RUNNING D I G I TA L AUDIENCES, WA L K I N G ADVERTISING DOLLARS

THE UNTAPPED REACH OPPORTUNIT Y IN DIGITAL MEDIA A CUSTOM ANALYSIS COMMISSIONED BY FACEBOOK JULY 2013

Copyright 2013 The Nielsen Company

EXECUTIVE SUMMARY
We are still in the early days of multi-platform advertising. But preconceptions have already developed about the best way to leverage certain media to achieve your marketing objectives. Specifically, industry consensus is that TV remains the reach medium, with its ability to attract large assemblages of viewers across demos, particularly for the largest networks and during the prime time daypart. Meanwhile, online is viewed as a medium by which marketers can reach more specific audiences and drive incremental reach (e.g., light TV viewers). Continued rapid Internet penetration globally and an explosion in the popularity of social networks and apps challenges this view. Facebook, with more than 1 billion users globally, is a good example of this evolution. Facebooks user base results in a potential to drive massive reach, either duplicative or incremental to reach achieved on TV. Have we reached a new paradigm in terms of the role of online in driving reach for advertising campaigns? While marketers should also consider additional metrics, such as frequency and time spent, and measure their advertising across the 3R frameworkReach, Resonance, and Reactionto truly understand advertising performance and optimization opportunities, this paper focuses on marketers reach objectives. Specifically, this Facebookcommissioned study investigates this phenomenon by comparing Facebooks total site reach to that of large TV networks, and establishes heuristics for optimizing reach delivery on a large CPG companys multi-platform campaign. Through this approach, we address a number of fundamental questions: 1. How does Facebooks site reach compare to that of TV networks? To what degree do their respective audiencesoverlap? 2. How does this reach differ for different demographics and across different dayparts? 3. What is the optimal way to allocate campaign spend between TV and online (Facebook) to drive better reach performance? We find that Facebook is capable of delivering site reach at levels comparable to major TV networks, particularly for certain dayparts and demos. By examining a model optimizing a campaign for maximum on-target audience reach across media channels, we observe that Facebook continues to provide incremental reach with a large portion of campaign allocation. Overall, this paper shows that digital publishers with large, robust sets of high quality user data (like Facebook) can in fact serve as an effective foundation for reach delivery.By investing in the online media channel, brand marketers can increase their audience reach while at the same time creating an opportunity for dual screen media exposure. This is all possible within the original campaign budget.

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CHALLENGES AND ADVANCEMENTS IN THE ONLINE ADVERTISING INDUSTRY

Not all people buy all products. Generally speaking, the purchasers of a given product tend to skew toward a particular set of demographic and psychographic profiles. For instance, parents are more likely to buy diapers and men are more likely to buy shaving cream. Marketers spend a lot of time thinking about the optimal audience for their advertising campaigns. Once that audience is selected, the question is how best to deliver media to it. It follows that marketers would then demand campaign reporting metrics that measure the efficacy of a given campaign at reaching its intended audience. Television advertising is the most well-established medium for marketing, capturing the largest portion of spend in an estimated $495 billion worldwide advertising industry. Total TV ad spend in the United States (US) rose to $76.5 billion in 2012, up from $71.8 billion in 2011 another year of growth1. The television advertising industry has adopted Gross Ratings Points (GRPs) achieved within particular age and gender groups as measured by Nielsen as the industry standard ad metric in the US. GRPs simply equal the percentage of the intended audience the ad campaign reached multiplied by the average frequency each person within the group saw the ad*. In short, TV media plans are generally optimized to achieve maximum GRPs within a particular age and gender grouping and a set time interval. In the book When Ads Work: New Proof that Advertising Triggers Sales, John Philip Jones summarizes the key goals that define the way educated brand marketers thought, and most continue to think, about success in television marketing: 1. Aim to cover a substantial proportion of the brands target group once every week with as a little duplication as possible. Substantial proportion is a judgment call based on the size of the brand, its target group, and knowledge of the effectiveness of defined levels of reach achieved in the past. 2. To attain this minimum reach, determine the optimum number of weekly gross rating points (GRPs) and establish the best types of dayparts and television programs to use in order to minimize audience duplication 3. Run the weekly advertising pattern for as many weeks as the budget will allow. Any inevitable gaps in the schedule should occur during the low season.
Source: 1.Nielsen Global AdView Pulse Report, Q4 2012.

