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What We Can Learn from DTC Success with TV Ads 12 Mins Ago

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What We Can Learn from DTC Success with TV Ads 12 Mins Ago What we can learn from DTC success with TV ads 12 mins ago One of the most-discussed plot twists in recent Kevin Krim is EDO's President & CEO. His 21-year career has advertising has been the pivot of Direct-to- spanned search, social and TV Consumer (DTC) brands to linear TV. These advertising across start-ups and data-driven, digital-first players are expanding major companies like Yahoo and NBCUniversal. Sebastian Chiu is well beyond Facebook and Instagram—and EDO's Chief Data Scientist. He becoming serious players on the largest earned his undergraduate and traditional medium in advertising. post-graduate degrees from Harvard, working previously as a data scientist at Dropbox. A January 2019 Video Advertising Bureau study found that in 2018, 120 DTC brands collectively spent over $2 billion in TV ads—up from $1.1 B in 2016. 70 of those 2018 advertisers ran TV ads for the first time. But while we know that theyʼre advertising on TV, what may be less discussed is whether theyʼre succeeding on television—and what strategies they use to achieve their success. At EDO, we have a unique and differentiated ability to measure how DTC advertisers perform on TV by tracking incremental online searches above baseline in the minutes immediately following individual TV ad airings as viewers translate their interest in advertised brands and products directly into online engagement with them. By measuring incremental search activity across 60 million national TV ad airings since 2015, we are able to effectively isolate the effects of TV ad placement and creative decisions that are most likely to cause online engagement. We ran the numbers on DTCs as well as advertisers in various other categories to better understand how DTCs specifically are succeeding in TV ads—and what DTCs who are considering TV advertising can do to achieve success on TV. Table of Contents Does the David vs. Goliath story play out on TV? The DTC revolution is a quintessential David and Goliath story. In vertical after vertical, small, digital-native upstarts are changing the game and overtaking major brands. Does that story play out on TV as well—or is TV advertising one area where DTC marketers have finally met their match? To answer that question, EDO looked at how effectively TV ads elicited viewer activity since September 2018 across eight major industry categories including DTC. Guided by historical ad performance across billions of ads, we rated ad performance based on how closely the DTC ads came to meeting the benchmark volume of brand-related online activity in the minutes following each TV ad airing. We index each industry accordingly—giving an index value of 100 to an ad that meets benchmark standards, and below-par ads getting a score under 100 while higher-scoring ads receive a score over 100. We chose to set our index baseline of 100 to the average Consumer Packaged Good (CPG) ad since it is such a large and broad ad category. Our results are as follows: What emerges is a picture of DTC brands giving traditional advertisers a very strong fight. In the minutes following ad airings: The typical DTC brand garnered an average 6.7 times more search engagement than the CPG category. DTC appears to be a serious competitor to traditional retail—the latter with just 11% more search from the average TV ad than DTC advertisers. DTC also outperformed the benchmark itself by 6.7 times. Because DTCs are typically competing with entrenched players across the various categories above, itʼs particularly illuminating to look at specific comparisons. DTCʼs lead was significant as we drilled into specific advertisersʼ performance. In the menʼs grooming category, consumers who viewed a Dollar Shave Club ad were 6.5 times as likely to engage online than were people who viewed a typical ad for traditional brands Gillette and Schick. Within bedding, TV viewers who saw mattress ads were 3.4 times as likely to engage online if that ad was for DTC brands Casper, Leesa, or Purple Mattress than for traditional mattress companies Mattress Firm, Sleepyʼs, and Tempur-Pedic. To understand what an accomplishment DTCʼs TV ad performance really is, keep in mind that even the “giant” DTC companies—valued between $1 and $2 billion at the most—are still tiny compared to the massive traditional incumbents (P&G, for instance, has a market cap over $230 billion). Simply put, when it comes to TV ad impact, DTCs are punching way above their weight—and giving traditional brands a run for their money. Is there a newcomer advantage on TV? DTCs are overwhelmingly challenger brands—and thus “the new kids on the block” within their respective categories. Does being a fresh face help or hinder the way TV audiences receive them? One hint