From TV to short-termism? Discussing 2023 ad budgets with the attribution experts

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by Lindsey Francy Dec 2, 2022 News
From TV to short-termism? Discussing 2023 ad budgets with the attribution experts

As the recession puts more pressure on budgets, advertisers in the UK are considering cutting back on offline media. Three of the UK's top 10 by spend and 11 of the UK's top 50 were included in the survey.

Almost 40% of respondents plan to cut offline investments next year, due to the fact that the 2023 budgets are under a lot of scrutiny. Only 20% of people planned to cut their digital budgets. 34% are planning to increase spend in digital channels such as paid search, social, and connected TV, but only 20% are planning to do so in the offline world.

I talked to a few people about what is happening in advertising right now and how this might affect the goals of digital media spend.

“Streaming is now a critical piece of the puzzle”

According to the ISBA report, 70% of advertisers plan to cut linear TV spending. According to John Nardone, the shifts are not as dramatic as the ISBA numbers suggest. Traditional TV reach is falling from a very high base, and not at a steep rate. It's still an important media channel as TV viewing converges with digital in streaming formats

Andrew Carmody, the chief marketing officer of Viewers Logic, suggests that some marketers aren't doing enough to prove the effectiveness of traditional channels

The channels that can't prove they work are the ones that are being cut. Linear TV still relies on metrics such as reach and Frequency to prove effectiveness. Carmody said that marketers are making cuts even without the data to back them up.

A brand wanted to cut their TV spend because they thought their campaign didn't work after sales stayed flat. Their sales were maintained because of their TV campaign, which proved that advertising in a recession was important to their survival.

Research has shown the importance of keeping a varied media plan which is stronger when TV is combined with streaming – Emmanuel Josserand, FreeWheel

Despite still holding value for brands, marketers are decreasing their spending on traditional TV advertising. Many are searching for connected TV. During a time when advertisers need to make sure every impression and dollar is accounted for, CTV gives them greater flexibility and optionality.

This growing area of interest is highlighted by Paul Wright, General Manager Western Europe.

Almost all businesses think that CTV advertising will surpass mobile advertising in the next three years. The ability to engage new audiences will likely be a key reason for its growth.

The growing digitisation of TV is drawing in advertising spend.

Advanced TV channels include connected TV, over-the-top, addressable linear TV, and video-on-demand. We expect ad-supported video-on-demand and free ad-supported streaming Television to experience especially strong growth with almost nine in 10 UK marketers planning to invest more in these channels.

Josserand suggests that marketers shouldn't put all their eggs in one basket.

TV has long been a gold standard in advertising and research shows the importance of keeping a varied media plan. It's a critical piece of the puzzle, but should be complemented by streaming.

Brands looking for fast-converting channels?

While ISBA states that digital growth is out pacing offline media, the most effective way to analyse changes in spend allocation over the long term is not to consider 'offline versus digital'. Money will be moved to the best place to get the best return. He said that when the budget is being constrained, they will keep spending with more targeted channels.

The co- founder and director of Demand More told Econsultancy that not all areas of digital are generating investment.

There is downward pressure on digital channels that are less measurable such as programmatic and paid social that are used to engage users as an early touch point with a brand. In order to justify the spend to the business, brands are increasing their budgets across paid search and affiliates where they can see measurable returns for their investment.

Marketers will move money to where they are getting the best return. When the budget is being constricted – Isaac Weber, Measured

As more marketers focus on campaigns based on immediate need, there will be a continued shift towards short-termism. Making Science's head of performance UK warns that marketers must be careful with this approach.

He said that brands need to be careful not to over- invest in low CPAs and strong ROAS for short-term success. It could lead to under-developed brands across entire industries if those who do do do so. It is easy to fall into a trend of short-termism, followed by higher funnel objectives and vice-versa, but brands must not lose sight of long-term success.

If advertisers focus too much on short-term wins, they risk impacting retention, loyalty, and other factors that sustain business models in the long run. There will be a balancing act between achieving near-term goals and preparing for success when the economy recovers, which will be reflected in ad budgets.

“Advertisers need more real-time measurement and diagnostic tools”

"The rate at which advertisers have to adapt to changes in consumer behavior, privacy policies, platform technology, regulations, and whatever else comes our way is not going to slow down." Advertisers will need more real time measurement and diagnostic tools to quickly identify what's working and what isn't.

As user level tracking becomes a thing of the past, click-based methods are no longer viable. Incrementality experiments and market testing are now being used by platforms and vendors.

Most experts agree that marketers need to re-think their models.

Budgets will be maintained only if the return on investment is accurate. He said that existing models for measurement rely on assessing the impact of different media channels in silos and patching them together to get aholistic view of what was achieved. The approach is flawed and makes marketers vulnerable. If marketers are able to meaningfully assess the contribution that each channel makes to a campaign, can they shift budget to the areas that will enable them to drive success?

In relation to TV, Jo Kinsella made the point. The need for measurement and effectiveness is one of the key elements for advertisers heading into next year's down market. The economic stress will move the TV market towards outcomes metrics and greater transparency to ensure that brands can account for every dollar. With consistent measurement, advertisers can measure efficiency and effectiveness across different platforms.

“Every channel, tactic, and campaign should be scrutinised and optimised”

What can we do for the future? In this climate, performance is as important as ever according to Stephen Upstone.

Real-time measurement is what he wants marketers to focus on. By applying strong approaches using data and analytics in the mid-funnel, marketers can ensure they are leading new customer growth and maintain brand equity that will transform their results over the next one to two years.

While spend is being shifted to certain areas of digital media, marketers will still be challenged with smaller budgets, which means they need to do more with less.

It's important for brands to use existing content in innovative and impactful ways. Advertisers need a flexible approach to media budget allocation and creative production because audiences and brands are re-examining which platforms they engage with.

The entrance of new platforms and formats like TikTok is likely a key driver [of increased social spend] – John Nardone, Mediaocean

Creative data will be crucial in allowing media buyers to access pre- and mid-flight performance insights across platforms to adjust budget allocation accordingly. It will help to avoid expensive campaign content designed only for a platform that could fall from grace at any time.

A variety of platforms could also be involved. He said that they expect to see marketers use the power of social media to explore newer platforms. Most respondents were planning to increase their social investments over the next five years. New platforms like TikTok are likely to be a key driver here.

The recession could result in more budget cuts, but marketers should be careful with their media portfolios. He said that if you can identify the least efficient areas of investment and cut there first, decreasing budgets don't have to equate to a huge sacrifice in return on investment.

Advertisers should focus on eliminating wasted spend when there is still room to grow. Every channel, tactic, and campaign needs to be analysed to understand what is driving conversions.

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