*For example, if an ad campaign is aimed at Males 1824 and it reached 30 percent of all Males 18-24 with an average frequency of 1 ad per person, the campaign would have achieved 30 GRPs. Similarly, if the same ad campaign had reached 20 percent of all Males 18-24 with an average frequency of 2 ads per person, the campaign would have achieved 40 GRPs.

Copyright 2013 The Nielsen Company

The reality is the pie is growing in terms of media consumption. TV still leads in terms of time spent, with the average US TV viewer watching 156 hours of TV per month, the average PC owner spending 29 hours online, and the average smartphone user spending 24 hours on apps and web each month2. The number of computer Internet users has grown from 156 million in 2007 to 212 million in 2012 and smartphone penetration has increased from 7 percent in 2007 to 59 percent in 20123. Additionally, the number of households that do not receive TV programming via a traditional platform has more than doubled in the last six years, growing from 2 million in 2007 to 5 million 20134. The first step for marketers who are heavily invested in TV advertising in determining how to allocate spend more effectively across media channels is the ability to measure campaigns in a comparable way across all these channels. This is more difficult than it may otherwise seem because digital advertising has widely adopted a set of divergent campaign measurement metrics from that of TV as the media channel norms namely impression counts and click-through-rate. Nielsen has developed two products, Nielsen Online Campaign Ratings and Nielsen Cross-Platform Campaign Ratings, which aim to fill this demand for cross-media channel campaign measurement. Nielsen Online Campaign Ratings measures digital campaigns using GRPs in a way that is directly comparable to that of TV. Nielsen Cross-Platform Campaign Ratings measures campaigns that are running on TV and online within one, GRP-based report. In short, though the tools are now available, many marketers are still left trying to create integrated campaigns without proper vision into performance within and across platforms. A major underlying issue preventing the advertising industry from keeping pace with this audience migration to digital consumption had been the lack of uniform measurement.

Sources: 2.Q4 2012 Nielsen Cross-Platform Report, December 2012 Nielsen Smartphone Analytics. 3.Q4 2007 and Q4 2012 Nielsen Cross-Platform Report, Q4 2007 and Q4 2012 Nielsen Mobile Insights. 4.Q4 2012 Nielsen Cross-Platform Report.

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UNDERSTANDING ONLINE AND TV REACH

A CASE STUDY
To further illustrate and understand the distribution of media audiences on television and online, we conducted an in-depth analysis of potential audience reach using Nielsens US TV/Internet Data Fusion panel which represents the total US population of TV and PC users. In this analysis, we looked at the reach for four television networks within specific age and gender groups at different times during the day. We then compared that with the reach of the Facebook PC digital network, as a percent of the total population during the same times of the day. It is important to note that time spent metrics and mobile media consumption were not included in the daypart analyses contained in Figure 1.A and Figure 1.B. Figure 1.C uses Nielsens TV/Internet/ Mobile Data Fusion panel to measure differences in reach between Facebook (PC + Mobile) and TV networks looking at a full month of data.
100

POPUL ATION REACH BY AGE - DAY TIME WEEKDAYS

FIGURE 1.A 5
75
Facebook Network 1
55%

Network 2

Network 3

Network 4
56% 56% 58%

50

50%

52% 47% 40% 39% 40% 34% 32% 31% 28% 33% 46% 46% 42% 36% 30% 47% 42%

29%

25

19%

17% 15% 15% 15%

21% 20% 19% 20%

25% 26% 25%

0
P12-17 P18-24 P25-34 P35-44 P45-54 P55-64 P65+

Source: 5.Figure 1.A: Nielsen TV/Internet Data Fusion, October 2012.

