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Episode 114

Everything Works at Zero with Jordan Rossler

The most efficient frequency for TV advertising is just one impression. As controversial as that sounds, the data is clear. You need at least 2X more conversion likelihood from a second viewing to justify its cost.

This week, Elena, Angela, and Rob are joined by Jordan Rossler, VP of Media Analytics, to explore why cost is the principal determinant of TV's ROI. They examine the controversial "Everything Works at Zero" principle, where any effective media becomes dramatically more efficient when you lower its cost. The team breaks down why CPM is king and how to evaluate if cheap media is still high quality.

Topics Covered

• [01:00] The "Everything Works at Zero" principle explained

• [05:45] How TV pricing differs between linear and streaming

• [12:00] Why frequency of one is the most efficient level for TV

• [14:00] Creating ads that stand alone regardless of frequency

• [16:30] The hidden costs of targeting in TV advertising

• [19:00] Using ACR data to prove cost-efficient buys outperform premium ones

• [23:45] Debunking myths about targeting effectiveness

Resources:

Reach, Revenue & ROI: The 3 Principles for Effective Advertising Report

Today's Hosts

Elena Jasper

Chief Marketing Officer

Rob DeMars

Chief Product Architect

Angela Voss

Chief Executive Officer

Jordan Rossler

VP Media Analytics

Transcript

Jordan: The most efficient level of frequency from a cost per or ROI basis is that level of frequency, level of one. And the reason for that is, it's definitely true that as you see an ad more times you become more and more likely to eventually convert and purchase.

Elena: Hello and welcome to the Marketing Architects, a research first podcast dedicated to answering your toughest marketing questions.

I'm Elena Jasper. I run the marketing team here at Marketing Architects, and I'm joined by my co-host Angela Voss, the CEO of Marketing Architects. And Rob DeMars, the Chief Product architect of Misfits and Machines.

Rob: Howdy.

Angela: Hey.

Elena: And we're joined by a special guest, Jordan Rossler, our VP of Media Analytics at Marketing Architects.

Jordan: Hey guys, thanks for having me.

Rob: Yes, extra capital S on special guest.

Angela: Major brains joining the pod today.

Jordan: Excited to chat with you guys. Let's get into it.

Angela: Get your calculators out. You're gonna need 'em.

Rob: What's a calculator?

Elena: Yeah. Get out chat GPT. Get ready. Okay, we're back with our thoughts on some recent marketing news. Always trying to root our opinions in data research and what drives business results. Today we're talking about one of our favorite phrases and principles at Marketing Architects, everything works at zero, which means if media is effective, lowering its cost makes it dramatically more efficient. More attention for fewer dollars means better results. And I'll kick us off as I always do with some research. A couple of years ago we released a report called Reach Revenue and ROI.

And to this day there's one section of that report that continues to come up again and again in conversations with clients, in strategy meetings. It sparked debate then, and it really still does now. And that section was titled The Principal Determinant of TV's Ability to Drive ROI is Cost. It was maybe the most controversial part of that report because it challenged a lot of long held assumptions. You know, marketers, we love to talk about performance. We optimize for conversions, clickthroughs, response rates, but in this section, we flipped the script. We said, that's all great, but none of it matters if you don't factor in cost because everything works at zero. If media were free, most campaigns would look like rock stars.

That's not the real world. And to make the point stick, we've used a few different analogies for this one, but we like to say, imagine that Steph Curry, you know, pick your player, Steph Curry, LeBron James, Anthony Edwards gets one shot at the free throw line and you get 100. Speaking personally, I'm not good at shooting free throws, but with enough time, with enough shots, I'm probably gonna make more than an NBA player with just one chance. And that's how we think about targeting and cost.

The report goes on to show that TV, it's not always the expensive dinosaur that people think it is. In fact, we found that Marketing Architect's clients reached the same scale as Fortune 100 advertisers like Walmart, IBM, but at a fraction of the cost. So with the right media strategy, TV can outperform even digital on efficiency.

So the bottom line is the price you pay determines the value you get. That's what today's episode is about. Why cost matters and how it changes what you think is working. Alright, so this is the sort of concept that makes sense in theory, but as marketers, we constantly make decisions that stray from this principle.

