Agencies Press Nets To Up Accountability

With about $15 billion up for grabs in the broadcast and cable upfront marketplace just three months from now, there are rumblings among the media buying agencies that the networks that offer ways to prove the value of the dollars spent by their advertiser clients may be the ones who see the least amount of dollars shifted to nontraditional media. While no agency is threatening a wholesale pulling of dollars out of television, many media buyers say their clients want the networks to become more accountable and find ways to show that their clients' multimillion dollar TV expenditures are actually working toward meeting corporate objectives and contributing to the profit picture by increasing sales. Buzzwords like return on investment (ROI) and return on objectives (ROO) have been around for a few years now, but more and more advertisers are demanding that their media agencies adopt them as a bargaining point in their negotiations with the networks. A large Nielsen ratings number alone is no longer good enough for some advertisers, who want proof that the commercials they run on television, or the product integrations they have woven into shows, have engaged viewers enough to actually go out and buy those products or services. Many in the industry are waiting for the initial results to emerge from a landmark $20 million upfront deal negotiated by Starcom with Court TV during last year's upfront. Under the terms of that deal, which first took effect in the fourth quarter of 2005, a formula was set up under which not only Nielsen ratings, but also "viewer engagement" will be a contributor in determining if Court TV meets its ratings guarantees or has to offer makegoods. Sam Armando, vp, director of television research at Starcom, said the fourth-quarter data "is just in." It's not like his agency or Court TV is planning to share specific results publicly (at this point), but he said overall the results of how the formula worked is "encouraging." Under the formula, which Armando said can be adjusted to improve as both parties proceed, Starcom and Court TV conduct a proprietary study on each show in the package to measure a viewer-attention component and a viewer-retention component for the commercials or products advertised. Those two components are combined to create an engagement factor. That engagement factor is then applied to its guaranteed rating impression to get an engagement impression. Starcom can get makegoods in two ways: If the regular rating guarantee is not met, or if the engagement guarantee is not met. "Describing it makes it seem like a daunting process," Armando notes, "but all of the broadcast networks can do it. The Court TV formula can be used as a model. It has certainly opened eyes to the possibilities of doing business in a different way." Armando says that the goal in the Court TV deal was not to necessarily create a perfect model from the outset, but to find a partner willing to start somewhere and adapt as it is tested. "We encourage criticism, and the model can be adjusted," he explains. "We hope this will spur dialogue where there always wasn't." All well and good, argue some broadcast sales executives. But they also point to Court TV's small size as a network and its lack of ratings clout in the realm of TV options. If it had not cut such a deal with Starcom, they note, Court might have gotten a smaller share of the agency's upfront dollars.But Armando said his agency is not holding a gun to any network's head to try new formulas like this. "We will do it with networks that our clients want to partner with, and it can benefit both," Armando says. "Some of our clients still want just [audience] reach," indicating that they will continue to make traditional TV time buys with Nielsen ratings guarantees.Steve Grubbs, CEO at media agency PHD North America, says he believes Court TV should be commended for trying to come up with a formula to measure advertising effectiveness beyond just eyeballs. "Our clients are asking us for more accountability to justify the dollars we are spending on their behalf, and we in turn are asking the networks for more accountability," says Grubbs. "Any network that is working in this direction to help us crack the code should benefit."Ed Erhardt, president of ESPN/ABC Sports Customer Sales and Marketing, notes that there are many advertisers who want to buy just reach on his network. But his staff encourages anyone advertising on the network to work out an advertising plan that takes into consideration a client's desired return on objectives when planning which ESPN platform to spend dollars on."We've become big believers in return on objectives," Erhardt says. "We ask the advertiser coming in what their goals are. What are they trying to accomplish with their advertising? Then we decide how we can take the ad dollars they want to spend and best allocate them across some or all of our platforms to help meet those goals."Erhardt said his sales force can make use of the 2000-person ESPN sports poll on a weekly basis to ask questions about brand perceptions before, during and after an on-air or multiplatform campaign. The poll can also be used to identify whether viewers were actually motivated to go out and buy a particular product."It helps us determine whether a marketing