The Highest ROI Form of Digital or Television Is … Premium OTT (Part 1)

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At September’s three-day virtual ARF AUDIENCExSCIENCE conference I had the pleasure of presenting three papers. One has special importance for all marketers because it identifies one media type as towering over the others in terms of ROI.

That media type is the streaming of network television grade content in an advertising-supported environment. Standard Media Index categorizes OTT within "National Television -- Digital Video."

SMI has another category it calls "Non-Premium Digital Video." The latter is led by YouTube and also includes digital video within Facebook and all other digital video that is not presented in a context equal in production value, writing and "class" to traditional broadcast and cable network television.

The data I’m about to share with you comes from a study sponsored by Fox and performed with the cooperation of SMI by Bill Harvey Consulting. All television and digital advertising is covered by the study, not just the portion delivered by Fox.

A study of this kind would never have been attempted before the advent of SMI. The media cost data available to the industry had never been good enough to invest in a study of this kind. SMI, by creating a pooling system, uploads actual insertion orders on a census basis, cleans and harmonizes the data, and reports back to each agency its own data side by side with the total industry for benchmarking and planning purposes. Certain data are made available to networks and others while maintaining the confidentiality of advertiser- and brand-specific data.

We studied Automotive, CPG and QSR, three of the largest national ad spend verticals accounting for almost half of national advertiser ad spend in the U.S. (SMI also compiles data in more than two dozen other countries.) In total we correlated $2.2 trillion dollars in sales with $48 billion in ad spend by all TV and digital media types.

The average ROI across all this advertising within each of the three verticals was determined using multiple regression analysis quite similar to the way it is done in marketing mix modeling, using standard Excel extensions with no proprietary black box deviations. The completely transparent methodology is reported in the full report.

Indexing media types to the average across all television and digital media types, Premium OTT is the highest ROI media type. All other television is second, and all other digital is third.

Premium OTT has 4.7X the ROI average across media types for Automotive, 9.1X for QSR and 9.4X for CPG.

Reasons explaining this degree of ROI performance include addressability, lower ad load, on demand availability (meaning a viewer can wait for the perfect time to become immersed without distraction), generally non-skip-ability, and the public’s sudden falling in love with streaming, especially younger audiences.

And, oh yes -- no ad fraud. Not on Premium OTT.

The reason why Non-Premium Digital Video is under television and far under Premium OTT is generally because of the invitation to skip and other psychological deficits of those contexts for advertising.

Nevertheless, the rush of ad spend into Non-Premium Digital Video has dwarfed that of ad spend in the most powerful ROI medium. This is explained by CPM, still holding the bulk of the industry under its magic spell, despite the rise of ROI analytics. ROI already reflects CPM within it. CPM is not an outcome measure but is treated as one. Such it has always been, only now are we starting to awaken.

Read Part 2.

Photo: Glenn Carstens-Peters/Unsplash

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