A recent report from ad tech platform Innovid discovered that connected TV advertising reached only 19.6 percent of U.S. households — a staggering number if you’re still using outdated methods of campaign measurement.
The ultimate goal in advertising is to drive sales. There are many minor victories along the way to converting a customer, such as increasing awareness, improving brand perception, and moving the consumer down the marketing funnel to the consideration stage, before they finally convert and become a paying customer.
It’s the last part, the sale, that has always been the goal of advertising, and it’s never been easier to judge ad performance in terms of sales. In that regard, we are living in the golden age of advertising.
At first glance, CTV leaving out 80 percent of the total addressable audience would seem to be concerning. But concerns about the report don’t acknowledge the reality of our modern media ecosystem. There is no single medium for achieving wide reach anymore, and reach itself is no longer as relevant a metric that it once was. Anyone prioritizing reach in their campaigns is nostalgic for a media landscape that no longer exists.
For decades, TV was the country’s primary mass medium. Tens of millions of Americans would tune into the same program at the same time. This captive audience made it the most effective way for brands to reach wide swaths of the consuming public.
Those days no longer exist, however. The internet has fragmented media, such that there is no medium that is a reliable way to reach a majority of consumers. Successful ad campaigns utilize numerous channels — social, display, retail media and, yes, CTV — to reach a wide array of consumers and achieve their reach goals.
More importantly, however, is that reach is no longer the best way to gauge the performance of a campaign. Reach was a popular metric for most of the history of advertising not because it was particularly illuminating, but because it was one of the only metrics available.
Reach indicates how many people saw a campaign, but it provides no insight into whether those people were at all persuaded by the campaign. The imprecision of this approach created a famous saying in the advertising industry: “Half the money I spend on advertising is wasted; trouble is, I don’t know which half.” (The quote is often attributed to 19th department store tycoon John Wanamaker, the man who pioneered the idea of truth in advertising.)
During the analog era, marketers would have to conduct costly months-long studies to determine if a campaign produced a sales lift. In the early days of the internet, marketers moved to last-click attribution to measure a campaign’s success, another vanity metric that is not tied to sales.
“While media metrics like clicks or site traffic have directional value, they fall short of capturing true business impact,” Ben Kartzman, president and COO of Attain writes in this op-ed for Advertising Week. “While these metrics offer directional insights and support, they don’t necessarily translate into true business impact like sales or longer-term revenue growth. Ultimately, incremental sales are the only outcomes that matter. Everything else is a step toward that endpoint.”
The dream has long been to be able to tie an ad exposure to a consumer’s purchase behavior. With the rise of retail media networks, where the ad and conversion are one in the same, and purchase data platforms such as Attain, which connect consumers’ shopping habits to their ad exposures, that dream has largely been realized. The digitization of all media and commerce means that marketers now have data on every step of the purchase journey — from first exposure to consideration stage to eventual conversion. The loop has been closed.
Connecting ad exposure to sales activity has ushered a new metric: return on ad spend. That is, how much of a return on investment did a campaign generate, as measured by consumers’ actual purchase decisions.
The case for CTV is so strong that some have made the case it will surpass Google and Facebook to become the largest channel in all of advertising. Jason Fairchild, CEO of CTV platform tvScientific, makes that very case. “Marketers can now connect the dots between TV ad exposure and outcomes (sales, etc.) on a deterministic basis and understand (and prove) incremental ROAS for TV at a granular level,” he writes
CTV might not penetrate every living room, but when brands do advertise on CTV, they can rest assured that their campaigns are being measured more accurately and giving their brand a better chance at success. That is much more powerful than reach could ever be. The future of advertising isn’t about nostalgia for mass reach — it’s about celebrating each conversion that moves your business forward.
