The “Performance-driven TV Commercial” market is showing signs of significant growth in Japan. Metrics such as PDCA (Plan-Do-Check-Act) and CPA (Cost Per Action), which are commonly used in digital advertising, are gradually penetrating the world of TV commercials. In recent years, IREP has also been focusing on video advertising and TV commercial production, leveraging its operational expertise cultivated in digital advertising in the realm of TV commercials.
Therefore, this time, DIGIFUL editor Mr. Shunsuke Chiba interviewed Communication Design Unit’s Mr. Shingo Tomita, who is actively involved in performance-driven TV commercial operations, to learn about the overview of our performance-driven TV commercial service “Science-driven TV Commercial,” as well as our approach to buying, creative aspects, and effectiveness measurement.
The Growing Performance-driven TV Commercial Industry
Chiba:
We started hearing about measuring the effectiveness of television commercials and “programming” television commercials around a year ago. I feel like television commercials are getting a second look. Why is that?
Tomita:
I believe there are several factors here.
Firstly, advancements in technology have made it possible to measure and analyze actions taken after exposure to TV commercials, such as visiting a website, using a service, or making a purchase. With the ability to measure outcomes, companies that previously didn’t consider TV commercials due to the inability to measure their effectiveness are now considering TV advertising.
Secondly, the launch of Smart Ad Sales (SAS) in February 2020 has had an impact. With SAS, TV commercials can now be purchased on a per 15-second spot basis, in addition to traditional “time” or “spot” buys. This allows entry into TV advertising even with lower budgets. These two reasons contribute to the renewed focus on TV commercials.
Chiba:
At IREP, we offer a performance-driven TV commercial service called “Science-driven TV Commercial.” Could you provide a brief overview of the service?
Tomita:
IREP originally excelled in performance-driven advertising. Leveraging our expertise and insights in performance-driven advertising, we offer a service called “Science-driven TV Commercial,” which covers planning & buying, creative, and effectiveness measurement for TV commercials.
When discussing performance-driven TV commercials, there are three main aspects: planning & buying, creative, and effectiveness measurement. Regarding the creative aspect, traditional TV commercial creative production has relied heavily on the experience and intuition of creators.
In performance-driven TV commercials, while we still respect the experience and intuition in the planning stage, we also conduct activities such as pseudo tracking using AI to identify focal points, analyzing final outcome data to verify the effectiveness of the creative messaging, conducting AB tests by changing messaging or offers, and iterating through re-planning to find the most effective combinations.
(Figure 1: A Scientific Approach to Television Commercials)
Chiba:
Clients may perceive IREP primarily as a provider of “digital advertising” and “performance-driven advertising.” Why did IREP start handling TV commercials?
Tomita:
Irep became a wholly owned subsidiary of Hakuhodo DY Holdings in October 2018, and is relaunching itself as a next-generation digital agency within the Hakuhodo DY Group. By collaborating with Hakuhodo DY Media Partners, a group company, we’re now able to buy television commercials and measure their effectiveness, allowing us to take advantage of the creative production and know-how we cultivated when running text and banner ads.
In addition, although people think of us as a company specializing in programmatic ads, we have an integrated planning organization with over 50 creators on staff. As a member of the Hakuhodo Group, we also have industry-leading media buying capabilities, making us the only digital agency capable of creative production and media buying, including in the mass media domain.
A Scientific Approach to Planning and Buying
Chiba:
Tell us about the three key elements of planning and buying, designing creatives, and measuring effectiveness. What’s the difference between planning and buying with conventional television commercials?
Tomita:
First, let’s start with the basics. Traditional TV commercials are broadly categorized into “Time Commercials,” where sponsors are associated with specific programs, and “Spot Commercials,” which are not tied to any particular program and are aired within designated time slots. Furthermore, within Spot Commercials, there are different buying patterns:
- All-day: These commercials are broadcast throughout the day.
- “Reversed E” pattern: These commercials are aired during morning, afternoon, and prime-time slots on weekdays and throughout the day on weekends.
- “Rotated U” pattern: These commercials are aired during morning and prime-time slots on weekdays and throughout the day on weekends.
