A Breakdown of How Traditional Media Fails in Efficiency and Effectiveness
Let’s have a frank conversation.
Pouring a large portion of your budget into traditional media, such as television and radio, is wasteful. Relying on these channels hurts your return on investment in two key ways:
- It can’t be specific to your primary market area (PMA).
- It can target by demographics (good) but not by actual shopping behaviors (bad).
Traditional marketing is a form of stimulus marketing, which is the act of creating interest and brand awareness. For any stimulus channel to be effective, you must define your audience. This process includes identifying shoppers by gender, household income, age, level of education, and relationship status; however, you are missing two key components: the ability to analyze shopper behavior and the types of questions they’re asking.
That is a high-level overview of traditional channels’ wastefulness. Let’s take a closer look.
A Practical Look at Traditional Media Waste
Here’s a basic explanation of traditional media buying:
You find programming that has the largest viewership and the greatest percentage of your defined audience.
What does that mean? Let’s look at an example of a TV ad spend.
You want to sell women’s compression legwear. Your key demographic may look something like this:
- Age 25-54
- $70,000 per year minimum income
- Exercises regularly
We’ll assume your market has 1 million people and 20% of them fit these criteria. If 20% of a channel’s viewers match your defined audience, that channel receives an index of 100.
- A channel with 10% of viewers that match has an index of 50.
- A channel with 30% of viewers that match has an index of 150.
So, you’ve received the demographic data from each of the networks.
We know that our benchmark to score an index of 100 is 20%. Because of this, we know a few things:
- The Travel Channel is a winner. So is ESPN.
- If we had the budget, we could choose CBS.
- NBC and The Food Network would be a waste of spending.
Keep in mind that you’re not paying for that targeted audience. You pay for your channel’s total market audience because these networks can’t send your advertisement to only the households that satisfy your targeting.
That means although your CPM at the end of an ad run on ESPN is $15, you need to consider that there are thousands of people who didn’t meet your criteria — but you still pay to reach them.
The cost per thousand impressions to reach your actual targeted audience has to be larger to account for all of that waste (those viewers who are not matched). That’s why the total cost to acquire the impressions of your targeted audience on that channel is $57, not $15.
The Solution to Wasteful Media Buying: Programmatic Advertising
The media buying landscape is evolving, which is slowly making cable networks and radio stations in their current form far less cost-effective. It’s also why these same companies are determining how to transition into a programmatic channel via phone apps and other means.
So what is programmatic advertising?
Before you dive into that, take a moment to digest what we’ve discussed above.
Do you have questions?
If yes, get answers by contacting our Brand and Public Relations Manager Dane Saville at firstname.lastname@example.org.
If not, subscribe to our monthly newsletter or come back tomorrow. We’ll show you how a programmatic approach eliminates the waste of traditional media buying.