Media

Why an online-ad guru thinks TV ads are too cheap

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Those bullish on online advertising eye the television-advertising market, which is worth $70 billion just in the U.S., and bet that Web ads can steal a big chunk of that, as they’ve done with print advertising. That’s why Google is pushing YouTube, Google TV, and video advertising, for starters.

But Internet-advertising pioneer Dave Morgan, who cofounded 24/7 RealMedia and Tacoda, argued Friday morning that television viewing is growing, as is television advertising — and that TV ads may be “wildly underpriced.”

“Most of you won’t admit that you watch four to five hours of television a day,” said Morgan.

His latest venture, Simulmedia, which launched last year and drew an investment from cable-TV giant Time Warner in April, aims to bring techniques of Web targeting to television to boost prices from their current levels.

Today, TV ads are mostly sold based on crude gender and age demographics. Internet ads, by contrast, are increasingly targeted with sophisticated algorithms based on a host of data points about individual and group behavior.

“Clearly there’s an opportunity” to apply those techniques to TV ads, said Morgan. “Untargeted TV ads for the promotion of TV or movies work at a level of 3 to 4 percent. Why do movie companies advertise on TV? You can track TV exposure on an individual, neighborhood, household level to sales.”

Data-based targeting lifted results by 75 percent over sex-and-age demographics, said Morgan, based on recent campaigns Simulmedia has run.

“A half to two-thirds of television advertising is dramatically underpriced,” said Morgan.

The question Morgan left unanswered: Will television companies be able to capture those improved results in higher advertising rates? Or will advertisers simply expect a better return from the dollars they’re currently spending?