New Metrics for New Media? A Multi-Billion Dollar Question

October 12th, 2007 Nurlan Urazbaev

“MORE THAN $36 BILLION IN annual advertising on broadcast and cable TV networks rides on estimated audience measurements from third parties,” writes Diane Mermigas, editor-at-large at MediaPost, in MediaDailyNews. Her point is that all this money is being paid to TV channels based on the assumption that vewers have seen commercials and programs. And that assumption, in turn, is still being made based on the old-style TV ratings, whose accuracy leaves much to be desired.

At the time when media and marketing are being converted to digital technologies,  advertisers are “wrestling with how much marketing dollars to split between TV — where they think they still reach the so-called masses — and more precisely measured online and other digital media — where there is some individual accountability,” says Diane Mermigas.

She quotes NBC Universal’s CEO Jeff Zucker, who was asked about the viability of the current TV ratings system: “Zucker replied: “They are what we live by and what we all have to judge ourselves by; whether they are accurate or not, whether there are issues or not. We all have to play by the same rules, and we cannot get caught up in saying that’s not the rules we should play by.”"

According to Diane Mermigas, that kind of attitude on the part of TV media owners and traditional media measurement companies “will keep the ratings sham as a lynchpin of television economics, even as more meaningful metrics and measurement options develop across all media spaces.”

Many advertisers, however, do not share Mr. Zucker’s position towards old-style ratings as the basis for ROI measurements. The explosion of Internet advertising (especially of the pay-per-click model), driven by unequivocal accountability, the fast growth of Outdoor (driven by digital conversion and newer metrics), and the slowdown of TV advertising growth are proofs to that effect.

Mermigas says: “The present challenge is measuring and reconciling the statistical reach of consumers for all TV programs wherever and whenever they are viewed, be it TV, mobile or DVR. The aggregate measurement for programs has to be credible.

But in a new era of personalized, consumer-centric media, why would any company be allowed to think that sampled metering is an acceptable substitute, even as television and other incumbent industries convert to digital measurement and distribution?

It may have something to do with the inextricable broadcast networks and television stations’ legacy systems of reporting, using and pricing against those inexact metrics,” writes Mermigas.

So, that explains why, as media buyers are using lack of measurements as a valid excuse for not buying digital signage space, the only way to convince them at this point is to give them the TV-style CPMs, CPPs and GRPs they are used to. Digital signage networks who can offer that, can succeed in getting national advertisers, sometimes. But, as we all know, the above metrics have very little to do with the real advertising ROI, and that is one of the reasons why ad budgets are still largely off limits to digital signage networks.

Here’s another couple of quotes from this brilliant piece:

“…  The bad news is going to get worse as viewers consume more of the broadcast network content in time-shifted, Internet-streaming, direct downloaded ways outside the traditionally measured Nielsen universe, where a single rating now represents 1.3 million TV homes.“

“… If the networks are serious about generating at least one dollar of new media revenue to replace every dollar of conventional advertising lost, they had best throw their money and energy behind measurement systems that certify reach on all platforms. And they can’t do that with their head in the sand,” concludes Diane Mermigas.

While there are still no viable enough metrics for online display advertising, paid-search marketing is booming, thanks to the fact that advertisers only pay for click-throughs, and impression counts are delivered free of charge (so no CPMs, only cost-per-click!). If you are using e-commerce, you can get quite accurate sales conversion (or goal conversion) numbers, which is the closest you can get to ideal ROI measurements in advertising today.

I am just wondering, what will it take (and how long) for the digital signage industry to develop the metrics that reflect the real campaign effectiveness. In fact, this is the multi-billion question.

Entry Filed under: Digital Signage ROI, The Big Picture, Uncategorized