In today’s fast-paced world, where everything happens in the blink of an eye, advertisers are constantly searching for the most effective way to place their brands in the spotlight. While often videos on Facebook and YouTube are opted for as a quick, cheap and easy solution for brands to reach consumers, new research now indicates that in the long run, these do not provide the greatest return on investment (ROI) for advertisers’ marketing campaigns.

This week’s egtabite features TV2’s pioneering research, presented at egta’s 2019 DigitalNext meeting, which shows how addressable TV gives marketers a substantially higher campaign ROI (than YouTube and Facebook) when considering the criteria of view-through, viewability (pixels served) and screen size.

Methodology

Existing ROI studies looking at digital video – meaning everything from VOD, YouTube and Facebook video to addressable TV – give inconsistent ROI results with a substantial spread. Sometimes the results are very good and sometimes the results are quite disappointing.

Christian Godske, Head of Commercial Product Development at TV2 Denmark, explains that this discrepancy with regards to performance has a lot to with the quality of the video exposures.

TV2’s sales house – along with GroupM research agency Business Science – conducted an econometric modelling meta-study to look at the impact of quality by taking into consideration factors such as the completion rate of an ad, viewability (pixels served), and the different devices used – all based on already available media agency data.

The goal of the study was to see if the quality of video campaigns had an impact on the measured ROI across 10 clients that used Facebook, YouTube and addressable TV and whether taking quality into account would explain video advertising with respect to sales. In other words, getting closer to a more consistent impact of video advertising.

Results

The TV2 ROI study conducted on digital video has three key takeaways:

The quality of ads plays a crucial role in the impact while view-through (completion rate) is the most important parameter affecting a campaign’s ability to deliver ROI. This study addressed the quality concern and came up with applicable figures for the Danish video ad market;

On TV2’s addressable TV offer, the view-through rate is 99%, thus driving a consistently high ROI, substantially bigger than both YouTube (37% of completion rate) and Facebook (5 % of completion rate), confirming that consumers very rarely complete a Facebook video ad.

 

Although addressable advertising is significantly more expensive than online campaigns from a CPM rates point of view, it is clear that – apart from the higher quality of ads – it drives sales to the point of outshining the lower cost of digital advertising. In other words, even after factoring in the price difference, addressable TV’s ROI is significantly better than the one of online video campaigns. In fact, in Denmark the starting price of addressable TV is more than double that of linear TV, 5-6 times higher than Facebook and 2-3 times higher than YouTube video. Even though Facebook has a much cheaper CPM on the impression level Facebook CPM is much more expensive on the completed ad level. The low CPM of Facebook video is not low enough to make up for the even lower completion rate of the ads and the impact it renders.

Finally, addressable TV, just like traditional television, has a scale potential and delivers a high ROI.

However, for most clients addressable TV is still a supplement to “normal” TV advertising.

“With addressable TV we have combined the best from two worlds – the quality of TV advertising with digital targeting and ad delivery – which very well resonates with the market”, Godske concludes.

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