad strategies. As digital TV becomes more commonplace, this strategic approach will only gain in value—so if you’d like to talk more with us, we’re here! Reach out to the enCOMPASS team to discuss ad strategy at any time.