New research from the University of Notre Dame shows traditional television advertising is far less effective than advertisers have believed. The finding matters because advertisers still plan to put $139 billion into linear ads this year, compared with $33 billion for ads on streaming or connected TV.
The team, led by Shijie Lu with coauthors Tsung-Yiou Hsieh and Rex Yuxing Du, used digital data from LG smart TVs and linked it to food delivery app purchases. They analyzed viewing and purchase activity for millions of people who opted in over a four-month period. The study focuses on broadcast networks such as NBC and ABC and did not track streaming apps like Hulu or Amazon. The research appears in Marketing Science.
The authors used second-by-second household viewing data to exploit natural timing differences in live programming. They find that traditional measurement methods, which rely on ratings and aggregate market data, overestimate ad effectiveness by 55% in a study of food delivery advertising. Lu says, "We show TV ads are only about half as effective as we thought." The study also identifies who and when viewers respond best to TV ads.
Difficult words
- advertising — paid messages to promote products or services
- linear — TV shown at scheduled broadcast times
- streaming — online delivery of video content in real time
- opt in — agree to allow use of personal dataopted in
- overestimate — think something is more effective than it is
- aggregate — combined into a total or whole amount
- rating — measure of audience size or popularityratings
- broadcast — TV program sent to many viewers at once
- second-by-second — measured at each separate moment in time
Tip: hover, focus or tap highlighted words in the article to see quick definitions while you read or listen.
Discussion questions
- Do you think advertisers should move more money from linear TV to streaming ads? Why or why not?
- Have you ever bought food after seeing a TV ad or an online ad? Describe what happened.
- How could more detailed viewing data change what advertisers choose to do?
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