CTV Advertising and the New Outcome Currency

By Jason Fairchild

Unified currencies are a useful tool for upper funnel marketing tactics, but they miss the point for advertisers that are focused on bottom-of-funnel outcomes (these advertisers represent the majority of U.S. ad industry spend).

The idea of measuring TV audiences has been a point of friction for decades, made notoriously famous by Nielsen's dominance of TV measurement using a discredited panel approach. This dominant position has been broken in recent years driven, in part, by increasingly fragmented consumer viewing patterns across all TV, accelerated most recently by the advent and massive growth of cord cutters and streaming services.

As with all category disruptions, this one has to lead to new entrants in the measurement space, each with its own proprietary technology and approach to defining audience segments and delivery verification/measurement.

While creating an interoperable "meta-layer" that allows these various approaches to be "normalized" is a good thing, for most advertisers, it misses the most important point of investing ad dollars to get messages in front of potential customers.

So, what is the most important point of advertising? Is it to reach a certain audience type? Is it to stitch together a complex tapestry of programming that delivers GRPs against specific target demos? Simply, no.

These are abstraction layers and proxy metrics that help major brand marketers (and the industrial advertising complex that serves them) rationalize large "awareness" ad buys that are not measurable in terms of their actual impact.

This is basically a "count" approach — agreeing on the methodology around measuring the number of ads delivered to a target audience. It has nothing to do with the "value" of that audience or the value created for the advertiser by delivering ads to that audience.

Stepping back from proxy metrics and industry jargon, let's re-orient on what advertising is meant to achieve. Fundamentally, the purpose of advertising is to deliver a message that drives consumers to ultimately take action, usually to buy an advertiser's product or service.

In terms of the role abstraction layers and proxy metrics play, they're contributing factors in helping major brand marketers (and the industrial advertising complex that serves them) rationalize large "awareness" ad buys that are not measurable in terms of their actual impact.

For example, is Domino's in the business of delivering pizza ads to the right demographic, or are they in the business of selling pizzas? Is Delta Airlines in the business of getting ads in front of high value audience demographics that have a high likelihood of traveling frequently, or are they in the business of selling airline tickets? Whether we realize it or not, marketers are in the business of driving outcomes, not measuring ad delivery against certain audiences.

The U.S. advertising industry generates over 300 billion in ad spend (in 2022), as reported by Magna Global via Forbes, with over 200 billion of this spend driven by performance-oriented (and outcome driven) advertisers who measure outcomes at a granular level. There are several "in-the-trenches" outcome KPIs in use by marketers that, along with attribution methodologies, can be thought of as ingredients to an outcome currency. If outcomes are what advertisers are ultimately after, there should be an "outcome currency" instead of – or in addition to – audience measurement currencies.

What Exactly Is an "Outcome Currency" in TV?

Performance marketers have long used several KPIs to measure ROI on their ad spend. KPIs such as cost per click, cost per sale and ROAS have been used for decades. Attribution methodologies including last click, incrementality measurement and multi touch attribution (MTA) are used to determine the value of a given advertising channel or campaign.

However, in television, it's historically been harder to measure outcomes or attribution, due to a combination of tech limitations around TV measurement and the dominance of a single legacy TV measurement provider that did not evolve with technology.

The concept of outcome currencies is inherently more sophisticated than audience measurement currencies because they necessarily include drivers of outcomes, which include ads delivered to target audiences (so outcome currencies are in input to measurement currencies) — but are rarely single ad exposure events. In other words, by the time a user clicks on a Google ad and makes a subsequent purchase, they have likely been exposed to several ads across several media formats and channels.

Developing a "currency" that accounts for this truth is needed in TV where you can't just defer to the last-click model and call it a day (because you can't click on a TV). This is a good thing for the industry, because it forces us to finally agree that search and social should not get de facto credit based on last-click methodologies. It also forces us to agree on a science-driven attribution methodology that, combined with outcome KPIs, can be used as a "currency," so advertisers can buy TV and be clear on the value it delivers in a standardized way.

As a simple example, we can see in the below data chart the impact of TV on last click channels. This approach is built on the outcome KPIs (conversions) and is applied down-funnel from the "count" audience currency.

It also incorporates a defined attribution window. As the data suggests, it's far more deterministic and scientific in terms of measuring TV's impact on what matters most to the vast majority of advertisers: outcomes. The data also shows that as users see more TV ads, the conversion rates on last-click channels like search and social increase, more than doubling with an ad frequency of 10.

None of this is captured in audience currencies or last-click methodologies. But if I were a marketer, this data would be directly relevant to my investment decisions and media dollar allocation. This is made possible by defining the core unit of value–the outcome–and the formula for how that unit of value is applied within an attribution methodology. When combined, these represent one version of a potential outcome currency.

The views and opinions expressed are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.

Jason Fairchild is CEO of tvScientific.