With CPM, CPP, HUTs, PUTs—an alphabet soup of numbers for the ad buyer—the last thing the TV industry needs is another metric. But as TV and online begin to converge, buyers need to begin paying attention to another telling number: effective cost per unique reach (CPUR). Planners and buyers have long noted the total reach of a plan, but few have calculated the incremental cost of growing that number as the campaign progresses.
Fragmentation has altered TV viewing forever. Outside of a few tent pole events, never again will an advertiser be able to reach more than 20% of the population with one show. Take a quick look at ratings. In 1990, Cheers was the number one rated show on television, generating a 21.3 rating against the desirable A18-49 demo. By 2013, the rating for the number one rated show, Sunday Night Football, shrunk to 8.3.
What does this mean for advertisers from a macro level? It means fragmentation is capping the total reach an advertiser can build across an entire TV schedule. Even the largest spenders are maxing out around 70% delivery for any of the traditional TV buying demos.
Let’s look at a recent campaign by a top tier auto company that was measured with a Nielsen XCR study. Over a four week period, the campaign delivered more than 500 million impressions on TV and still only reached 69% of A25-54. The more they spent, the harder it became to reach unique consumers. In fact, the first 150 million impressions reached 38% of the demo, while the last 150 million impressions increased reach by less than 5%.
This is why digital video is becoming a mandatory part of any video campaign. Whether on the PC, smartphone or tablet, video consumption continues to grow on digital devices. And the ad community is starting to follow the dollars, treating digital video as another daypart within their TV plan.
The question now turns to, ‘what is the right amount of budget to allocate to digital video?’ To answer this question, I would suggest advertisers start evaluating CPUR. Even with fragmentation, TV remains the cornerstone of any video plan generating fast reach. But with each campaign there is a point of diminishing returns where the cost to deliver new consumers becomes counter-productive. The actual number will differ for every advertiser based on a few contributing factors like target as well as daypart and show mix, but the concept remains the same.
Looking back to the auto advertiser, there was a clear inflection point. TV started with a clear and consistent pattern, showing steady growth in the relationship between impressions run to unique reach. However, TV hit a clearly defined point where the ratio quickly changed, and substantially more impressions were required to build even minimal unique reach increases. At the same time, online maintained a more balanced relationship between the two metrics. While frequency is an important part of persuading a consumer to take action, I would maintain the television schedule moved well past the point of productivity.
Looking a little deeper, we see another telling statistic. Forty-five percent of TV impressions were delivered to A45-54, which is only a third of the desired target. So, not only were the last 150 million impressions primarily driving frequency, but they are significantly over-delivering to the oldest third of the target. This is not the most ideal use of media dollars and the brand would benefit by reallocating those dollars to digital video.
There are now tools available to help brands understand optimal allocation in the planning phase of a campaign. These tools match recent advertiser TV spend with available digital inventory to project CPUR among other key metrics.
In the long run, buyers should make decisions based on more than one data point, but by taking CPUR into consideration they are better prepared to tackle the current marketplace challenges.