campaign is actually impacting sales," Erhardt adds. "At any one time, we will have 10 of these projects going on in different forms. We haven't reached our limit yet, and we continue to staff up to do more of this. It is an integral part of the way we do business today."Rino Scanzoni, chief investment officer at Mediaedge:cia, calls return on investment "the Holy Grail," adding, "We have a whole division at our agency devoted to finding ways to quantify the ad dollars we spend on behalf of our clients. We continue to get better at it and smarter at it." Scanzoni believes that while the TV networks have to be open and willing to change the decades-old system of measuring ad effectiveness and offering makegoods based solely on mass-reach Nielsen ratings, he says it's also up to the media agencies to come up with responsible ways to make it more palatable for the networks to do it. He says, "The networks that are willing will benefit a lot more down the road."Lyle Schwartz, senior vp and director of research and marketplace analysis at Mediaedge:cia, who works closely with Scanzoni during the upfront buying season, said the broadcast networks cannot sit back and let the cable networks create new formulas measuring audience accountability without acting themselves. "For the broadcast networks to maintain their position, they will have to start showing a greater accountability that dollars are working and proving how advertising on their networks can help clients achieve their objectives," explains Schwartz, "because there are plenty of other media outlets out there looking to siphon off money from them."David Ernst, executive vp, director of futures and technologies for media agency Initiative, agrees: "The days are gone when advertisers are just looking for eyeballs. We have to go much further than that. We need to know how engaged viewers are in shows and commercials, and the networks are going to have to field studies to show advertisers the impact of their commercials and how they impact viewers' intent to buy."One broadcast network sales executive, who did not want to speak for attribution, says the networks are willing to work with advertisers to come up with new ways to measure ad spending accountability, return on investment and viewer engagement, but it has to be a two-way street. "[The agencies] talk the game, but unless they are willing to actually sit down with us and work together, and go beyond just trying to get the cheapest cost-per-thousand buy, it is just rhetoric," the exec notes. "We are willing to find different ways to measure effectiveness, but it is hard to find a client that is willing to pay, say 20 percent more to cover the costs of doing that. Every conversation seems to fall back to how can they get cheaper CPMs."Steve Lanzano, executive vp and general manager of media buying at MPG, acknowledges that some advertisers are more concerned with paying the lowest CPM. But he says for those clients who want the networks to prove that ad dollars spent with them actually motivates viewers to go out and buy product, the networks should provide that proof at their own cost. "Why should we have to pay more?" Lanzano asks. "If a network can show us that advertising in their programming motivates viewer buying, that network will get a larger share of our dollars. The burden should be on them. But those who do not begin to provide us with that information may be left behind. With all the digital and interactive opportunities we have, where things like engagement can be better measured, we will continue to spin off dollars away from the networks that can't provide that information to us."Right now, however, broadcast network sales execs say clients seeking to get measurement data beyond pure Nielsen ratings number only about 10 percent of their total client base, a number Lanzano agrees with. So the public discussion seems to be more intense than the private negotiations. Starcom's Armando said initial conversations between the agencies and networks need not center around new formulas of viewer measurement. Other areas of importance to advertisers could be addressed such as making a more detailed analysis of commercial pods. "A lot of our interest revolves around commercial pods," Armando says. "The length of pods, the order of commercials in pods, where the pods are located within a show. One of our concerns is how to better ensure that viewers are watching our commercials."But ESPN's Erhardt points out that no matter how closely a network works with the agency to try to get the best viewer engagement from commercials, the creative quality of each commercial spot must be there. "We can put the advertising in all the right spots, but if the creative is bad, it still may not work," Erhardt says.Scanzoni argues that while dialogue on new ways to measure advertising effectiveness will take place during the upfront discussions, it has really become a year-round conversation. Starcom's Armando agrees. Though the Starcom/Court TV viewer-engagement measurement deal was finalized during last year's upfront, discussions started long before that. Says Armando: "This has become a 12-months-a-year conversation."

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Agencies Press Nets To Up Accountability

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