TV Ads-Do They Measure Up?

Advertisers across media are seeking unprecedented levels of campaign measurement and ad tracking. In this day of digital media, where Google, Microsoft and Yahoo! battle for online ad supremacy, the TV advertising marketplace seems almost criminally antiquated.

The TV advertising marketplace is worth an estimated $70 billion annually (for comparison, the online advertising marketplace is worth $15 billion per year). While this market remains a tremendous opportunity, a substantial portion of spend decisions are based on practices more akin to AMC’s “Mad Men” than deep analytics. The current system is coarse, and provides no data to prove that advertisers are actually reaching their targeted audience. Do viewers really watch the commercials? Are they actively engaged? Do shows reach target demographics?

As a result, the TV advertising market is ripe for innovation from established players (Nielsen, MSOs in Canoe Ventures), new entrants (Microsoft, Google, TNS) and start-ups (Invidi, SpotRunner). Each is exploring different approaches, attacking the market with set-top box targeting, more specific geo-ad targeting, and dynamic ad insertion. Much of the recent buzz and focus, especially for the cable companies through Canoe Ventures, centers on more effectively targeting television ads. Industry visionaries imagine a day when ads can target specific households, much the way online ads target specific IP addresses. This approach will radically overturn television advertising’s mass-market approach, improve ad relevancy, and dramatically lift CPMs.

Although the intense focus on television ad targeting will likely yield considerable returns in the long-run, the focus today for any player should be on the less-sexy, more tedious mechanics of measurement. Advertisers today see little or no reporting on how ads fared, and they want that to change. In truth, the winner of the race to transform TV advertising and capture the greatest share of profits will be the first to solve the oft-ignored measurement challenge.