may come from the way viewers respond to DTC advertisers over time. Looking at the search engagements that brands garner as they first arrive on air versus the months following, itʼs clear that TV newcomers receive a “pop” in the first three TV months. After that, ad-related online search levels out in the nine months that follow. Below is a sample of that newcomerʼs welcome amongst a select few DTC TV advertisers: How much more engaged were audiences in the first three months of a brandʼs TV ads vs. the subsequent nine months? Overall, amongst the brands we studied, audiences were 75% more responsive to DTC TV ads in those first three months. When it comes to TV ads, being a newcomer can help. Thatʼs good news for many DTC advertisers looking to enter the TV game. How does the DTC marketing playbook translate to TV? (A brief history and how-to, plus a Casper mini-case study) DTC brands are built on driving efficiencies by rethinking the marketing status quo – simplistically, by cutting out the middleman. Can DTCs translate that philosophy to TV? First, itʼs important to recognize the historical context here. Itʼs not actually a new phenomenon to use TV to drive direct sales to consumers. For many decades, TV has had a category of advertisers called “Direct Response” (DR) marketers – you probably know them as those memorable, if sometimes annoying, spots loudly pitching you the latest kitchen or workout gadgets with a toll-free phone number and/or, for the past couple decades, a URL. We know the longer-duration versions of these ads fondly as “infomercials.” DR marketers are the predecessors of todayʼs generation of DTC marketers. TV networks generally relegate DR ads to non-guaranteed placements (i.e., “we will run your ads in whatever programming we have open slots”), almost always outside of the higher-profile dayparts, in exchange for a much lower price per ad than that paid by advertisers who commit to guaranteed placements in the Upfront. How do the DR marketers know itʼs a good trade? Quite simply, they watch the data very carefully – they keep track at a very precise level the exact time an airing runs on TV and then they look for the spike of people of entering their sales funnel. The special thing about live, linear TV is that thereʼs almost always a spike. There are hundreds of thousands or millions of people watching the ad live and some portion of them react by looking for more information and perhaps buying. So the DR marketers count how many site visitors (or in the past, how many phone calls) above the norm arrive in the minutes following the TV ad, tag them as a cohort with metadata about the specific airing that got them there and then see how many convert into buyers. They do the ROI math on value relative to cost, and then they buy more of whatʼs working for them and less of whatʼs not. If they realize thereʼs a very specific chunk of TV programming thatʼs really performing well for them, they might pay more to get guaranteed placement, but more typically theyʼll identify a certain creative (the 15- second or 30-second piece of video that is the ad) is doing particularly well in certain types of programming and they will ask the networks to rotate that one in more often, or theyʼll shift money into better-performing dayparts or networks, staying in the DR-tier of inexpensive inventory. Why doesnʼt every marketer do this? The short answer is itʼs hard for most brands because they do not have the visibility that DR marketers have. Whether itʼs an old-school DR marketer selling a countertop rotisserie chicken roaster or a next-gen DTC marketer selling a networked stationary bike, thereʼs only one way the interested consumer can shop and buy. DTC brands own their funnels. Most other brand marketers, from automakers to CPG to movie studios, canʼt see the data about their customersʼ paths to purchase because it is scattered around a tangled web of online and offline sources and outlets. What we do at EDO gives these brands a sophisticated proxy of the real- time, granular visibility that previously only DTC (and DR) marketers had. Casper Sleep, one of the best-known DTC players, seems to have leveraged the DTC playerʼs data-driven approach with its innovative approach to dayparting (apportioning ad buys across time of day). Dayparts are a classic media balancing act, involving investing ad budgets across a spectrum of time slots that represent the biggest audiences for the highest prices (prime time) to lower-cost, lower-viewership times like overnight. Striking the right mix along that spectrum lies at the heart of an efficient TV plan. We looked at the dayparting strategies of three of the leading mattress brands—DTC leader Casper, alongside traditional brands Sleep Number and Mattress firm—over a six-month period to get an up-close view of how these traditional and DTC brands might approach dayparting differently.
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