Looking Beyond ROI to Optimize TV Campaigns

It’s not surprising that TV spending continues to dominate the direct to consumer (DTC) advertising space, but the fact that marketers may be leaving precious dollars on the table certainly is. Accurately linking marketing performance to sales is critically important, and marketers often measure and optimize their campaigns in terms of ROI (though still not often enough). However, it turns out that current ROI on its own doesn’t tell the whole story. There are additional data-driven metrics that provide deeper insights on how to best maximize profit and meet strategic objectives.

With increased budget scrutiny, it is more important than ever for marketers to evaluate their campaign ROIs along with other strategic questions about their TV investments:

• What is the optimal investment level to drive positive outcomes?
• What is the estimated impact of decreasing or increasing the budget?
• And, ultimately, where is the saturation point for TV investment (in other words, what is the optimal investment level for maximizing profit)?

Recent innovations in analytics and data availability have empowered marketers to use data to answer these questions. The result is that marketers can now optimize the performance of their largest marketing investment with greater accuracy than ever before.

Crossix helps marketers find optimal investment levels for TV advertising by measuring the actual relationship between TV exposure and patient health behavior. Using this relationship, we can then run powerful, forward-looking simulations to estimate campaign performance at varying investment levels. These simulations use highly granular data on the effectiveness of TV exposures at every frequency to estimate what campaign impact will be as exposure frequencies change with changes in investment. This approach differs from typical simulation approaches powered by models using aggregate level data sets. With this level of granularity, marketers can now better understand how performance will change with spending adjustments and find the optimal investment levels based on expected profit and ROI, as illustrated below.

In this example, the brand’s current investment level was not near the saturation point; decreased investment would translate to decreased profit, and there was room to drive additional profit with additional investment. The campaign wouldn’t reach saturation until increasing the current budget by 100%. However, the ability to drive incremental profit would decline after a 25% increase in spend, highlighting that it isn’t always desirable to reach a saturation point.

Reaching a saturation point may be suboptimal because there is often a tradeoff between maximizing ROI and maximizing profit. The ROI and profit levels for the same campaign are illustrated below. For this campaign, profit would be maximized at an investment level 300% higher than the level where ROI peaks. ROI is typically maximized at a much lower investment level than is needed to maximize profit.

Ultimately, marketers must consider ROI, profit, and other sales goals together to determine the optimal investment level for a campaign. What is the new patient start or sales target, and what is the ROI that makes sense to achieve it? A forward-looking, data-driven approach powered by linking marketing exposure to real-world health behavior is necessary to arm marketers with the insights to optimize campaigns effectively while balancing these strategic priorities.

Have you uncovered your sweet spot? Find out with Crossix.