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The Supreme Secret to TV Advertising Success: Move from KPIs to KMIs.

I get it. My first job was as a marketing statistician. A data grubber. The source of proof for marketing results. So I get the chorus to measure TV's immediate effects. CAC. Searches. Clicks. Calls. All of the immediate metrics- or Key Performance Indicators (KPIs)

I get why each marketing channel is in a 'prove it or lose it' battle with each other. And must answer to immediate performance metrics. A digitally native business is likely not alive without at least one channel clearly delivering immediate results.  

But the desire to treat TV just like digital channels is, unfortunately, gaining traction. Companies are running smaller tests. Using social media-derived creative. And wanting immediate results. Just like Facebook. Instagram. Google Search. At first glance that can seem to make sense. With the possible reasoning being why not deploy your learnings from digital channels into TV. Use the same team. Creative assets. Even the same measurement tools and metrics. 

But the fundamental flaw in treating TV like a digital channel is that TV is NOT like any other channel. And approaching TV entirely differently than digital will lead you to a supreme secret- the supreme secret to TV advertising success.

Reaching major business milestones with TV advertising.

TV is more like word of mouth (WOM) than it's like any digital channel. We know that positive WOM is the most desirable and impactful effect that grows revenue. But how does marketing insert itself into a conversation between people, at scale? It's not possible. Similarly, TV’s highest-impact effects are not immediate and can't be known by marketing, until later. At a macro business level. 

TV's most impactful effects are NOT the ability to deliver against immediate marketing KPIs (though it can do that well). TV's main business value is its ability to help companies reach key MILESTONES, or what we call Key Milestone Indicators (KMIs). Outcomes like improving pricing power. Reducing search dependence. Building a brand. Growing baseline-recurring revenue.

TV can reach larger milestones than other channels because it's an upper-funnel channel that drives global business results and impacts all other marketing channels. Results that, frankly, over time can often mean the difference between success or death to a digitally native company. But what's a data scientist to do when they can't immediately fully prove how the TV channel is working? 

Three strategies to structure TV for greatest impact.

First, be careful to consider the role of personal opinions regarding what will work in TV. Artificial intelligence and new marketing technologies are now fully functional and predictive of long-term business outcomes from TV. It's possible to pre-test a dozen creatives, for example, and predict with 95% confidence the winning spot, both in terms of sales and long-term brand-building effects. The majority of TV campaign launches are still not driving high-impact business results because of the level of personal opinion (rather than science-based results) that is inserted into creative execution, media selection and analytics interpretation.

Second, the vertically integrated structure of many companies doesn't always allow for the effective measurement of TV's full effects. Executive-level sponsorship, ideally at the CEO level, is required to fairly evaluate TV effects and ensure that business units are accurately reporting results (and not arbitraging TV spend for their own benefit). A major decrease in search cost per click may have come from the digital team, but more likely is due to TV’s ability to drive more deterministic demand for your brand, thus lowering bid requirements.

Finally, it's vital to view TV uniquely from other channels in a marketing mix. The science of combining immediate sales activation with the art of long-term brand building requires distinctly unique analytic frameworks and timeframes to quantify appropriately. And only with critical thinking against all possible effects can you have the potential to uncover the supreme secret of TV success- the ability to move both brand forward and revenue upward- in ways that help reach major milestones. 

What major MILESTONE do you need to reach?

We set Key Milestone Indicators (KMIs) for clients- higher-level goals than Key Performance Indicators (KPIs). Because TV is an upper-funnel activity that impacts the entire marketing ecosystem, it is the best way to build a brand next to word of mouth. It's vital to incorporate expansive thinking against all effects to fully capitalize on TV's impact. 

A common KPI often tracked is customer acquisition cost (CAC). Immediate sales activation goals can and should be part of a TV plan. But moving beyond singular ‘indicators’ like CAC, to 'milestones' is better, and includes examples like: 

- Increase brand recall 1,000 basis points and quantify the impact on baseline revenue. 
- Reach $1 billion in revenue from our current $500MM level- within two years.
- Increase sales growth by 50% over baseline- within 60 days. 
- Improve pricing power and capture 500 basis points in improved margin.

Progress toward these types of metrics is NOT best measured by a data scientist. My own training building marketing models for dozens of major corporations early in my career is less helpful than my executive experience looking for business growth drivers essential to growing companies. Pricing power is not read by an attribution model, as an example. But these are the effects that raise entity value and drive value far greater than web lift.

Thinking small is a common misstep when deploying TV advertising. 
 
What milestone of growth would change the lives of your customers? You and the people who work at your company? The network of partners and investors who believe in what you do? Go ahead, think big. And then watch TV do its job to reach that major milestone- IF you structure your TV campaign in the right way to reach that milestone.
 
There is an advantage to accepting the reality that TV is a complex channel that requires a vast collection of techniques to measure its effects. When you look through that lens, you more carefully consider the positioning of your creative, the call-to-action deployed, the opportunity to reach wide new audiences, and the share-of-voice required to best impact results.
 
Both first- and third-party data are valuable in setting the stage for success. Deepening first-party data through original research to truly understand message resonance, for example, is an essential ingredient to long-term success. But, it all starts with pursuing TV as a big idea for a large stage, and that requires a macro-focused mindset to achieve the greatest level of success.
 
 Why do we invest millions of our own capital in client campaigns?

Can TV really be a game-changer? The reality is that a review of new TV campaigns shows that few run volumes indicative of the advertiser reaching impactful, measurable goals. Our own experience also indicates that campaigns that don't optimize all major variables result in performance rates that are often many times below the hurdle rate to continue using TV. 

So, in the end, what is the solution, or (supreme secret,) for TV success? The answer is to optimize all the performance variables, and you will see success skyrocket. That’s why over the last decade we've developed four platforms (Creative, Media, Conversion, Analytics) and invested more than $50MM in capability development to fully optimize service offerings that help clients reach major TV-driven milestones. 

Because account tenure is the biggest driver of agency profitability, we made a crazy bet two decades ago. We bet on our clients and now invest our own capital in every campaign to disrupt the high cost of premium agency services. We cover costs that include award-winning creative production and sophisticated, unified marketing-impact modeling. Clients then not only have far more to invest in media (and reach profitability faster), but we’ve found the up-front net-loss incurred ensures we are tightly aligned and focused on reaching the right long-term major milestones rather than selling services that may not contribute to performance.

Will the changing TV landscape also change the secret to its successful use?

You could research the TV channel full-time and still not keep up with the volume of events occurring through an explosion of new video sources, analytic methods, and new vendors serving the video space. There are gargantuan battles shaping between FAANG and traditional media. Investments in content and techniques to gain consumer attention are exploding. As a marketer, there is much you could worry about.
 
Managing through this change is the job of a business (agency) focused on TV as their full-time profession. The real opportunity for the marketer is to think big. To identify the major corporate milestones, the Key Milestone Indicators, that TV can successfully help reach, and then make that a reality. With the right partner, you might be surprised how much can be accomplished.

Chuck Hengel
Chuck Hengel
Founder & CEO

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