Copyright 2013 The Nielsen Company

POPUL ATION REACH BY AGE - PRIMETIME

100

FIGURE 1.B 6
Facebook Network 1 Network 2 Network 3
74% 69% 62% 61% 53% 48% 44% 36% 65% 63% 64% 74% 72% 70%

Network 4
77% 78% 75% 72% 77% 79% 81% 72%

75

55%

50

47%

50% 46% 41% 42% 43% 38%

51%

40%

37%

25

25% 22%

250.0

0
P12-17 P18-24 P25-34

250.0

P35-44

P45-54

P55-64

P65+

187.5

POPUL ATION REACH 187.5 BY AGE - TOTAL DAY

FIGURE 1.C 7

125.0

PERSONS 1824

125.0

PERSONS 2534

62.5 250.0

62%

70% 56% 56% 55%

61%

59%

62.5 250.0

64%

64%

77%

74%

71%

75%

73%

0.0 187.5
FB Mobile FB Online FB Online OR Mobile Network 1 Network 2 Network 3 Network 4

0.0 187.5
FB Mobile FB Online FB Online OR Mobile Network 1 Network 2 Network 3 Network 4

125.0

PERSONS 3554
83% 82% 83% 84%

125.0

PERSONS 55+
89% 88% 86% 91%

62.5

54%

61%

73%

62.5

44% 30%

52%

0.0
FB Mobile FB Online FB Online OR Mobile Network 1 Network 2 Network 3 Network 4

0.0
FB Mobile FB Online FB Online OR Mobile Network 1 Network 2 Network 3 Network 4

Sources: 6.Figure 1.B: Nielsen TV/Internet Data Fusion, October 2012. 7.Figure 1.C: Nielsen TV/Internet/Mobile Data Fusion, January 2013.

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These data point to a few interesting conclusions specifically around reach: 1. TV is more effective at reaching all audience segments during primetime hours when compared with daytime hours. 2. Facebook exhibits relatively consistent reach across both daytime and primetime dayparts. 3. During the weekday daytime hours, Facebook achieves a higher reach than the TV networks for every age cohort containing persons younger than 55, while during primetime hours, each of the four TV networks achieves a higher reach than Facebook in each age cohort except for Persons 18-24. 4. Mobile can also offer incremental reach for both online and TV, and is another way for fully integrated plans to achieve highest reach results.

MEASURING MULTI-PL ATFORM ADVERTISING SUCCESS

INCREMENTAL AND CROSS-MEDIA REACH
With near-universal market adoption, it is safe to say that television is a mature advertising ecosystem. To optimize spend, brand marketers can find value in emerging digital channels that can complement TV. The success with which online advertising can optimize reach within an advertising plan can be measured in two ways: 1. Incremental Reach: the marginal, extended reach within the desired audience segment the campaign achieves as a result of the online component, i.e. the portion of the audience reached only on the digital platform. 2. Cross-media Reach: the portion of the audience for whom the campaigns message was reinforced via impressions being viewed both online and on TV, i.e. the portion of the audience reached on both TV and a digital platform. Nielsen has shown that cross-media reach is more effective in driving resonance than reach through a single media channel8.

Source: 8.Nielsen IAB Online Video Study, 2012.

Copyright 2013 The Nielsen Company

In this section of the paper we attempt to explicitly measure incremental and cross-media reach within particular demographic groups and dayparts. We do this at a macro level by comparing the audience reach estimates of both the TV and Facebook (PC only) platforms as a whole using the Nielsen TV/Internet Data Fusion panel. We then perform a similar analysis at the micro level by taking an actual television ad campaign and executing a simulated exercise of reallocating portions of TV media spend into online spend to measure the resulting impact on reach that could be achieved by the campaign.

MACRO ANALYSIS: UNDERSTANDING REACH ACROSS FACEBOOK AND TV

We start our analysis of incremental and cross-media reach at the macro level by measuring the incremental and cross-media reach within demographic groups9 and dayparts. We look at top TV networks as well as the PC-only Facebook platform. The data is analyzed in an only-only-both method (TVonly, digital-only and duplicated reach across platforms) to demonstrate the incremental reach digital o ers, as well as the ability of digital to drive deeper engagement with audiences via cross-media reach.

FIGURE 2.A DAY TIME

50 45 40 35 30 25 20 15 10 5 0
Network 1 Network 2 Network 3 Network 4

PRIME TIME
60 57 54 51 48 45 42 39 36 33 30 27 24 21 18 15 12 9 6 3 0

11% 13% 14% 12%

13% 13%

13% 12%

14% 5% 13%

Facebook-Only Reach

Facebook-Only Reach Duplicated Reach

15% 4% 11%

15% 4% 11%

15% 4% 11%

Duplicated Reach Network-Only Reach

33%

28%

33%

29%

Network-Only Reach

Network 1

Network 2

Network 3

Network 4

Source: 9.Data not shown for all demos. Figures 2.A-2.D: Nielsen TV/Internet Data Fusion, October 2012.