- “Rotated L” pattern: These commercials are aired during prime-time slots on weekdays, and throughout the day on weekends.
(Figure 2: Patterns for Spot Commercials)
IREP’s “Science-driven TV Commercial” not only utilizes the traditional TV commercial buying methods mentioned earlier but also leverages SAS (Smart Ad Sales) to purchase commercial slots. With SAS, commercials can be purchased on a per 15-second spot basis, allowing prioritization of purchasing slots that have shown good effectiveness based on measurement and analysis. Additionally, being part of the Hakuhodo Group, which possesses top-tier buying capabilities in the industry, enables IREP to provide buying strategies that align with the client’s objectives, setting it apart from similar services offered by other companies.
Regarding the basic planning approach, traditional planning often focused on mass media with any remaining budget allocated to digital channels. The planning was fixed beforehand and not adjusted during the campaign period. This approach sometimes led to purchasing slots solely based on cost per rating(CPR), even if they did not yield desired results.
In contrast, the planning approach of “Science-driven TV Commercial” emphasizes starting small and scaling up based on results. For instance, conducting test marketing in areas outside the metropolitan region and then expanding nationwide based on the findings, or adjusting creative materials and purchasing additional slots during the campaign to maximize effectiveness. The service analyzes slots with good performance and selects them based on cost efficiency.
(Figure 3: Experimenting small and expanding big)
A Scientific Approach to Designing Creatives
Chiba:
Next, let’s talk about creativity. What makes the creative aspect of “Science-driven TV Commercial” different from traditional TV commercials?
Tomita:
Traditional TV commercials are often categorized as “Awareness-building” or “Brand-building” creatives. They are created with the aim of conveying the brand’s identity, increasing brand awareness, and fostering positive attitudes towards the brand. On the other hand, performance-driven TV commercials are categorized as “Action-oriented” creatives. Their primary goal is to stimulate user actions such as search queries or website visits. The fundamental objectives are fundamentally different.
(Figure 4: Awareness and favor-forming vs action-oriented creatives)
The “Awareness-building” or “Brand-building” creatives and “Action-oriented” creatives not only differ in their objectives but also in their expression methods and the volume of ad placements. For instance, “Awareness-building” or “Brand-building” creatives aim to express what the advertiser wants to convey to the users through artistic expressions in the commercial. Since the goal is to increase awareness and positive attitudes towards the brand, a large quantity of placements, such as 2000 Gross Rating Points (GRP), may be necessary. However, the effectiveness of these placements can only be determined by testing them in practice. Key Performance Indicators (KPIs) for such creatives typically include awareness rates and recall rates.
*1 GRP: Gross Rating Point. Measures the impact of a particular ad by calculating the target demographic that is reached by an ad.
On the other hand, “Action-oriented” creatives aim to express the benefits, features, and the value proposition that users seek through the commercial. It’s not about broadcasting in large quantities, but about achieving the desired results with the optimal amount of placements. This principle is similar to digital advertising. Key Performance Indicators (KPIs) for such creatives typically include intention-to-use rates and Cost Per Action (CPA).
When discussing this, it might seem that the “Action-oriented” approach, which ultimately drives purchases or service usage, is replacing the traditional “Awareness-building” or “Brand-building” approach. However, this is not necessarily the case. It’s essential to understand that both approaches can be used together depending on the objectives. Furthermore, regardless of the approach, creating creatives that are human-centric remains crucial. We believe that understanding and scientifically analyzing human behavior can enhance awareness and stimulate action, regardless of the approach.
By experimenting and iterating, we’ve been able to develop expertise over time. Utilizing IREP’s proprietary methods, we have a variety of frameworks at our disposal. Despite having these frameworks, there’s a diverse range of expression methods. As a result, you’ll often find that our commercials don’t all look the same.
As for who creates these creatives, we have a team of around 50 creators at IREP. This team includes members with extensive experience in the field of TV commercials, as well as those who have worked in creative departments of comprehensive advertising agencies. While some members have previously focused on creating awareness-building commercials, they have been draw to IREP by the potential of action-oriented TV commercials and the opportunity to engage in activities such as measuring effectiveness and implementing PDCA cycles for TV commercials.
