Proponents of TV and SEM advertising often have contentious debates. SEM advertisers love the trackability of the channel and the immediacy of response while TV advertisers love its reach and its ability to build awareness. However, what is not clear is how the channels interact and how to find out the right media mix to maximize overall returns across the channels. We do a lot of modeling and analysis to answer both questions, and I shall present a few insights that should get you rolling.
For this analysis we study the SEM and TV data of a big budget direct advertiser. Both TV and SEM spend varied a lot over a period of 3 months, which is great for the study as it allows us to study the cross elasticity of both. I could only study the connection between TV and brand keyword advertising on SEM because SEM budgets were changed significantly during the testing period. However, brand keywords were always bid to position 1 and hence the position variability was eliminated. I also accounted for seasonality effects. When I analyzed the connection between impression volume on brand keywords and the TV spend, a clear connection emerged. The following chart shows the connection:
You can visually note that even the simple fitted line shows a connection between TV spend and online impression volume for the brand terms. I looked at the quality of fit and the statistics corroborates the visual evidence. Mathematically, the line fit explains 87% of the trend.
What does this mean?
For this advertiser, TV advertising led to increased searches on the brand terms. How many searches can be attribute to TV? It depends on the TV spend. The chart below shows the percentage of impressions attributable to the TV advertising for the above example.
Note that at $2.1 million a day in TV spend, 65% of the search impressions are attributable to TV. On the face of it, this sounds impressive. However, it is still $2.1 million a day. That’s a lot of money!
At this point you are probably wondering what is the best allocation of advertising dollars across SEM and TV to maximize conversions. The answer is not simple because it requires modeling of the following:
- The effect that TV has on SEM both in terms of impressions, clicks and conversion rates.
- The length of effect that TV has on the online channels. Showing an ad for a day can have an effect for several days online. How do we model that out? This is an open question that academics have been trying to answer using a slew of sophisticated mathematical techniques
- The best possible outcome on the SEM channel knowing that I am spending a certain amount on TV.
My team and I work on the above questions for several advertisers. While the answers are never clean or perfect, we use several mathematical techniques to answer the ultimate media mix question—what is the best allocation of budget across all channels (SEM, TV, Display, Facebook among others) that maximizes ROI.
Feel free to tweet or contact me directly if you liked my analysis and if you would like to know more about the connection between TV and SEM.
Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.