INdustry: How Interactivity May Improve Advertising Math - Michael Collette

It39s interesting to note that interactive advertising though not exactly a new idea doesn39t seem to have its own math Pundits like me banter about the enticements of engagement the intrigue of interaction and the certain value of conversions but in truth we have no math Or at least I can39t find muchI39ve been revisiting interactive advertising lately With ITV apparently on the rise in many forms and flavors the potential lucre from expansions of the 70b currently spent on TV advertising is the golden goose yet to be gotWhile doing some reading about how media planners think strategize and build plans to spend 70b I took note of a particularly important aspect of media planning the fuzzy nature of effective frequency or the number of times and ad must reach its intended target to be effectiveIt turns out that media planners have by little more than convention arrived at general agreement that the effective frequency of advertising is 3 This is kind39ve like a coefficient of friction except that it isn39t actually based on any science Some media planners argue that 4 is the magic number Why Well mostly because they say soIt39s a very important number because it has a huge impact on the way money is spent Effective Reach is the of the target audience that can be reached with Effective Frequency So if I reach 55 of the target audience 3 times my effective reach is 55 Got itMedia planners constantly struggle with this because they really want to reach as large a percent of their target audience as possible but given finite budgets and asymptotic costs meaning the rate of cost increases much more than linearly they nearly always sacrifice reach goals to make sure they39re getting effective frequencyThis is a problem worth solvingWith this in mind consider the results of the only US interactive TV audience measurement effort that I39m aware of amp8211 the study published last year by Canoe Ventures If anyone is aware of any others please let me know and I39ll make the readers aware In the study Canoe reported very significant gains in unaided ad recall and perceived brand value amp8211 even among people that did not use the interactive featureSo why do we care Well using some standard math it turns out that the cost to reach 55 of the target 2 times is about 50 less than the cost to reach 55 of the target 3 times The whole point of repeating oneself is to break through the clutter and connect with the viewer What if amp8211 and this is just Collette39s hypothesis amp8211 what if it turns out that when we add engagement interaction and conversion to TV ads we actually make them more effective If the magic frequency number could be reduced from 3 to 2 by virtue of interactivity it would take 50 less money to achieve the same result That39s another way of saying that it would make interactive ad units twice as valuable as traditional old TV ads The best TV inventory is heavy demand If that inventory can be made twice as valuable then inventory sellers will see significant increases in revenues and those that make that possible might just possibly get paid reasonable sums for their effortsOf course this won39t be easy Not at all A great many very experienced people are pretty convinced of 3 and sometimes 4 Actually the whole TV ad industry relies on it It will take a lot of careful work implementing measuring reporting and repeating same to reduce 3 to 2 and thereby drive a dramatic increase in TV ad CPMs But if interactive TV ads really are more effective then it39s doable And if they aren39t well then what39s the pointMichael Collette is the founder and general manager of MediaTech Strategies a consulting company specializing in commercialization of new media technologies Recently weamp8217ve been very active in Smart TVConnected TV Advanced Advertising and Interactive Television Michael can be reached at michaelcollettecomRead all Michael39s MediaBizBloggers commentaries at Michael ColletteCheck us out on Facebook at MediaBizBloggerscomFollow our Twitter updates MediaBizBloggerThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaBizBloggerscom management or associated bloggers MediaBizBloggers is an open thought leadership platform and readers may share their comments and opinions in response to all commentaries

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INdustry: How Interactivity May Improve Advertising Math - Michael Collette

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