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POPUL ATION REACH BY PL ATFORM - PERSONS 18-24

FIGURE 2.B
60 57 54 51 48 45 42 39 36 33 30 27 24 21 18 15 12 9 6 3 0

DAY TIME

38%

38%

38%

38%
Facebook-Only Reach Duplicated Reach Network-Only Reach

14% 33%
Network 1

12% 28%
Network 2

13% 33%
Network 3

12% 29%
Network 4

80 76 72 68 64 60 56 52 48 44 40 36 32 28 24 20 16 12 8 4 0

PRIME TIME

25%

28%

24%

27%
Facebook-Only Reach Duplicated Reach

25%

22% 14%
Network 2

26%

23% 15%
Network 4

Network-Only Reach

17%
Network 1

17%
Network 3

POPUL ATION REACH BY PL ATFORM - PERSONS 25-34

FIGURE 2.C DAY TIME
80 76 72 68 64 60 56 52 48 44 40 36 32 28 24 20 16 12 8 4 0
80 76 72 68 64 60 56 52 48 44 40 36 32 28 24 20 16 12 8 4 0

PRIME TIME
15%

19%

17%

20%

37%

39%

41%

41%

Facebook-Only Reach Duplicated Reach

36%

32%

35%

31%

Facebook-Only Reach Duplicated Reach Network-Only Reach

18% 11%
Network 1

Network-Only Reach

16% 10%
Network 2

14% 11%
Network 3

15% 10%
Network 4

26%

22%

26%

22%

Network 1

Network 2

Network 3

Network 4

POPUL ATION REACH BY PL ATFORM - PERSONS 55-64

FIGURE 2.D
80 76 72 68 64 60 56 52 48 44 40 36 32 28 24 20 16 12 8 4 0

DAY TIME
22% 22% 27% 21% 20% 15% 26% 25% 21% 27% 20%
Facebook-Only Reach Duplicated Reach Network-Only Reach

23%

100 95 90 85 80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0

PRIME TIME
6% 31% 7% 29% 8% 28% 6% 31%
Facebook-Only Reach Duplicated Reach

47%

46%

44%

47%

Network-Only Reach

Network 1

Network 2

Network 3

Network 4

Network 1

Network 2

Network 3

Network 4

Copyright 2013 The Nielsen Company

Generally speaking, we observe higher levels of Facebook-only reach (incremental) during the daytime and higher levels of cross-media reach between Facebook and TV in the primetime hours, which are results consistent with our earlier analysis of daypart reach for each of the platforms. This is most evident when looking at the younger age cohorts. Some of the more striking results are within the 18-24 and 25-34 age groups. Facebook adds significant incremental reach when looking at individual networks for the daytime daypart and significant cross-media reach during primetime for these age groups. During the day, the Facebook-only reach addition to network audiences ranges from 37 percent to 41 percent. When looking at these same demographic groups during primetime, the Facebookonly reach ranges from 15 percent to 28 percent, while the cross-media reach is much higher, ranging from 22 percent to 36 percent. This type of analysis offers an exciting opportunity for brands to better achieve their campaign reach goals. For brands aiming to extend reach, publishers should be evaluated based on demographics and dayparts where they are able to offer the highest unduplicated reach. Brands that are aiming to reinforce the messaging through duplication can focus on publishers that offer significant cross-media reach. While these findings on reach are insightful in aggregate, marketers are still faced with challenges, asking, What is the optimal media mix between TV and digital, and how do I measure the impact of this mix on reach?

MICRO ANALYSIS: PL ANNING FOR THE OPTIMAL ALLOCATION - A CPG CASE STUDY
This next section of the paper takes an actual television advertising media plan through a simulated exercise of reallocating TV media spend into online spend to measure the resulting impact on reach achieved by the campaign. It is important to note that this analysis focuses only on reach and does not measure other metrics, such as time spent, or the other pillars of the 3R framework, resonance and reaction, which are all relevant for evaluating a campaigns success. To perform this exercise, we use the television-viewing and Internet-browsing behavior from Nielsen TV/Internet Data Fusion. Online in this analysis is defined by a set of 10 of the top publishers based on historical campaign performance within the females 18-34 demo. Using Nielsen Online Campaign Ratings data, the top publishers were determined by how well they were able to reach the intended audience, in this case females 18-34. As a second breakout, we have included Facebook in addition to these 10 publishers.

