What You Should Know About TV Advertising Reach and Frequency
The first thing TV advertisers should know about television is that the more people your campaign reaches, the more expensive incremental reach will become. Advertisers must also consider frequency, or the number of times each person sees an ad.
The relationship between TV advertising reach and frequency demonstrates that, by far, reach has a bigger impact on conversion. Adding more frequency beyond the first exposure produces a smaller and smaller effect on conversion rate, which is why performance-oriented advertisers should direct incremental media dollars to reaching additional customers rather than increasing frequency.
For most brands, moving a previously unreached prospect in your target audience from zero to one impression will be a more efficient use of spend than moving an existing prospect from two impressions to three.
With linear TV, advertisers who want more reach need to buy more ads, which typically increases the cost of the campaign
For example, the first $100,000 that you spend on linear TV to reach a given audience may deliver a close 1:1 balance of reach and frequency, but as you increase your campaign spend, the balance will tilt more towards increased frequency as it becomes harder to find net new audiences to achieve incremental reach.
For an advertiser to reach the first 10% of their target audience, each point of reach will likely cost anywhere between $10,000-20,000 depending on the audience.
While these are estimates, the relationship is what is important to understand.
Once you reach 30% of your target audience, each point of reach between 30-40% may cost anywhere between $50,000-75,000.
And once you’ve reached 50% of your target audience, each point of reach between 50-60% may cost about $300,000-500,000.
How to Reduce the Cost of TV Advertising Reach and Frequency
Test and learn. Determine which combinations of creative, TV network, publisher and program placement across linear and CTV to produce the best outcomes before you ramp up your spending.
Buy ads across a wider variety of networks/publishers and counter-intuitive timeframes. This can enable you to reach more new people with each spot and mitigate some of that cost escalation. Additionally, some of the lower-rated networks with non-prime dayparts, and long-tail CTV publishers, are often cheaper because they often don’t index as highly for the target. Think of it as being network-agnostic but religious about reach. What is most valuable is efficiently finding the audiences that matter most to your brand wherever they are consuming TV content -- “premium” programming is redefined as where your target audiences’ eyeballs are.
Favor reach over frequency. When it comes to conversion (sales, site visits, app downloads, television premiere tune-in, etc.) with TV, reaching even one new person is often better than reaching the same person twice. On linear TV, if you can buy spots that are the most likely to reach new potential customers — even if that reach doesn’t come at the lowest possible cost per thousand impressions (CPM) — your CPM will increase, but you’re also likely to achieve campaign results that out-pace the higher costs.
It is essential to diversify your campaigns between linear and connected TV. Linear TV is generally less expensive than CTV, but at the point you start hitting diminishing returns against your audience target, it makes more sense to distribute your budget to maximize your reach across both. We can identify unduplicated reach on CTV and leverage it for reach extension once additional reach on linear becomes more costly.
It is also important to note that some audiences can only be reached through linear or CTV, so a cross-channel strategy will often make sense for brands focused on reach. We have developed a budget recommender tool to help brands understand how to maximize reach against their target audience in the most cost-effective manner across linear and CTV inventory.
Conversely, relying solely on the cheapest CPMs beyond an initial test to find signal can be very risky. It may seem that by merely buying a lot of impressions and/or GRPs you’ll inherently deliver more audience. That’s not necessarily the case, since buying impressions just because they’re cheaper can result in wasted spend by not controlling frequency and oversaturating an audience or by engaging people who aren’t in your target audience. In other words, you get what you pay for!
As many brands first enter into television advertising, they will likely see some strong spot-level performance metrics correlate with lower CPMs. This can lead advertisers to chase the lowest possible CPMs across their TV buys, thinking that they are the leading indicator of good performance. This, in turn, can lead to quickly exhausting pockets of low-CPM inventory and audiences, driving up frequency to the point of inefficiency.
For example, the CPM to advertise to a broad 18+ audience on digital might be ~$9, compared to a purchaser lookalike audience’s CPM of $18. Optimizing only for lowest CPM would tell us to go broad every time, but then we would miss the fact that the lookalike audience shows an 80% higher click-through rate (CTR), a $0.20 lower cost per click (CPC), and ultimately a better return on ad spend (ROAS).
It’s all about balancing the Gross Rating Points (GRPs) against reach, specifically buying the GRPs that reach your audience. And with people watching about the same number of networks as they have for several years, even as their options have expanded dramatically, the best way to scale performance is to reach your audience by accumulating GRPs from an expanded inventory pool and network set.
Until, of course, the industry takes our advice and replaces the broad, fluffy, sex/age demo-defined GRP with the digital and data-defined audience impression as the primary metric for the future of scaled, premium video advertising on TV.
Download our Cross-Channel TV Playbook for a more detailed guide on how to unlock audiences on both linear and connected TV.
Want to learn more? Contact us or email us at advertise@simulmedia.com.