What we can learn from DTC success with TV ads

One of the most-discussed plot twists in recent advertising has been the pivot of Direct-to-Consumer (DTC) brands to linear TV. These data-driven, digital-first players are expanding well beyond Facebook and Instagram—and becoming serious players on the largest traditional medium in advertising.

A January 2019 Video Advertising Bureau study found that in 2018, 120 DTC brands collectively spent over $2 billion in TV ads—up from $1.1 B in 2016. 70 of those 2018 advertisers ran TV ads for the first time.

But while we know that they’re advertising on TV, what may be less discussed is whether they’re succeeding on television—and what strategies they use to achieve their success.

At EDO, we have a unique and differentiated ability to measure how DTC advertisers perform on TV by tracking incremental online searches above baseline in the minutes immediately following individual TV ad airings as viewers translate their interest in advertised brands and products directly into online engagement with them.

By measuring incremental search activity across 60 million national TV ad airings since 2015, we are able to effectively isolate the effects of TV ad placement and creative decisions that are most likely to cause online engagement.

We ran the numbers on DTCs as well as advertisers in various other categories to better understand how DTCs specifically are succeeding in TV ads—and what DTCs who are considering TV advertising can do to achieve success on TV.

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Does the David vs. Goliath story play out on TV?

The DTC revolution is a quintessential David and Goliath story. In vertical after vertical, small, digital-native upstarts are changing the game and overtaking major brands. Does that story play out on TV as well—or is TV advertising one area where DTC marketers have finally met their match?

To answer that question, EDO looked at how effectively TV ads elicited viewer activity since September 2018 across eight major industry categories including DTC. Guided by historical ad performance across billions of ads, we rated ad performance based on how closely the DTC ads came to meeting the benchmark volume of brand-related online activity in the minutes following each TV ad airing.

We index each industry accordingly—giving an index value of 100 to an ad that meets benchmark standards, and below-par ads getting a score under 100 while higher-scoring ads receive a score over 100. We chose to set our index baseline of 100 to the average Consumer Packaged Good (CPG) ad since it is such a large and broad ad category. Our results are as follows:

Edo raises $12M to measure TV ad effectiveness

Edo, an ad analytics startup founded by Daniel Nadler and actor Edward Norton, announced today that it has raised $12 million in Series A funding.

Nadler and Norton have both had startup success before — Nadler co-founded and led Kensho, which S&P Global acquired for $550 million. Norton invested in Kensho and co-founded CrowdRise, which was acquired by GoFundMe.

Even so, ad analytics might seem like an arcane industry for an actor/filmmaker to want to tackle. However, Norton said he was actually the one to convince Nadler that it was worth starting the company, and he argued that this is an important topic to both of them as creators. (Nadler’s a poet.)

“Movie studios and publishers, they take risks on talent, on creative people like us,” Norton said. “We want them to do well … The better they do with the dollars they spend, the less risk adverse they become.”

Nadler and Norton recruited Kevin Krim, the former head of digital at CNBC, to serve as Edo’s CEO.

Krim explained that while linear TV advertising still accounts for the majority of ad budgets, the effectiveness of those ads is still measured using old-fashioned “survey-based methodologies.” There are other measurement companies looking online, Norton said they’re focused on social media sentiment and other “weak proxies” for consumer behavior.

Edo screenshot

In contrast, Edo pulls data from sources like search engines and content sites where people are doing research before making a purchase. By applying data science, Krim said, “We basically can measure the change in consumer engagement, the behaviors that are indicative of intent. We can measure the change in consumer behavior for every ad.”

In fact, Edo says that since its founding in 2015, it has created a database of 47 million ad airings, so advertisers can see not just their own ad performance, but also that of their competitors. This allows advertisers to adjust their campaigns based on consumer engagement — Krim said that in some cases, advertisers will receive the overnight data and then adjust their ad rotation for that very night.

As for the Series A, it was led by Breyer Capital. (Jim Breyer has backed everything from Facebook to Etsy to Marvel.) Vista Equity co-founders Robert Smith and Brian Sheth participated in the round, as did WGI Group.

“For more than a decade I’ve watched the data science talent arbitrage transform industries from finance to defense, from transportation to commerce,” Breyer said in the funding announcement. “We needed someone to bring these capabilities to bear on the systemic inefficiencies and methodological shortcomings of measurement and analytics in media and advertising.”

On the customer side, Edo is already working with ESPN, Turner, NBCUniversal, Warner Bros. I wondered whether some of the TV networks might have been worried about what Edo would reveal about their ads, but Norton said the opposite was true.

“I don’t sense that they in any way have trepidation that we’re going to pull their pants down — quite the opposite,” he said. “They are absolutely thrilled with our ability to help burnish and validate their assertions about the strength of what they’re offering.”