Growing ‘unicorns’ with brand response TV advertising

Advertising during the Super Bowl is designed to make a statement. Brands use those premium slots as an opportunity to make people laugh or cry, to take a political stance, but most of all, to make a lasting impression. At $5 million for a 30-second spot, Super Bowl ads aren’t cheap, and just as notable as the content can be which brands decide to shell out for ads at astronomical prices.

Well-established car, beer, soft drink, and insurance companies are the usual suspects, but over the past few years, startups have begun to invest in these spots, as well. For instance, Airbnb aired a TV commercial called “We Accept” during last year’s Super Bowl, which aimed to make a political statement and raise its brand profile.

The trend of startups paying for Super Bowl ads is a window into what is actually a much larger trend: startups are increasingly putting TV, and specifically brand response TV advertising, at the core of their growth strategies, with accountability.

Why is this happening? Because brand response TV has emerged as a way to fuel hyper-growth for consumer-facing unicorn companies. Companies use brand marketing to raise awareness and direct response to elicit an immediate response from audiences who take some action. Brand response TV marries traditional branded marketing with direct response. The hybrid offers a strategy that elevates brand awareness with a clear and prominent call to action that results in attributable ROI.

DRTV has been a popular medium for years, but over the past two decades, many tech companies shied away from TV advertising because it came to be associated with the excesses of the first dot com bubble. They focused more on digital marketing, which was more accessible and affordable. However, as the ranks of unicorn companies have swelled in volume and scale, startups are viewing brand response TV as an opportunity to maximize their advertising dollars and generate real results.

There are about 30 venture-backed companies that reached valuations between $500 million and $999 million in 2018, including Sun Basket, Turo, ZipRecruiter, and Zola. These companies could become unicorns in 2019, and brand response TV could help them get there.

Unicorns on TV

A “unicorn” refers to a privately held startup that is worth more than $1 billion. Uber, which is now valued at $68 billion, is at the top of the unicorn list, followed by Airbnb, SpaceX, Palantir, WeWork, JUUL Labs, Pinterest, and Stripe, among others, in the US. In addition, Legal Zoom, Automation Anywhere, Discord, and Circle Internet Financial all joined the U.S. unicorn club in 2018, according to CB Insights.

An analysis by FounderKitreveals that most unicorns make consumer-facing software products and are in the retail sector. As companies that target consumers, have money to spend, and focus on rapid growth, TV advertising is perfectly suited to their needs.

This may seem counterintuitive since 2016 marked the first year that digital ad spend outstripped TV ad spend in the US. The internet, mobile devices, and social media broke open new channels for advertising and consumers are increasingly spending their time online. There’s also the perception that digital advertising has greater accountability, and even large, well-established companies that can afford plenty of TV ads have shifted their spend toward digital.

However, the digital advertising marketplace has become highly fragmented. Each channel has its own requirements, audience, and metrics, which can make it difficult to deploy cohesive campaigns. The reality is that digital channels have complicated the advertising landscape and made it harder for brands to execute campaigns that are sticky, not to mention accountable.

TV advertising, on the other hand, is an effective way to engage potential customers, as well as raise brand awareness and prestige. People may be spending more time online, but they still watch TV. In fact, American adults watch an average of five hours of TV per day. TV is hard to beat when it comes to getting a product in front of a wide audience. It also delivers a high level of measurability and accountability, particularly if the campaigns are direct response. TV remains just as relevant and impactful as ever, and TV ads serve as a status symbol for the many unicorns who can afford them. TV ads are not as cheap as digital advertising, so in a sense, a TV campaign represents a moment of arrival.

For evidence, look no further than the many successful tech startups that have experienced breakout growth and invested in TV ad campaigns: Dollar Shave Club, zulily, Jet.com, Airbnb, Uber, FanDuel, JustFab, Blue Apron, Warby Parker, and Slack, to name a few. These companies achieved enough growth to afford a TV ad, but TV ads are also instrumental in fueling that growth.

Brand response TV, or not?

TV advertising isn’t a good option for every startup, however. There are a few things to keep in mind when deciding whether to invest in a brand response TV strategy. First, TV ads need a clear, recognizable, enduring brand message to be successful. TV ads can be quite short, and even if they’re longer, it’s not easy to keep people’s attention — especially if they’re using ad breaks to do other tasks such as using the bathroom or browsing on their phone. A good TV ad has to pack a punch with a concise yet powerful message.

Second, although TV ads work best for companies that already have significant traction, newer companies can also achieve success by casting a wide net and pairing TV ads with digital ads — just as Airbnb, Uber, Dollar Shave Club, and Blue Apron have. Digital ad campaigns allow for more specialized, niche targeting. With TV, not all viewers are customers and people outside a target audience may end up seeing an ad and taking action. A proven conversion funnel is essential to ensuring that views translate into buys. Part of translating views into buys is following up and nurturing leads. After an ad airs on TV, email messages, social media ads, and retargeting via mobile can help spur viewers to take action. The TV campaigns with the best results are part of a larger omnichannel effort that reinforces the message via other channels, such as over-the-top (OTT) and connected TV (CTV).

For startups that are still working their way toward unicorn status, there are ways to deploy TV advertising that won’t break the bank. Just because a company can’t afford a Super Bowl ad or a prime-time slot doesn’t mean that TV advertising can’t work for them. Direct response advertising tends to cost less and is more trackable because the initial point of contact and sale happen closely together. In addition, modern analytics tools enable startups to meticulously track metrics such as first-time visitors and conversions and adapt accordingly.

Gone are the days when a TV ad campaign means spending a large amount of money and hoping for the best. Today, startups can deploy a brand response TV campaign at a reasonable cost that triggers immediate and measurable actions in an accountable way. Brand response TV isn’t right for everyone, but it can be a powerful way to get in front of new people, convey a message, and engage enough customers to get one step closer to unicorn status.

Karla Crawford Kerr is vice-president of marketing at Hawthorne

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