We pay more to target an individual when we could reach a broader audience and include that person for less. We overvalue certain kinds of media when we could reach the same audience for less elsewhere. Like all things in marketing, this debate is extremely nuanced, but Angela what do you think are the main reasons why there's so much pushback to this? Everything works at zero principle.

Angela: I don't know. That's why Jordan's here.

Rob: Boy, you sound like me.

Angela: I know. I think it comes from several places. There's a lot of resistance to this principle. And I think related to television, people are conditioned to think that TV is very expensive and maybe just don't go to a place of challenging the cost. I think it starts with how marketers are trained to think. Cost feels tactical, like a procurement detail, not like a strategic lever, but in reality, cost can be the multiplier. It determines whether your media strategy can scale or whether it's going to fail. I also think there's a deep seated bias that the more expensive the media, the better the media.

The more premium, the more precise. But in media, price often signals complexity, not quality. And then there's this fear of waste. Broader, more efficient buys can look risky because you're not narrowly targeting your core audience, but that waste is often where your future consumers live. I also think that legacy metrics like CPA and ROAS sort of reinforce that bias.

They reward short-term wins that ignore that long-term efficiency play, the ability of those impressions to drive future customers to your brand. And I think to add to that general comfort with the familiar probably catches this all at times. You know, marketers have been conditioned to chase precision and personalization, especially in digital, even when it drives up cost and narrows reach. So when we say everything works at zero, it doesn't just challenge a media strategy. It sort of challenges the entire marketing mindset, and I think that makes it hard for folks.

Elena: Yeah. Since we're going to be challenging a whole mindset today, maybe let's start with the basics and work our way into it. So Jordan, thanks again for joining us. I wanted to start by asking, how do we define cost efficiency in a TV campaign? So what are those metrics that matter most?

Jordan: It's a good question. I think one of our beliefs around here is that CPM is king, right? And so CPM is kind of at the top of the list of the lowest cost it takes to go and reach the most number of people is nine times outta ten gonna be the most effective way to buy your campaign.

I think an alternative way to look at that TV's bought in terms of TRPs or GRPs a lot of the time. And so the cost per point in one of those metrics is another great metric to just say how many dollars does it take to go and reach a ton of people of our audience. And then obviously seeing the down funnel impacts on ROI at the end of the day is another good way to evaluate how efficiently are we doing what we need to be doing.

Elena: So that phrase, CPM is king, is normal around here. But if you put that out into the marketing world, people would probably get very mad. Because that's not a widely held belief. And part of the reason is because we only buy TV advertising media. That belief would change depending on what you're buying a bit, I would think. But most people listening to this podcast have never bought TV advertising themselves. Their brands might have never dabbled in it, and it has some oddness to it when it comes to pricing. So could you walk us through how is TV priced and how does it differ from digital pricing?

Jordan: Yeah. I think it's important to distinguish between the linear and the streaming side. So on the linear side, you are offering a rate upfront before your ad even airs. And so what's important is to try to project how many people are actually gonna see this? So you can estimate a CPM on the front end versus on the streaming side, it's a more one-to-one basis. So you're bidding for people as they're viewing. So you can kind of lock in a various CPM or at least a CPM ceiling so that you're never crossing that boundary that you've set for yourself. But in linear, if no one tunes into the show, you just paid hundreds, thousands, millions of dollars for no one to see it, and there's really nothing you can do.

So that's a difference there between linear and streaming. I think where the premiums come in on the linear side, there's more premiums when targeting specific geos, like DMA or state level targeting. That's where some premiums can come in. On the streaming side, geography isn't really as much of a premium, but where costs can really start to add up. And this is kind of a hot topic that I know we'll get into later today, is around the targeting of specific audience using first and third party lists and things like that to get really honed in on a target audience. That's what can add a lot of premiums to the tune of more than two to three times a normal CPM if you had a very general broad targeting line.

Elena: So while we're on the topic of CPM, I mentioned this a little earlier, but I wanted to talk about this elephant in the room, which is just because something's cheap doesn't mean that it works. And that's usually a big pushback we hear to this principle is, well, I could go buy millions of impressions in display ads that nobody's ever gonna see. So we know that just because something's cheap, it doesn't mean that it's gonna work for your brand. How do you evaluate if media is both cost effective but also high quality?

