AI is a powerful technology working in an unhealthy advertising ecosystem. It is unlikely to have a significant impact on digital advertising because of three factors related to the imperfections of the current ecosystem. The first is that targeting isn’t working all that well anyway. And as third-party cookies are deprecated and the present effect of Apple’s privacy policies combine, the data that feeds AI will not be a great training set. Secondly, bad actors in the ecosystem are faster than good actors and will use AI to improve their fraud. Finally, economic expectations are such that if AI has any impact, it will be used to replace human thought workers and not improve the process of advertising.
Brian Wieser’s keynote address covered four trends that are affecting the media and advertising industries: industry consolidation, the rise of ad-free TV, the emergence of new e-commerce marketers and procurement. After his presentation, Scott McDonald probed him further about his observations about the state of the media and advertising marketplace in 2023. His key points on these four trends and highlights of Brian’s conversation with Scott appear below.
Audrey Steele (FOX) introduced this presentation by highlighting the objectivity of the years-long study focused on the relative value of different platforms and impression quality, with the brands involved amassing close to $3 trillion in sales. While many in the industry are focusing on maximum reach, this study looked at sales as the most important measure of impressions, quality and value between media platforms.
This dialog between Scott McDonald and Colleen Fahey Rush (Paramount) covered the rebranding of Colleen’s company and three broader issues facing the television industry—the rise of streaming services, her perceptions of the currency environment and the upcoming upfronts.
This ARF Pharma Council event followed up on the Council’s podcast episode on “Inclusive Futures of Humancare,” focusing on the importance of inclusiveness in pharma research and marketing with respect to both demographic characteristics and health conditions. Four speakers delivered brief presentations, followed by a discussion moderated by Pharma Council Co-Chair Marjorie Reedy of Merck.
Lloyd Darbonne – Senior Director Research, Insights, & Strategy, FOX Corp.
Bill Harvey – Executive Chairman, Bill Harvey Consulting, Inc.
Audrey Steele – EVP Sales Research & Strategy, FOX Corp.
Audrey Steele (FOX) introduced this presentation by highlighting the objectivity of the years-long study focused on the relative value of different platforms and impression quality, with the brands involved amassing close to $3 trillion in sales. While many in the industry are focusing on maximum reach, this study looked at sales as the most important measure of impressions, quality and value between media platforms.
Bill Harvey (BHC) detailed the study’s methodology of implementing a standard multiple regression analysis with ROI optimization using SMI’s real ad spend numbers and Circana’s and S&P Global’s sales spend across the top ten brands in each of QSR, CPG and Auto verticals over nine years of data.
Lloyd Darbonne (FOX) covered how the thousands of iterations of their ROI optimizer selected the media mix that predicted the highest share for each company studied. Concentrating on entertainment (inclusive of TV sports & news, TV cable entertainment, TV Big 4 entertainment and premium digital video TV), the optimizer then measured the optimal allocation for maximum ROI in each vertical. Results across verticals documented higher ROIs with significant reallocations and rebalancing of ad spends in TV and premium contexts.
Key Takeaways
Brands that increased their spend in non-premium digital lost sales and market share, much of it due to misallocation of advertising spend. There are opportunities for 20-40% ROI increases by reallocating non-premium digital dollars to TV.
TV has 2.6x the sales effect of non-premium digital. There is a 14.6% incremental sales lift added by advertising, on top of the baseline 85% sales without advertising. TV generated 69% of the added 14% across the combined three verticals, with non-premium digital at 27%. In all three verticals studied, broadcast entertainment still has a good amount of headroom—increasing share of ad spend will increase sales effects.
Buyer focus on CPM and rush to oversaturated lower-priced media and non-premium digital inventory has served to suppress the sales effects of overall campaigns.
Focusing on ROAS instead of reach, and using standard multiple regression analysis gives advertisers an advantage over slower-moving competitors.
The ARF hosted its annual flagship conference, AUDIENCExSCIENCE 2023, on April 25-26, 2023. The industry’s biggest names and brightest minds came together to share new insights on the impact of changing consumer behavior on brands, insights into TV consumption, campaign measurement and effectiveness, whether all impressions are equal, join-up solutions across multiple media, the validity, reliability and predictive power of Attention measures, targeting diverse audiences, privacy’s effect on advertising and the impact of advertising in new formats. Keynotes were presented by Tim Hwang, author of Subprime Attention Crisis, Robert L. Santos of the U.S. Census Bureau, Brian Wieser of Madison and Wall, LLC and Andrea Zapata of Warner Bros. Discovery.
Attention, AI and machine learning stand at the top of the Journal of Advertising Research’s inaugural list of research priorities, developed in close consultation with the advertising industry—a move intended to deepen the journal's commitment to addressing practitioners’ greatest research needs.
Auto companies in many countries tend to reduce ad spend toward promoting low-emission vehicles in the face of unfavorable tax policies, but this may not be the optimal advertising strategy and can have a profound effect on the rest of the media market, new research has found.
At Part I of our Insights Studio Series on November 2, 2022, we discussed key shifts in the ads landscape and insights on peoples’ thoughts and behaviors around privacy—based on the latest ARF Privacy Survey. Experts from Boston University, Meta, Nielsen and the ARF shared macro-level trends as well as frameworks to help make sense of the advertising ecosystem.
