Since the economy is still in recovery mode, CEOs are putting increasing pressure on marketers to spend ad dollars more wisely. This has advertisers asking for better metrics from TV networks. And, networks, in turn, are pushing on rating services, such as Nielsen, to do a better job of determining audience sizes and demographics. They want ratings to include seven days of DVR playing instead of three (going from what is called C3 to C7). In this climate of buyer belt tightening and intensified competition, advertiser clients are asking for even more. They want better, more specific data.
What does better data mean?
The Association of National Advertisers is asking for brand-specific commercial ratings. They are spending $70 billion a year on TV commercials, and they want more specific information that includes the following:
- Audience size per ad rather than per show
- Effectiveness of different ad versions they’d like to test
- Relative effectiveness of different time slots within a show
- Comparison of the effectiveness of different commercial lengths
- Impact of social media integration on the program and commercials
- Effect of product placements in the show
Need for more accurate ratings.
For so many years, Nielsen and others have programmed people’s brains into thinking that the sweet spot of advertising is the 18 to 49 demographic. Within that group, they told us that the even sweeter spot is the coveted 18 to 34 cohort. As a result, the TV shows that attracted this group fetched the highest advertising dollars.
Advertisers pay more for younger audiences, but should they?
Last year, with 60% of its audience over the age of 55, the hit CBS show The Good Wife (11.51 million viewers) was able to charge advertisers a CPM of only $25. Even though it had a smaller audience (10.5 million viewers), the popular Fox show Glee charged advertisers $47 to reach a thousand viewers (almost double that of the Good Wife). Why? It has one of the youngest audiences in prime time. American Idol had an audience more than twice the size of Glee (21 million viewers). However, because its audience skews older (averaging 44 years of age), it has a CPM of $46.75 – slightly lower than Glee. With their 50 something actors, Mark Harmon and Jamie Lee Curtis, NCIS regularly draws larger audiences than Glee and The Office, but since the viewing audience is older, it commands lower ad rates. Here is a quote directly from Wikipedia, “Glee and The Office drew fewer total viewers than NCIS during the 2009–10 season, but earned an average of $272,694 and $213,617 respectively, compared to $150,708 for NCIS.”
Baby Boomers are too often left out.
According to Amy Chozick in the Wall Street Journal, “…viewers over 55 haven’t factored into ad rates, which have made them without value to the networks.” David Wolfe, noted author on marketing to older customers, says that Madison Avenue is still locked into “Chronic Youth Syndrome.” In his talk by the same name, Neal Gabler calls this “The Tyranny of the 18 to 49.”
Boomers watch more television
Ironically, this fixation on younger audiences is a historic anachronism dating back to the time when Baby Boomers were 18 to 34. If marketers look at the current data, Baby Boomers, those born between 1946 and 1964, should be the coveted audience segment. They grew up with TV and tend to watch more than other segments – 170 hours a month, or 5 to 6 hours a day (compared with 4 hours and 49 minutes for all viewers). The 18 to 34 demographic is more focused on the Internet, and watches less TV. Moreover, Baby Boomers have the largest buying power of any demographic group. Unlike previous generations that dialed down their spending when they reached 55, Baby Boomers spend a lot. They spent $2.9 trillion in 2010 and are expected to spend $4.6 trillion by 2015. Previously, nobody thought of challenging Nielsen – the company that has had a virtual monopoly on audience metrics upon which TV advertising has been sold over the past 35 years.
Nielsen ratings: worthless
David Poltrack, a highly-respected CBS Chief Research Officer (with a last name that couldn’t be better for his position), recently told the members of the Advertising Research Foundation at their annual convention that there is no link between the age or sex of the audience targeted and the sales generated by an ad campaign. In other words, beyond total audience size, Nielsen ratings are virtually worthless. For advertisers that have spent hundreds of billions of dollars on advertising based on Nielsen ratings over the past 35 years (since 1976), this is really bad news.
Potentially, the good news is that CBS has been working with Nielsen to develop a new model upon which advertising will be sold. This model identifies six target audience segments unrelated to age and sex demographics.
- TV companions
- Media trendsetters
- Sports enthusiasts
- Program passionates
- Surfers and streamers
- TV moderators.
How marketers have benefited from targeting older audience
Marketers that have refocused their marketing on older segments have already realised dividends. Here are just a few examples.
- In the 1990’s, New Balance targeted Baby Boomers and became the fastest growing shoe company in the United States.
- When Vespa Motor Scooters returned to the US after a 15-year absence, the company thought that their target audience would be 20-year-olds. What they discovered is that their most enthusiastic customers were over 50. Moreover, the older buyers bought higher-end, more-profitable models with more options and accessories. As a result, now they are also targeting the older demographic.
- Unilever targeted older women using ageing “real-people” in their Dove soap commercials. In the months following the launch, their sales growth exceeded expectations and beat the growth of the entire soap category.
- Numerous other brands that have targeted Boomers and the over 49 crowd have reaped considerable success.
How you can benefit
Now that advertisers are looking at data in real time, it is clear that the coveted demographic segment that marketers chased over the past 36 years is a myth. It may have been true at one time, but it is not now. How can marketers take advantage of this new information?
- Measure and don’t assume. Learn about the tools and metrics available to identify and track your target audience (what I call the “lock”).
- Build a marketing information system to incorporate the most appropriate metrics to monitor, collect, analyse, report, and take action on information from this audience. This does not have to be done all at once, and can be built in stages.
- Look beyond the traditional segments defined by organisations, such as Nielsen, to determine the segments that are most likely to buy your products.
- When Nielsen and the networks develop new metrics don’t accept them at face value.
- If you find inaccuracies in the metrics they use to formulate their advertising rates, use that information to negotiate a better deal with the media in which you want to insert your message.
- Build into your marketing information system ways to measure how well it is working so you can tweak the system to continually produce better results and negotiate for better rates.
- Understand that the big numbers in the US are trending older because of Baby Boomers. This will continue until the segment dies out.
- Generation Y or Echo Boomers also have sizable numbers. Don’t ignore them or any segment for that matter.
Have you been targeting the right audience? If not, what do you plan to do to correct the situation?
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