If advertisers employ agencies to grow the business, remunerate TV buying on that basis
Ian Daly, head of AV at Bountiful Cow TV, reflects on Enders Analysis’s ‘TV Must Evolve’ research, digging into a bulky section about how agency reparation didn’t encourage the most efficient media buys.
Look closer at your agency contract to improve the effectiveness of your TV ads
Viewing habits are shifting at pace following a year of restricted movement and consecutive lockdowns. As new TV trends emerge, we also hear renewed calls for reform and change in how TV is bought and sold. For anyone who hasn’t managed to keep on top of all the articles amassing on the subject, the key takeaway is that the sun has long passed noon on today’s TV trading practices.
ISBA led the march by commissioning the much-needed report by Enders Analysis on the future of the TV advertising model. The Enders report outlines the important industry-wide measures that need to take place and will undoubtedly take time to implement. And yet, advertisers will be pleased to know that there is one crucial change that can be actioned today and can have an immediate impact on countering the loss in advertising effectiveness identified by the IPA.
That is the emphasis of agency remuneration to shift from price to business outcomes. Now for anybody who thinks that this is utopian, a few forward-thinking agencies have been working in this way for some time. The price of TV is but one component of delivering media effectiveness – a more valuable currency.
For example, a nifty cognitive performance experiment conducted almost sixty years ago, nicknamed the Candle Problem, taught us that extrinsic motivators (namely financial rewards) are not effective at encouraging complex problem-solving.
While this may seem as abstract as it is binary, there is a deep relevance in citing the Candle Problem when talking about TV trading. Because, in a world where the TV landscape is growing in scope and sophistication, there are still too many agencies that are incentivized to deliver the lowest possible TV price.
As Manning implied, the race to the bottom is not only unsustainable, but it is totally inconducive to TV planning today. The job of a TV planner has never been more difficult thanks to the unprecedented fluidity of audience viewing behavior. Rather than focus on delivering the lowest CPT, today’s TV planners should be concentrating on delivering effective TV campaigns that live across multiple formats and channels.
So how do you create a remuneration model that inspires media effectiveness? Start by dialling down isolated, extrinsic motivators where possible and instead focus on the opposite – an intrinsic desire to be part of something successful.
Put simply, make sure that business outcomes are built into the core of the advertiser-agency contract. These outcomes range from ROI to awareness, penetration, acquisitions and more, the common denominator being that they focus on growing clients’ businesses rather than delivering arbitrary discounts v SAP. Of course, competitive TV pricing underpins campaigns, but it should not be the ultimate goal.
This needn’t be revolutionary. If advertisers employ agencies to grow their businesses, then why not remunerate on that basis? Of course, this is easier said than done and my thoughts go out particularly to clients with international procurement departments, but it is entirely possible through collaboration. Agencies must be more vocal about unrealistic and unsustainable buying targets, both before and after pitching.
Advertisers, on the other hand, must recognize the damage to their media effectiveness that cost incentives are producing. Ultimately, transparency and education are required on both sides, as well as an understanding that the commoditization of TV advertising benefits nobody other than those who arbitrage.
The sun will soon set on today’s TV trading practices, ushering in a new dawn in which the value of TV planning and buying is seen as equal. By then, the advertisers and agencies who have heeded the advice to move on from price-based incentives to those that are outcome and effectiveness-based will be the ones who benefit most. For the rest, we may need to light a candle in remembrance.
The Drum took a deep dive into the Future of TV this month. Don’t forget to sign up for our Future of Media briefing here.