Jordan: Yeah, you're totally right there. I think a low CPM really comes down to two things, right? Number one is the media performing from an ROI standpoint, and is it generating unique reach? Are you only hitting this really small pocket of people over and over again at a low CPM, which is great, but not really expanding your reach and doing what we want TV to do in the first place. And the good news is we can leverage ACR data to measure both of those things and see is there down funnel response coming in, but also how wide is the reach that we're actually hitting?

How big is the footprint that we have? Are we just hitting a really small pocket of people on a couple of networks over and over? Or are we competing and getting our share of voice out there relative to our competitors and the level of spend and impressions that you're hitting to keep those impressions accountable. And what we see is that as long as you have a very diverse buy, lot of different stations, lot of different day parts, that reach is gonna inherently come by hitting as many people as you possibly can.

Elena: I liked what you said about a low CPM is only as good as who you're actually hitting, and TV is lucky for marketers in TV. A bit of a different case than digital typically. As far as knowing who's watching, you said ACR, I just wanna make sure that we define that. That's automatic content recognition. Can you give a quick explanation of that? People might not know what it is.

Jordan: Yeah, no. Great question. It's basically leveraging a pool of smart TVs that are automatically detecting the linear feed that you're watching. And so we know on those millions of TVs, what are you watching? When are you watching? And are we hitting you with our ads? And how many people are we hitting with our ads at a given point in time? And are we uniquely hitting people with ads on certain networks and programs? Or is it a really small pool of just those, you know, a subset of those TVs?

Elena: While we're on this topic of media quality, I wanted to ask you, do you think that some marketers avoid this most cost effective media because they think it might reflect poorly on their brand, or they just assume that it's low quality?

Angela: Yeah, I think that's a part of it. There's a fear that cheaper media reflects poorly on who they are, their purpose, their brand in general. If you're not paying a premium, you're somehow devaluing what you stand for. It's a pretty flawed assumption in my view, I think in media, price doesn't necessarily reflect quality. It often reflects things like scarcity, availability, targeting complexity, or how premium the seller wants it to feel.

Perhaps not whether it actually performs. So, and I just think, you know, if you think about your own viewing behavior. We watch a lot of content, so of course we watch NFL football, we watch tent pole events. We also watch non tent pole events and non NFL football and that. Can you recall a time where you see an ad for a brand and go, geez, I was thinking great things about that brand until they fell outside of NFL football and now I don't feel like that? That doesn't happen.

Elena: No, never.

Angela: So, you know, I'd argue that choosing efficient media isn't a sign that you're cutting corners. It's a sign you're making sure your dollars are working as hard as they can possibly work.

Elena: When we talk about low CPM, CPM is king, one of the biggest benefits of that is that you can get more reach for your dollar because you can hit more people. We recommend doing that instead of hitting the same people more often. And in our data, we've seen that the most efficient frequency level is a frequency of one. So, Jordan, why do you think that is? And how does that show up in our actual response data when we're evaluating performance?

Jordan: Yeah, this is a really, really controversial kind of hot topic that people almost don't even believe when we show them the data. And really the data is extremely clear. Like you said, Elena, the most efficient level of frequency from a cost per or ROI basis is that level of frequency, level of one. And the reason for that is, it's definitely true that as you see an ad more times you become more and more likely to eventually convert and purchase. That's undeniable in the data, however, if I see an ad once and then twice, I need to become at least 2X more likely to convert for that second impression to actually be more efficient and worth it than the first impression.

And that's just not what we see. There's a marginal gain, but it's not a 2X gain after seeing an ad twice or 3X gain after seeing an ad three times. And that's where the diminishing returns really come in and make that frequency level of one the ideal. So if we could have our cake and eat it too, we would hit every single person one time and then every single person a second time. That's not logistically possible, but that would be the ideal way to build a campaign if you were going for the most efficient response possible based on the data we have.

Elena: That breaks my brain a little bit. I like how you explained of like, your second frequency, you're right. Like even if people are more likely to convert, you've already paid for the first frequency, right? Is what you're saying. So like for each one, maybe some marketers think of it as starting at zero, but you're not, yet to take into account the cost that you've already paid to hit them once. So yeah, that is kind of a, not kind of, that is a controversial topic sometimes.

