Will GRPs have the last laugh?

/ Apr 24, 2013

VIS_BettinaHeim

By Bettina Hein

Google’s mantra is algorithms, not humans. Buy keywords in an online auction and live happily ever after. No more media planners needed. With YouTube, that mantra has seemed to fail. Why else would Google spend $300M on creating premium content to attract traditional TV media buyers? And still, TV advertising budgets are as big as ever, TV CPMs are growing and a lot of TV media moguls are laughing.

So has the online video industry failed? Will it ever rival TV? Or are we mere fools producing subpar content for teenage audiences?

To see this from the perspective of innovation theory, let’s take a look at a chart showing the size of the print advertising industry that appeared in The Atlantic last year:

In 1996, it became clear to those in the technology industry that printed newspapers would be doomed by the Internet. But we were deemed fools by a lot of powerful media players because print advertising revenues kept climbing to a height of $60B in 2002. It took 6 years for revenues to start falling but people interpreted that as a temporary effect of recession. Only in 2006 – a full decade later – did the decline finally become a pattern that clicked.

I predict that the same disruptive pattern will become evident in TV advertising over the next decade.

What does that mean for online video advertising?

If you follow the lessons of the Innovator’s Dilemma (written by Clayton Christensen), there will be a bifurcation of content:

  1. YouTube content will get better but will have very different economics than TV
  2.  TV content production will focus on high-end production values, with increasing financing coming from non-traditional players like Netflix and Amazon

So will advertising still be sold on the basis of GRPs in ten years? Yes, but much less than today. The superior measure-ability of YouTube and other online video advertising will slowly allow dollars to flow online. Older media buyers and legacy CMOs will age out and be replaced by younger executives that don’t need the GRP “security blanket” anymore.

Meanwhile, there are empires to be built for those that recognize the sign of the times. Many smart marketers like Red Bull or Old Spice are already taking dollars away from TV and producing measurable ROI with YouTube ad campaigns. Ecommerce companies are using YouTube as a direct-response medium to generate returns similar to or even higher than those on search campaigns. My message to those addicted to TV: why wait until you’re a dinosaur?

_____

Bettina Hein is the Founder and CEO of Pixability, a YouTube marketing software company. She’s also the co-author of Video Marketing for Dummies. She studied innovation theory at MIT where she got her M.Sc. Pixability helps brands and performance marketers run content marketing and ad campaigns on YouTube.

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