11 Dec 2023 | Ella Sagar

Why TV needs to get into the outcomes business

TV should come together to sell holes, not drills.

That pitch by Kate Waters, ITV’s director of client strategy and planning, was part of a wider argument for how the TV industry should become an outcomes-driven business to learn from and better compete against digital platforms.

Speaking to an international TV advertising audience at The Future of TV Advertising Global last week, Waters started with a quote by Harvard academic Theodore Levitt: “People don’t want to buy a quarter inch drill. They want a quarter inch hole.”

The distinction here being the product being sold, the drill, is different to the thing people want, the hole, which Waters said was “of particular relevance” to TV right now.

Brand awareness ‘only ever a proxy for really important stuff’

Waters explained TV advertising at its best effectively impacts outputs, outtakes, intermediate outcomes, and business outcomes all along the spectrum from drills (audience outcomes) to holes (what advertisers want).

However, she added: “We in TV have been spending way, way, way too much time talking about the drills bit. We spend a lot of time talking about the best way to measure our audiences.”

She acknowledged that this was “not an easy task” and is getting more complicated as people watch TV in different ways.

Waters said measuring things like brand awareness, values and effects is “only ever a proxy for the really, really important stuff”, stressing: “No business builds a brand for the sake of building a brand, they build the brand because it builds their business.”

She showed delegates the backend of Google’s ad platform where you could choose a goal that “would make this campaign successful to you”. These were ordered first in sales, leads, web traffic, brand consideration and then brand awareness and reach and others.

She questioned why, out of those choices, a brand would choose brand awareness and reach when they could have sales, emphasising the point that if you were in the business of building a business, you would choose sales.

Waters added: “Now the interesting thing about this is it’s gone even further. It’s on the fringes of what the likes of Google are experimenting with but now you can buy profits. So I say again, why would you buy brand awareness? Why would you buy eyeballs, if you can buy a profit?”

Selling outcomes, not audiences

She warned that TV ignores the fact that this is the way the world is going “at our peril”, and was “really shocked” when she arrived in the industry and heard conversations about “the nonsense” digital platforms are up to when they have “brilliant products” that really work and “convince finance people”.

Waters made the point that the digital side of the ad market is where the money is going, and showed this was also the case for products that sell outcomes rather than audiences.

In a graph, she demonstrated how, in 2019, 50% of adspend went to an outcome-denominated product, as opposed to an audience product.

And this will develop more over time in video as Waters highlighted that, based on ITV’s estimates, 50% of all money going into video will be on an outcome-denominated product by the end of 2023.

“That is the reason why TV needs to get into the outcome business because increasingly that’s where the money is going. And if we can’t persuade people that we can generate those outcomes, then we’re just going to get less and less cash.”

How does TV get into the outcomes business?

Waters set up the Measurement Innovation Team (MIT), a team with the mission to “invent ways to reveal all of the value that TV creates for all of our advertisers all of the time”.

She said: “It’s really important that we do that because fundamentally what we think is that for a long, long, long, long time, TV has done incredibly well selling yourself short. Because all we’ve been doing really is measuring either the eyeballs, or indeed the changes in the way that people feel.”

Waters and the MIT team work based on three observations: they need to find “much more persuasive ways” of arguing the financial benefits of TV, they need to train sales teams to do “much more active selling” of TV compared to previous trading systems, and they need to have tripartite conversations with clients and agencies who all have in-house data capabilities.

To do this, Waters and MIT work on “making lots of small bets” and big research projects, like models about the value of peak time TV advertising which found it generates 1.4 times as much traffic relative to daytime even when taking into account the cost of the ads. Other ongoing projects include work on TV advertising’s impact on price elasticity, intermediate outcomes like search, alongside geo-testing and total TV measurement.

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However, she said it was “not enough” to just do the research, but to turn these into products for both small and large advertisers, to begin to “attack the fat end of the long tail”.

Waters said: “At the most basic, we want to match what the platforms can do in terms of lift. So incremental lift is absolutely the new default when it comes to measurement. TV has never been very good at it.”

She also said this presented a “fantastic opportunity” to understand and measure the full funnel impact of TV.

Waters explained: “When we try to talk about TV’s role being to build brands, we are doing ourselves a massive disservice. We are not in the brand building business. We are in the business building business. That includes brands, yes, but it also includes all of those lower funnel effects as well.”

She also said TV needed to “really try to leapfrog” the platforms on “the deep financial arguments” and speak not only about how TV works and its power to create emotion and reinforced memory structures but also full spectrum effects like price sensitivity and larger lifetime value.

This is a TV thing not just an ITV thing

“This is the fight for our lives. Genuinely, I believe this,” Waters stated.

She added: “This is not just an ITV product, this is a TV thing. Genuinely I believe that because you will know the way that TV is traded means that we as ITV only benefit if more money goes into TV in total. That’s why I think this is a collaborative, collective thing. So please come with us on this journey. We are really, really keen to collaborate and our ambition is to sell the holes, not the drills.”

When asked by host Justin Lebbon, chair of Adwanted Events, if she thought TV realistically could compete with digital platforms, Waters replied: “If we put our minds to it, and if we put our money to it, and if we collaborate properly, then we have a fighting chance. We have a phenomenal product – that’s the thing that we all forget..”

She urged the audience to “compete on content and collaborate on everything else.”

The Media Leader is part of the Adwanted Events team behind The Future of Advertising Global — the world’s leading conference for media and advertising professionals, which took place on 5 and 6 December in London.