But Rob, I wanted to ask you about this because if marketers, we believe that the most efficient frequency is one, does that change how you build creative for a channel like TV where you can really do that? Because I think that sometimes we hear creative best practices is like nurturing people through creative and maybe changing the storylines. And do you think marketers, should we be focused more on giving consumers a reason to buy right away if we're gonna subscribe to this principle?

Rob: Well, people are gonna disagree with me on this, but I am an expert in my opinion, so deal with it. 99% of ads, regardless of frequency, should be able to stand alone. If you've got an agency who's kinda selling you on the slow burn creative, you know, where you don't really need to know who it is for because it's so darn clever, right, and there's this payoff that the customer's gonna have, you know, once they've seen the ad for the 12th time, you know, in combination with all the other ads that in the campaign, they're overestimating their own creativity.

And quite honestly, they're trying to impress their friends in the industry that they did a campaign that wasn't, you know, so on the nose. Some advertisers have enough budget to toss in the toilet to flex on pure brand subtlety, but that's really the exception, not the rule. Every ad should have to sing for its supper, and that doesn't mean the ad needs to lack creativity or suck. It's actually, it's the opposite. It means every ad has a job to do, and that's to grow a brand, both short and long term.

Elena: Rob, I think that, it's funny you say that, that sometimes that's more for the industry than for consumers because I see examples a lot in the advertising trades of campaigns like this that build over time. I cannot remember a single one that I've seen as a consumer that I actually, I remember seeing things where you're confused though, where like clearly you were in the wrong stage of the journey. You're like, what is this? But I see examples of that all the time, but I actually can't think of one where I was like, take it on, because it's, it's so hard to actually hit people in a sequence too. Which, speaking of that, of trying to target in a sequence, we talk a lot about the hidden cost of targeting on the podcast. So Jordan, could you explain what is it that makes targeted media more expensive?

Jordan: Yeah, I think a lot of the stuff Angela hit on earlier on the linear side from a scarcity and premium standpoint certainly factor in, and I think on the streaming and CTV end, higher levels of targeting just require a lot more additional data sources to be brought in to create those lists of people to hone in on. Things beyond just age or gender. And so all of those come at a cost in addition to in the bidding process and in the bid stream. When you see all these impressions coming by, you need to kind of get yourself to the top of the line to make sure you're winning the bids of the people that are on those lists.

And so that comes at a premium as to hit the right people at the right time. And then the burning the stick at the other end too. You're also getting less reach in the process, which hurts your results, so you're paying a premium to get less reach, which is two strikes against you from everything that we've seen in the data as the best way to drive efficient response.

Elena: So we brought Jordan here today to get into details. So that's what we're gonna do now because I am curious about this. What is the process like once we buy into this principle, we're going to approach a channel like TV this way. How do you show that a lower cost buy actually outperformed a more expensive one?

Jordan: My favorite analysis that we do is leveraging the ACR data that we talked about for not just our clients, but looking at their competitors or prospective brands as well, and pairing that with third party TV spend data to say, okay, here's how much you guys are spending in TV to go and hit X number of people X number of times, and you can put everyone on a level playing field and say, of this pool of millions of TVs that we have access to, how much media saturation do you have out there and how much are you paying for it?

And then compare how much did it cost Brand X to go and get 60% reach versus one of our brands to go and get that same amount of reach, and do a pretty easy analysis of a cost per point there from a TRP and reach standpoint. And then we always get the question of, yeah, but is that 60% of people that you're hitting? Is that the same high quality group of people? Surely it can't be on this premium brand, on those NFL airings going and hitting the same people and the beauty of the ACR data is we can look down to literally a device and household level. Are they the same devices or not? And I would say without fail, there is 90 plus percent overlap between those two pools of TVs where of the reach that the premium brand is getting, we're reaching at least 90% of those same people.

And oh, by the way, getting people outside of that too, at literally a fraction of the cost. And at that point the data just kind of speaks for itself and shows the power of that very diverse buy that we've been talking about. You don't have to go and get all those premium NFL airings to go and reach that same number of people. You can do it. It's a little harder. There's more blood, sweat, and tears involved, but it is just as effective and like I say, oftentimes comes at a fraction of the cost.

Elena: So Jordan, would it be right to say that one of the misconceptions there is the idea that people watching these premium networks, premium games, that's all they're watching, would you say that's a big part of it? Like marketers just not understanding that people don't only watch like one channel, one program, one type of TV.

