In TV, Cutting Can Be Clever

Dec 22

Written By Justin Evans and Justin Fromm

We generally think about media planning as an artist creating a fresco: sticking up one tile at a time to make a shining whole. Then we think about cutting media budgets–say in a recession–like demolition. Swing the hammer. Make it smaller.

But why shouldn’t cutting be clever?

In fact, cutting media budgets in a recession should be the more nuanced exercise. In such times, buyers need to squeeze every penny of value out of their plans. Cutting all tactics by, say 15%-20%, would be the obvious approach. But does it really yield the best results?

The truth is, if clients cut back with an eye to optimization–just like when they plan–they can help preserve their business.

Samsung has published research, based on an analysis of 21 national linear TV campaigns, demonstrating the declining reach capability of linear TV and recommending that 40% of all TV budgets should be deployed in a CTV environment. This recommendation is driven by two factors. First, CTV’s ability to reach the rapidly growing streaming audience. Second, the uncontrolled over-delivery of advertising on linear TV–and CTV’s capacity to manage and optimize frequency via ACR data and digital targeting.

We used our same database of national campaigns to simulate recessionary cutting in four ad categories: Automotive, Pharma, Media/Entertainment, and Financial Services. For this analysis, we assume an initial campaign allocation of 80% linear and 20% CTV.

The analysis: what happens when an advertiser needs to cut 15% of their media budget? They can follow the demolition model and cut 15% from both linear and CTV. Or, they can take a nuanced approach and find all the savings in linear–which would mean cutting linear by 18% and leaving CTV as-is.

Why analyze a scenario where all the cuts are in linear? We know that after a certain level of spend, linear adds frequency faster than it adds reach. Our hypothesis: when you cut linear spend, you’re mainly cutting excess frequency.

The results show how strategic, data-driven cutting can preserve reach–and keep communication flowing to customers.

In all four verticals, only cutting linear, and preserving CTV budgets, yielded better outcomes. Cutting only linear preserved a range of 0.5% to 6.3% of the client’s A18-49 reach across the four verticals. And that’s for the same overall budget reduction in dollars.

In other words–and to tie this to business results–the nuanced approach would have resulted in campaigns reaching an extra 670,000 to 8.7 million potential customers. Customers who, with the sledgehammer approach, would have perceived the advertiser as going dark.

Millions of customers seeing ads, in a time when many–including the competition–is pulling back? That seems both clever, and timely.