Sorry mate, no scandal here

Last week The Media Native – aka, David Brennan – asked if TV On Demand can justify its premium status. His conclusions ruffled some feathers at Videology and now Rhys McLachlan, Director of Corporate and Business Development would like to respond…

Last week, I was lured in by the promise of intrigue and scandal of ‘premiums’ in the TV VOD market in David Brennan’s article.

I’ve had the good fortune to have worked in VOD since its inception in the UK. I’ve worked not just with all UK broadcasters but also more recently with a broad tranche of other inventory suppliers in the market.

I am reluctant to get into a research debate with the Media Native, an individual for whom I have a huge amount of professional respect. However, I found his article to be too secular in its focus and I simply can’t agree with its conclusions.

His thesis, for me, fails in four key areas: the audience for VOD, the pricing of VOD inventory, the effectiveness of VOD and the sales impact that ‘clickability’ delivers.

Firstly, I’d question that VOD is no longer the domain of younger demographics. In early 2013 VOD is a universal media channel, with all genders, age groups, and socio-demographic groups represented. There remains a small, and it is small, skew towards men aged 16-34, but we see widespread adoption of VOD services across the nation.

Secondly, by focusing purely on TV VOD, the analysis ignores the contribution, both in terms of volume and CPM levels made by the 90% – 95% of UK video viewings; professionally produced inventory delivered by publishers from outside of the broadcast community.

I’m not divulging any trade secrets when I say that with very few exceptions, the pricing that these publishers offer cannot be described as four to five times an equivalent TV CPT.

I also disagree with the tone of his comments on broadcaster inventory pricing. Broadcasters spend billions of pounds to create and distribute content that keeps us all entertained. All markets find a natural balance between demand and pricing. In the current VOD landscape where the real top class premium content remains relatively scarce, then the broadcasters are simply realising market value.

Thirdly, I would point out that the Media Native is not comparing like with like. A four-five times multiple on TV VOD CPM may be arrived at if you are comparing to a TV ‘All Adult’ CPT. The reality is that no one targets VOD in this way.

At the most basic level, a buyer can undertake broadcast analysis of content to determine the audience composition for a piece of TV-content and then select a relevant VOD schedule that should optimise towards their desired audience.

So long as the buyer is vigilant, even this basic methodology should deliver an effective CPM that is cheaper than the TV CPT for the same audience.

VOD has moved on dramatically, however, and we are now creating and delivering against some very specific target audiences. So rather than broad ‘ABC1 Men’ for some auto clients, we can define, price, and target an audience of ‘men aged 35 – 39, with one child in household, in full-time white collar occupation, who play golf once a week, take two overseas holidays a year’.

In such instances, there is no comparable TV CPT against which we can benchmark and to even try would be foolish.

As regards the Media Native’s questioning of the “effectiveness” of VOD, I had thought that the case had been firmly settled quite some time ago.

Our incremental reach research, published in 2012, revealed that for four clients spanning auto, FMCG, entertainment and telecoms, across four TV audiences (M16-34, HW+CH, ABC1 Adults, A16-34), with TV activity running into the 400 TVRs levels, a medium weight VOD campaign (spends between £20 – £25k per campaign) contributes up to 4% of unique incremental reach.

Given that VOD is a cheaper CPM proposition, these incremental reach points are a hugely cost effective means of delivering new viewers to a TV campaign, especially if you’re assessing it at a cost-per-reach point.

Furthermore, we’re now starting to understand the value of ‘viewership’ on VOD channels. We carried out 35 separate ‘Brandscore’ surveys in 2012 and the aggregate results in average brand recall for VOD exposure vs TV exposure shows that that VOD provides between 3% – 5% higher recall than standard TV exposure.

This is not meant in any way to denigrate the effectiveness of TV – most of our clients use both TV and online video – rather to state that TV plus VOD is significantly more effective than TV alone.

Last but not least, the Media Native also questions the impact of ‘clickability’ or the enabling of VOD spots to allow viewers to click on ads and move through the purchase funnel.

The fact is that viewers are clicking on VOD ads. Our research in the US based on an extensive 12 month period of tracking, analysis and attribution, powered by Kantar, Nielsen and a large credit card provider, has definitively revealed triple digit uplifts in return on investment for brands in the FMCG, auto and high street sectors, with sales both online and offline attributable to VOD exposure.

I argue that VOD is not an expensive media proposition, in fact at a pure ‘per thousand’ level it is incredibly good value. It can be super-targeted and it delivers results.

That’s not a scandal, it’s a great media proposition and one that’s attracting more and more advertisers.