Jordan: Yeah, I would say that that's definitely true. There are certainly people that do only watch those premium networks and there's a portion of the population that you can only reach through an NFL airing, for example. But there's another vast majority of people that are watching a lot of other things too. And so I think the best way to build a buy is a very efficient base layer that stretches really wide across a high variety of networks and day parts, and then you pick your spots to go and get some of those live sports airings to put the frosting on the cake and have the most wide reaching, but high and high quality and cost efficient buy possible.

Elena: Yeah. And I love that idea of creating your foundation with this efficient, broad reach media makes sense to us. But Angela, this idea is contrary to how a lot of marketers approach media buying. A lot of marketers would do the opposite. They're gonna start with the targeted expensive media to hit their, you know, highest value customers, and then maybe go broad. So how do you help brands walk through that, like understanding that broader reach doesn't necessarily mean wasted spend, and why positive spill matters so much.

Angela: Yeah. This comes up all the time because broad reach a lot of times gets a bad rap. Clients hear broad and they immediately think waste. We talked about that before. But the truth is, growth doesn't come from only talking to people who are already in market or who already know you. It comes from potentially reaching the people who aren't yet, aren't in market, might be future customers.

That's what we call positive spill. They still have to be the right people. And I think sometimes people go like, if we're going broad, then we're hitting people that either have no relevance to my brand today, nor will they ever in the future. That's not what we're saying. When you buy efficiently and reach more people, yes, some of them won't respond right away, but many will eventually, and they wouldn't have even known you existed if you don't cast a wide enough net. That's how you build that mental availability and how you grow market share. So broader reach isn't waste, it's where that future revenue comes from.

Elena: So Jordan, there's those principles that Angela just walked through, and then there's also metrics. Have you found that there are certain metrics that resonate more with clients and brands when we're proving TV's effectiveness?

Jordan: Yeah, I mean, at the end of the day, ROI is the most powerful metric when talking with marketers, right? And I think we have countless examples of clients that have tried TV in the past at more premium levels that just haven't been able to make it work from a bottom line standpoint and have it pay the bills for them. But then they switch to our way of buying, much more cost efficient way from a CPM standpoint. And TV performance is finally scalable and in line for them, both in the short and long term. And that's kind of step number one. But going back to what we were talking about earlier with those ACR analysis of comparing cost per point and are we achieving the same reach at a fraction of the cost?

That data too is a great kind of step one to say, hey, just from a, who we're hitting, how we're hitting them and how much it costs to hit them standpoint, we're doing literally the exact same things you guys were doing last month, last quarter, last year, at a fraction of the cost. And that is a great way to kind of start conversation. And then once the performance data starts rolling in ROI almost always confirms that as well because like we said at the beginning, CPM is king.

Elena: Rob, when I was thinking about this, like everything works at zero principle, I was like, ah, it works across media, but does it also work across creative in some way? Like marketers, we might assume the more high quality, more expensive the creative, the better the performance. But that's not always the case, right?

Rob: I'd like to think that most marketers are smarter than the assumption that spending more dollars on creative equates to better performance. It's kinda like saying the more you spend on a car, the better a car will perform. And I think the Maserati has proven that that is absolutely incorrect. It costs like 90% more than a Toyota Corolla. Yet a Toyota Corolla won't leave you on the side of the road looking like a rich moron. So, you know, I don't know about you. I'd prefer driving a smarter spot with better performance than an overpriced spot that's shiny on the outside and broken under the hood. I don't think anybody would disagree with that, right?

Elena: No, no, I don't think so. That's not too controversial. I'm still getting over the Toyota Corolla example, but that's great. Alright, well we're just about done here. I thought one fun way to kind of wrap us up is, could we all share what's a myth about cost and effectiveness that we wish every marketer would unlearn. And Jordan, I'll start with you.

Jordan: Yeah. I think for me, I go back to the targeting that we were talking about earlier, especially on the CTV and streaming side. There's so many cool bells and whistles that sound so good on paper that you can go get, men who are interested in lawn care to then go advertise to them with that type of a product. And again, it does sound great in theory, but the reality of the mass media nature of TV is that you are targeting the account holder of the Hulu account or whatever streaming service they're watching through, and they're not necessarily in the living room watching TV at that exact moment.