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CPG BRAND MEDIA INVENTORY OPTIMIZATION - FEMALES 18-34

FIGURE 310
Online Only Reach Duplicated Reach
76% 15% 75% 18% 66% 33% 66% 35% 37% 38% 38% 35% 41% 43% 44% 76% 11%

TV Only Reach
78% 14% 79% 16% 79% 17% 80% 19% 80% 23%

80
73% 74% 10%

75% 12%

75% 13%

70

66% 66%

7% 28%

60

45% 44%

REACH (%)

50

40
38%

30

31% 28% 25% 23% 19%

30% 23% 20% 18% 16% 13%

20

10

0 0% 5% 10% 15% 20% 25% 40% 0% 5% 10% 15% 20% 25% 40%

Allocation of Online Excluding Facebook

Allocation of Online Including Facebook

The initial insight is the increase in reach among Females 18-34. The campaign started with a baseline reach of 66 percent of females ages 18-34. This reach increases rapidly with a 5 percent shift in spend from TV to online, bumping the reach up from 66 percent to 73 percent for total reach, excluding Facebook, and to 76 percent for total reach, including Facebook. This incremental reach is achieved with no additional spend on the part of the advertiser11. Reach continues to grow with the additional shifts of media budget into online, but eventually at diminishing rates. At a 40 percent shift to online excluding Facebook, the overall reach of the campaign begins to decline. There is also an underlying story in cross-media reach. While we observed a sharp increase in total reach with the first 5 percent shift, we do not see a similar level of decrease in TV reach. The baseline TV reach is 66 percent for the campaign, and with the first shift this drops to 65 percent when combining the TV only reach
Sources: 10.Figure 3: Nielsen TV/Internet Data Fusion, August 2012. 11.Average CPMs for each of the publishers were used to calculate impressions that could be allocated to online with the budget shifts.

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and the duplicated reach, excluding Facebook, and remains at 66 percent when combining the TV only reach and the duplicated reach, including Facebook. Not only is the advertiser benefiting from extending reach, but they are also adding a good amount of duplication across TV and online. This overlapping audience can unlock a wealth of opportunity for an advertiser to engage their key consumers multiple times, across media channels, to reinforce their messaging. This analysis shows in an applied example how a brand advertising on TV can maintain the same overall budget, reallocate a portion of spend into digital media, increase their reach among the intended audience, and create an opportunity to reinforce the messaging with cross-media reach across channels. In this CPG case study, with Facebook included, the brand increased their in-target reach from 66 percent to 80 percent with roughly 44 percent of the audience having an opportunity to be exposed to messaging on multiple channels.

CONCLUSION
The proliferation of connected, digital media devices and options has propelled an evolving media consumption landscape. The reality is advertising budgets have not followed at the same rate. A large barrier preventing higher growth of digital advertising spend has been the lack of a consistent measurement framework between TV and other digital media channels with which to judge the success or failure of allocation decisions. Consistent metrics are crucial to compare performance, gauge success and justify spend across multiple platforms. Throughout this paper we looked at comparable reach metrics across Facebook and TV networks to create a consistent measurement framework that lends itself to multi-platform capability. Two overarching conclusions can be made from this analysis: 1. Digital publishers with vast reach and high-quality demographic data, such as Facebook, should be considered a viable option alongside television when a marketer is pursuing an audience reach objective, particularly for younger age cohorts. 2. Planning with particular attention to dayparts for both TV and online presents exciting, synergistic opportunities for brands to increase intarget reach and create an advantageous audience for dual screen exposure, all while maintaining the same campaign budget.

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As audiences continue to increase their digital media consumption, large brand marketers that currently focus primarily on advertising within the TV media channel should adopt consistent measurement frameworks and begin allocating advertising dollars digitally to take advantage of incremental reach opportunities or risk being beaten to the punch by their competition.

ABOUT NIELSEN
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