4A’s, Harsh Words, Uncertain Futures

ORLANDO, FLA. The American Association of Advertising Agencies’ three-day media conference here last week raised a host of critical questions and issues—from consumer engagement to user-generated content, from return on investment to new media platforms—but offered few solutions.

“We’re all aware of the rapid rate of change and how that will accelerate going forward,” said Irwin Gotlieb, CEO of WPP’s Group M. “We’re all trying to figure out where it’s going, and nobody has all the answers.”

Alec Gerster, worldwide CEO of Interpublic Group’s Initiative, agreed. “There was a nice dynamic to it,” he said. “We all tend to look at the issues collaboratively instead of competitively for the couple of days we’re gathered together, and there’s huge intrinsic value to it.”

Other often-discussed issues at the event—attended by more than 1,400 media executives—included collaboration with creative agencies and other content providers and developments affecting this year’s upfront marketplace. Perhaps not surprisingly, attendees cited the chance to network and share ideas about connecting with consumers as the elements they enjoyed most about the event.

While media executives pondered the shape and direction of the communications landscape, the 4A’s had a strongly worded message for the traditional TV media. In a fiery speech that opened the second day of the event—the first full day open to non-members—Jean Pool, North American COO of IPG’s Universal McCann and chair of this year’s conference, warned media agencies to help advertisers better understand exactly who is tuning in to TV ads, or risk losing a bigger share of the ad pie going forward.

Pool called for the adoption of a commercial ratings system—in place of program audience measurements—as the currency by which ads are bought and sold. For sellers to continue resisting a switch suggests they are “hiding a dirty little secret,” Pool said. “We challenge you to provide full disclosure of all research.”

Pool said the U.S. is “way behind other countries” in supplying advertisers with sufficient accountability metrics. “Personally, I’m embarrassed by this sorry state of affairs,” she said. “There’s a pathetically long way to go.”

Pool also called commercial clutter “the saddest and stupidest thing we’ve done to our industry,” noting that hit shows like ABC’s Desperate Housewives have as much as 24 minutes of non-program content per hour. Viewers find such loads “irritating,” said Pool. “When I’m irritated, I’m not in the mood to be sold.”

Pool’s comments took some by surprise. “I thought her message was overly combative,” said the head of one media agency. “I agree that commercial ratings would help us all better understand viewing behavior, but the message could have been more ‘We’re in this together and need to solve this,'” the executive said.

John Mandel, CEO of WPP’s MediaCom, had no problem with the tone. Mandel, who is on the 4A’s media policy committee, said committee members even debated whether Pool should go further—and suggest that vendors have an obligation under Sarbanes Oxley to provide commercial ratings as “proof of performance” for audience levels they guarantee in exchange for the billions of dollars they receive from advertisers. Ultimately, the 4A’s lawyers ruled out such language, said Mandel.

Still, Mandel said many agencies and advertisers remain frustrated that TV programmers won’t provide commercial ratings. “We don’t know who watches commercials,” he said. “And they keep hiding the numbers.”

Broadcasters disagreed. “Give me a break,” said Mike Shaw, president of sales for the ABC Television Network. “We pay 90 percent of the cost of the ratings. If they want to pay 50 percent, they can have the numbers, too.”

That’s not the issue, said David Verklin, CEO of Carat Americas, a unit of Aegis Group. “We can’t tell if there is a consumer response until we know there has been a consumer exposure,” he said. “The research is there and should be made available to clients who are spending billions” on TV ads.

However, making commercial ratings the currency, said Shaw, would pose all sorts of new issues. “We can cancel shows all the time for doing poorly in the ratings,” he said. “Who’s going to cancel bad creative? Do I charge more for a commercial in the A position if every time it airs the rating dips?”

Chris Rohrs, president of the Television Bureau of Advertising, the trade organization for local TV stations, said ad agencies seem to be pouring more “creative energy” into new media and would do well to focus “relentlessly on the quality of the messaging, because that cuts through everything. I think the industry needs to ask: Are the commercials as good as they need to be?”

Meanwhile, on a panel titled “The Shape of the Modern Media Organization,” media-agency leaders voiced some passionate concerns of their own, including the challenge of attracting top talent and whether their agencies are properly structured for the future.

Joe Uva, CEO of OMD Worldwide, said media agencies were less likely to recruit coveted graduates because “it’s cooler to work at Google.” Others on the panel railed against the suggestion that media services should be “rebundled” with creative agencies. “This conversation about rebundling—I’m sorry, it doesn’t make sense to me,” said Jack Klues, chairman of Publicis Groupe Media. “The notion that the answer to stronger connectivity between the message and the medium is a return to the model of the 1980s is nonsense.”

In terms of the upfront, executives said that several variables, some still unresolved, could make this year’s negotiations the most complex since 1988, the year Nielsen Media Research first installed national people meters. The biggest unresolved issue facing buyers and planners is which form of Nielsen Media Research measurement will be the benchmark to determine guarantees for commercial time bought—live ratings, live-plus-next-day ratings (which include any time-shifted viewing on DVRs within 24 hours), or live-plus-seven-day ratings (which include time-shifted viewing up to a week later).

ABC’s Shaw reiterated that he would not sell any inventory in the upfront to agencies that insist on basing the sales only on Nielsen “live” ratings, which measure viewing when shows air. Shaw hopes the issue can be resolved by late April, before the upfront, and said he has personally met with most major media agencies.

Donna Speciale, president of U.S. broadcast and programming at MediaVest, said she is currently planning to buy commercial time in the upfront based only on Nielsen live ratings. “We will continue to look at all three data streams,” she said. “Eventually live-plus-seven may be the agreed-on currency by the industry, but right now I will only buy based on live ratings.”

Speciale also hopes the broadcast networks will not attempt to factor another new element into the upfront: out-of-home college-student TV viewing, which Nielsen plans to introduce in January 2007 (in the heart of midseason), a move that could cause ratings changes of 3-12 percent—a huge range. Speciale said she would rather the networks wait until the end of the season to gauge its impact, and implement it in next year’s upfront talks.

As if the research questions weren’t enough of a headache, there is also the introduction this upfront of new ad inventory. Not only are new networks entering the market—such as CW (a merged WB and UPN) and My Network TV (which buyers see as more of a syndication play)—but the established nets keep adding digital and broadband arrows to their quivers. Shaw last week announced that ABC is introducing My ABC, a new Internet streaming service that will carry ads.

“The easy part of our business has always been to come up with projections to predict audiences levels, because it was based on historical models. But this year there are so many variables, we will have to go back and see how they play into the formula,” said Rino Scanzoni, chief investment officer at Mediaedge:cia. “These complexities will slow down the buying process.”

Charlie Rutman, CEO of MPG North America, agreed. “All of these issues add to the level of complexity of the upfront,” he said. But he also believes slowing down the upfront process might not be a bad thing. “We get paid by our clients to get it right, not do it fast,” he said.