It might be the wife or kids or family or college friends of the kid who's using the account. And so there's so much dilution of the targeting there that oftentimes you're paying a premium of 2, 3, 5, potentially even more than that multiplier from a CPM standpoint to go and hit the same people that you already would've been hitting anyway. And the performance almost never can counteract the premium and spend. And so I think as marketers learning the lesson, that targeting isn't really worth the premium and like we've been talking about this whole time, stretching your net as wide and efficiently as possible is the best way to drive the bottom line performance.

Angela: Mine would be that premium or what I would just call expensive media is the cat's pajamas. I would say that, in many cases, and in many ways it's worse, going back to what Jordan had said about the stat that the frequency of one is the most effective at driving those immediate sales. There are many ways to get into a household. If I can pay $50,000 in quote unquote premium media to get into X amount of homes, is that a good use of my money or is it better to use that $50,000 to reach three X, four X, even five X potentially?

The amount of people still the right audiences. It's the argument over is the primary goal to get into the right household, or should I be giving some disproportional value to the delivery system, which is the programming that is used to get into that household. Paying more doesn't guarantee impact. It just guarantees you're spending more. So let's focus on outcomes instead of optics.

Rob: I think the bigger question is, do cats actually wear pajamas to begin with? You know, but mine doesn't.

Angela: She never has. And it's just like, I mean, smart. It bothers me. Yeah. Right.

Rob: I went with a different cost myth. The cost of time. Especially in the agency world where so many agencies charged by the hour, people have come to believe that the more time you spend, the more hours an agency puts into developing strategy, creative analysis, the better the quality of the work. And actually, I recently, I heard Roy Williams, who's known as the Wizard of Ads, he said copywriters that charged by the hour is like a gun slinger that charges by the bullet. And I thought that was, I thought that kind of really shot the idea home.

Angela: We're definitely in a time where the value of time is being challenged, I think in great ways.

Elena: Jordan stole mine, but that's fine.

Angela: Oh.

Elena: Okay. Yeah, I love any sort of targeting myth, but Rob, I think you're onto something there that, yeah, especially like we're saying with AI and one of the things we talked about recently on the show was using synthetic audiences for pre-testing. And I think there is this inherent feeling like if something's not expensive, if it's not time consuming, how is it working? It's like you kinda have to break your brain a little bit with like we do.

Rob: We do.

Elena: No, it's still working. Just because it's less expensive doesn't necessarily mean it's lower quality. Okay. Let's wrap up here with this. What is your go-to cheap thrill, something that you love that costs almost nothing? And Jordan, why don't you kick us off first?

Jordan: I know sparkling water is kind of all the rage right now and the 79 cent per liter sparkling water at Aldi is absolute fire, particularly the peach flavor. I'll choose that drink over any more premium sparkling water every day of the week.

Angela: Is that a sweetened peach or is it unsweetened?

Jordan: It is sweetened, yes. And it's just the perfect balance, soda of like...

Angela: Soda, Jordan. It's pop. That's what it is.

Jordan: I mean, it says sparkling water on the label, so we're gonna go with that.

Rob: All right. I'm gonna go with White Castle. It's cheap, it's a thrill. Enough said.

Angela: How cheap is it when you go to White Castle?

Rob: It's really cheap.

Angela: I don't know. I feel like you come back with boxes. I'm not sure.

Rob: I'm not even sure if it costs money. You just get this case of hamburgers.

Angela: They just give them to you?

Rob: Yes.

Angela: Mine's not funny at all. I love cleaning out a junk drawer or reorganizing a closet. It costs nothing. It maybe takes 30 minutes and it just makes me feel like I got my whole life together.

Elena: I feel that so much.

Angela: Mm-hmm.

Elena: I love that one. Yeah. Mine is, I love to watch my dog just run like crazy. You take your dog to a dog park and you really let him loose. Just love that, they just seem so happy and free and yeah, it's fun.

Elena: Great. Alright, well Jordan, thank you for joining us today. Thanks for coming on the pod.

Jordan: Absolutely. This was a blast.

Elena: We'll direct all complaints about this episode and the principle to Jordan Rossler so you can find him on LinkedIn. Reach out to Jordan if you have a problem with anything that was said on this podcast.