The ad industry is preparing for another year of Upfronts. These are the TV buying equivalent of a visit to Costco, where brands can lock-in some of the best rates for audience reach in the coming year. However, while brands get access to valuable network inventory at discounted rates, the buys come at a price: a lack of flexibility that makes it almost impossible to make in-flight changes to campaigns. This commitment, which for some brands is 90% of their annual TV budget, is probably the last bastion of old TV buying.
We asked Kevin O’Reilly, our Chief Strategy Officer, about the state of TV Upfronts and how advertisers can leverage the flexibility of make-goods to optimize real-world response.
Why do you refer to the Upfronts as the “last bastion of old TV buying?”
Today, TV is a performance-marketing channel – it can be measured and optimized in real time for response (just like digital). While TV was traditionally only a reach and frequency play for advertisers, it’s now also a direct driver of immediate response, whether it’s site traffic, search or app activity.
The Upfronts are still about buying TV for reach not response. Networks offer premium inventory, and brands buy it with the guarantee that their ads will reach a certain number of eyeballs. From this perspective, the Upfront buy is “efficient,” but not if you consider losing the opportunity to optimize.
This big disadvantage of Upfront buys comes because advertisers are “locked in” and it’s very difficult (outside of creative changes) to make in-flight optimizations. I could be in front of millions of people who tune in to “The Big Bang Theory,” but it doesn’t mean they will respond to my ad. And I don’t have the flexibility to change networks, programs, etc., to improve that performance.
Where do make-goods come in?
Let’s use the “Big Bang Theory” example again. I paid millions to run my ad during the show, with the promise that it will reach 8 million people with each airing. A few weeks into the season, ratings could be down, and my spot is only seen by 6 million people. The network owes me 2 million impressions. This is when make-goods come into play.
Make-goods are “spot ADUs” (audience deficiency units) other than the program that I bought. They are offered by networks to ensure advertisers get in front of the agreed-upon number of viewers. With my example, the make-good would be inventory that would get me in front of 2 million viewers. But rather than simply take anything the network offers, advertisers should understand what the best available inventory is that will drive response, and then negotiate for it. This gives us some flexibility with make-goods to get the chance to optimize campaigns (more on that later).
Are make-goods just used for Upfront buys?
No; they are not reserved for Upfront-only buyers. A make-good might be offered for many reasons. Most commonly:
- Bad advertising placements: In print, this can be placing the ad on the wrong page. Online, it can be next to questionable or conflicting material. For TV, perhaps running an ad during the wrong time.
- Ratings or impressions shortfalls: For TV, it happens when a show gets considerably less viewership than contracted by the media seller. Online, this can be considerably fewer views on the site.
- A preemption that results in the ad not airing: When a breaking-news story or speech by the president results in the program and its subsequent advertising not airing.
How can an advertiser optimize make-goods?
As I mentioned, you get flexibility with make-goods that you don’t get with Upfront buys. They are an opportunity not only to get additional “eyeballs,” but also to get in front of “eyeballs” from the right audience in the places and times that will drive actions. And the only way to know that is through measuring TV performance to identify aspects of buys that actually drive response.
Regardless of the type of buy, TV needs to be continuously measured and optimized for performance. With TV analytics solutions, such as TVSquared ADvantage, advertisers can know in, real time, how spots drive response across touch points. They know the days, times, networks, programs, genres, creatives and audience segments that lead to the greatest response.
As an advertiser of “The Big Bang Theory,” I should be armed with that information, so when the time comes for make-goods, I can tell the network exactly what type of inventory I want. The data could tell me that “The Price is Right” on Mondays and Fridays perform for my brand. “The Flash” on CW (an affiliate network to CBS) might also be the right fit. Being prepared with those insights – based on what’s worked in the past – is critical for advertisers to take advantage of make-goods.
You talk about audience segments when it comes to response. Aren’t TV advertisers limited to basic audience profiles like age and gender?
Audience targeting used to be limited to age and gender with TV and, in many ways, especially with the Upfronts, that’s still the case. But advertisers need to go deeper –beyond age and gender – because the data and technology exist to append much more detailed information on audiences (and audiences that actually respond).
With my “The Big Bang Theory” buy, I bought an audience of women ages 18-to-34. This group encompasses a wide variety of people. Looking at response data, I could see that women, ages 30-to-34, with an income of $100K, who live in urban areas and have 2 kids, make up the audience segment that responds the strongest to my ads. I now know their viewing habits and can tailor my make-goods (or any TV buy, for that matter) accordingly – getting in front of the right people in the places and times they are most likely to respond.