A Scientific Approach to Measuring Effectiveness
Chiba:
Measuring the effectiveness of TV commercials is at the core of “Science-driven TV Commercial.” Could you tell me more about how effectiveness is measured?
Tomita:
Until now, measuring the effectiveness of TV commercials has primarily relied on awareness metrics obtained through survey research (such as brand recognition, recall rates, and brand favorability). However, relying solely on awareness metrics doesn’t provide insight into how much the commercials have actually contributed to sales. In contrast, digital advertising allows for the visualization of contributions up to website traffic and purchase behavior. This has led to increasing skepticism towards evaluating TV commercials solely based on awareness metrics.
To address this issue, IREP has developed an in-house analysis platform to visualize the effectiveness of TV commercials. This tool, called x2 (DOUBLE SCORE), compares data from Google Analytics with TV commercial placement data to visualize how much website traffic has increased following TV commercial broadcasts.
This tool allows for the visualization of several metrics, primarily utilizing two analysis models depending on the objectives. The first model is the “Short-term Spike Detection Model.” This model enables the visualization of immediate effects shortly after airing, providing insights into the immediate traffic increase following commercial broadcasts. It’s utilized for the purpose of running PDCA cycles during the airing period.
The second model is the “Time-series Statistical Model.” This model facilitates the analysis of overall effects throughout the entire commercial period, including residual effects. It visualizes the traffic increase attributable to airing the commercial. This model is used for cross-media allocation optimization and post-campaign evaluation.
(Figure 5: Two models to measure the effectiveness of television commercials)
Chiba:
Are there any examples of new findings after visualizing the results?
Tomita:
For a client company interested in measuring the cost per reach of TV commercials and YouTube and determining the investment effectiveness and optimal budget allocation for each, we utilized the “Time-series Statistical Model” for measurement and analysis. As a result, we found that for lower budgets, YouTube investment yielded higher effectiveness, while TV commercials became more effective at a certain threshold of investment. Additionally, for the budget of this client company, it was determined that a budget ratio of 65% for TV commercials to 35% for YouTube is optimal.
(Figure 6: Examples of allocation modeling of digital and mass media)
The Future of “A Scientific Approach to Television Commercials”
Chiba:
Finally, please tell me about the future prospects for “Science-driven TV Commercial.”
Tomita:
First, in terms of functionality, we are continuing to develop x2 (DOUBLE SCORE) to support measurement for “App Install” and “Offline” activities. “Offline” refers to visits to physical stores or purchases made offline. We anticipate being able to track metrics such as the number of people who visited a store or the amount of sales generated after airing a commercial.
Additionally, in terms of methodology, we aim to promote the concept of “Performance Data-based Zoning.” The timing for optimal results varies depending on the industry and business type. For example, for app installations, evenings might yield better results, while for B2B companies, mornings might be more effective. There’s a common pattern where people watch TV commercials in the morning and then search for the product during their lunch break. We aim to create customized “Performance Data-based Zoning” strategies for each client company.
<Profile>
Shingo Tomita
Irep, Inc.
First Communications Design Unit, Programmatic Television Commercial Promotion Division
After working in sales for the telecommunications industry at an IT company, Shingo Tomita joined D.A.Consortium in 2007. There, he was engaged in solution sales for media companies with a focus on ad servers, and promoting the traffic analysis leg at an advertising company to which he was transferred. Since 2011, he has been involved in operations as the head of operational advertising in various capacities, including trading desk and DSP product promotion. For 3 years from 2017, he promoted television commercial and digital video ad solutions at a consulting company and implemented them at various client companies. In November 2020, he joined Irep and assumed responsibility for the programmatic television commercial promotion division.
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Irep Inc. is an award-winning global digital marketing agency based in the San Francisco Bay Area. Our headquarters are in Tokyo and our network spans more than 20 countries. In Japan, we are ranked No. 1 for performance-based marketing. We also offer highly specialized market entry, as well as integrated marketing and localization services. Since 1997, our data-driven solutions have effectively led our diverse international clientele to continuous success in Japan, Asia, and beyond.
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