Dive Brief:
- A&E Networks, which includes Lifetime and History, will begin guaranteeing that TV commercials drive business results during the TV upfronts, AdAge reported. A&E tested a model over the past six months created by analytics firm Data Plus Math that attributed results to ads. The network is also working with Nielsen Catalina and iSpot.tv.
- The network expects to do about 10 deals with outcome-based guarantees during this year’s upfronts, but the guarantees could be a larger part of the company’s business in the future. A&E is still utilizing Nielsen ratings guarantees.
- AMC Networks and Discovery have also started testing the Data Plus Math attribution model, but A&E is the first to use its guarantees, according to the report.
Dive Insight:
With networks being forced to compete against tech giants Google and Facebook for brands' ad dollars, A&E is attempting to prove that TV ad buys are still a worthy investment. But, the attribution guarantee is an obvious risk.
As marketers continue to shift their ad dollars to digital platforms, they are increasingly looking for a more direct measurement of how their investments in ads drive business results, something TV ad buys have not traditionally offered. A&E's move to guarantee business results like a car test drive or website visit shows one way TV networks might adapt to how digital has disrupted the marketing ecosystem. For years, audience targeting was the basis for TV ad buys, although other alternatives are also being pursued.
With the rate of cord-cutting increasing and pay TV subscribers decreasing, and viewers using DVRs or watching programming digitally in lieu of watching live TV, networks need a new metric to sell ads around. During the 2018 Winter Olympics, NBC Sports shifted its ratings guarantee for advertisers from a household guarantee to a metric average of viewers age 2 and up.
If widely adopted, the outcome-based guarantee model could help TV networks recover from their ongoing revenue slump. TV ad sales fell 7.8% to $61.8 billion in 2017, the sharpest decline in the past 20 years outside of a recession, according to Magna Global. Analysts have predicted that TV may never recover and reach its previous highs, as global advertising has grown at the same time TV ad sales have declined. Separate research by the Standard Media Index found that TV ad sales grew 7.1% in January 2018 year-over-year contributing to a 10.8% growth in U.S. advertising market, largely bolstered by awards shows like the Grammys, Golden Globs and Screen Actors Guild Awards.
