ARF’s Joel Rubinson Mulls The Evolving Ad Marketplace

No, ARF is not the sound your dog makes. It actually stands for the Advertising Research Foundation, an organization that seldom gets the recognition it deserves despite the incredible work it does for the media industry. After all, with all the confusion about multiple platforms and changing metrics these days, good advertising research has never been more important. In March, ARF hired Joel Rubinson to take over as its Chief Research Officer. We asked Joel to give us his take on the Upfronts, metrics and the evolving relationship between ad buyers and sellers.

What do you see as the primary research needs that could help media buyers and sellers come up with deals that are fair for both sides?

The industry is still evolving and does not have commonly agreed to metrics for the Web, mobile or in-store media, for example. In the meantime, certain media companies will provide their own information in terms of reach across platforms and engagement measures, and they need to be as transparent as possible in how they conducted their research.

Is the industry rethinking some early prognostications that the upfront process was outliving its usefulness? And if so, is it just a matter of tweaking the content of the upfronts to make them more relevant?

Some companies continue to question if they can anticipate their full year’s needs; I believe that Johnson & Johnson was recently reported as taking this position. Furthermore, the upfront buy is likely to be tempered by the economic downturn, and if the economy picks up, that might change the proportion of this year’s media that was bought via the upfront.

In general, how do you see ARF’s role—as well as the role of all research—in helping parties figure out deals for new platforms like DVRs, VOD, Internet, mobile, etc?

The ARF has industry leaders who come together to discuss emerging media, cross-media, and media effectiveness via our councils and task forces. Industry priorities emerge from that. For example, as I write this, there are over 100 industry leaders sitting in the conference room next to me or online hearing a series a presentations about research into mobile marketing. The ARF will be very central to the industry response to information needs for audience measurement and effectiveness/ROI analysis.

What about addressable set-top data? Is this kind of data going to eventually take over? If so, how long do you think it will take to happen based on the research out there?

It is still early days for set top box data, but the sample size and second-by-second data offers irresistible granularity. A very intriguing development is the integration of set top box data with retailer frequent shopper data. Having said that, set top box data has certain limitations, not the least of which is that it is tied to a platform while the media industry is asking cross-platform questions. Having said all this, I would say that STBs are a great addition to the metrics possibilities, but I’m not ready to proclaim that it is the magic solution… not just yet.  5/2/08

More of CableFAX Daily’s upfront coverage below.
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The Evolving Ad Market: Q&A With Magna Global’s Steve Sternberg

Media service firm Magna Global makes a business of understanding the key factors at play in the upfront negotiations. Steve Sternberg, EVP, audience analysis, and Brian Wieser, SVP, director of inventory analysis, gave us some perspective on the evolving advertising market.

New Magna research predicts DVR penetration at 36% of TV homes by 2012, up from today’s 22%. What does the continued rising trend mean for the TV advertising market?

The growth and expected rise of DVR penetration led directly to the transition from program ratings to C3 as marketplace currency. According to Nielsen, roughly 40% of primetime broadcast viewing in DVR homes is time-shifted, compared to less than 20% of primetime cable viewing. With the transition to delayed commercial ratings, the amount of live commercial viewing lost to channel switching on broadcast, is more than made up by DVR viewing. So going forward, C3 will be higher than live program ratings. This is not the case for cable, where the live commercial losses are largely not compensated by delayed viewing. But there are some first-run series, like "The Closer," that do get heavy DVR playback and will start to look even better than other shows by comparison.

Cable ops have fewer DVR subs than their satellite competitors, with Comcast coming in at 15.8% DVR penetration compared to DirecTV’s 30.9%, according to your latest stats. Why is that?

Cable operators have generally not pushed DVRs to the same degree as satellite, preferring to focus more on VOD. That is starting to change a bit.

Advertisers want addressable advertising. How far off are we from VOD becoming a significant ad platform, and how is that affecting this year’s deal-making?

The short answer is that although advertisers are conceptually interested in addressable advertising, the volume of inventory available remains small and will continue to be de minimus for the foreseeable future. As a result, it doesn’t impact current deal-making in a material way. VOD extensions may be included as part of a national VOD buy, but incremental dollars are not likely to be included. Local VOD inventory still needs to overcome the difficulties in buying that inventory, which may be a few years away.

What’s Magna’s take on all the talk about precision metrics?

There is more of a need than ever for more precise metrics. We’ve worked with a number of cable networks in experimenting with various commercial pod structures, engagement-type metrics, and are continuing to discuss potential measurement based on commercial pods. For the first time, the networks have a stake in keeping viewers tuned in to commercial pods, and are more willing than ever to partner with us on new and innovative research to help make this happen. This is one of the most positive developments in switching over to average commercial minute ratings.  4/18/08

More of CableFAX Daily’s upfront coverage below.
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Precise Talk From Starcom: Q&A With Natalie Conway

Starcom USA wants to quash the practice of negotiating cable buys from unrated networks based on ratings estimates. Natalie Conway, Starcom svp, cable activation director, sat down with Cfax to explain why the media buying firm will negotiate upfront deals only with nets applying precision metrics and why more accountability is critical to the smaller (i.e., non-Nielsened) networks Starcom targets.

Why this commitment to quantitative metrics?

Last year, we saw major minute-by-minute guarantees. Twenty five percent of our deals were guaranteed on the exact minute, and we had the industry’s first second-by-second deal, with Discovery HD, which really opened the door.

Those deals were based on data from TNS Media Research using set-top data from Charter’s digital cable system in LA. Now Starcom has a deal to get DirecTV set-top data from TNS.

Everyone is trying to move to increased accountability, and we think this is going to be a big year. The TNS and DirecTV data is out there and accessible, and that’s really great. To the extent that someone is willing to share that kind of data with us, that’s exciting.

And now Starcom is conducting the industry’s first-ever HD-dedicated upfront.

Yes, a large group of networks we think are very important and not rated would be those of the HD variety. We have just successfully negotiated the industry’s first HD upfront that includes a bunch of stand-alone networks and a fleet of simulcast networks offered by DirecTV.

Yet many cable operators traditionally have kept that level of data closer to the vest.

Our relationships with the MSOs are very important, and we want to make sure this is a targeted message. But we are big fans of increasing granularity in all ways possible, across all media. This is not just a cable thing and not just a video thing. We are definitely open to all players and all opportunities.

What kind of nets will most benefit from precision metrics?

We think this initiative will allow us to more easily partner with fledgling networks. It’s definitely a pro for some of the younger networks because a lot of them tend to be niche-oriented and are linked to special passions that some of our clients target.

What about nets that aren’t ready or able to bring precision metrics to their negotiations?

There are some cases where networks may not be in Charter LA or DirecTV, and so this type of second-by-second data is not yet available. We are approaching those partners and trying to come up with creative ways to learn together. We need to be creative and find a level of accountability that works. This is all about being inclusive, not exclusive.  4/4/08

More of CableFAX Daily’s upfront coverage below.
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Spring Flowers Ratings Help Fuel Bullish Upfront Projections

With the Upfront season now in full bloom, the buzz over increasingly complex ad buys continues. Already, Gospel Music Channel, Nickelodeon, Telemundo, Weather Channel and Sci Fi Channel have held events—with many more upfronts still coming. Turner and NBCU even plan to hold their cable shindigs in May during the broadcast upfront season. Meanwhile, everyone is struggling with advertisers’ new measurement demands. In light of that, we asked Hallmark’s Bill Abbott (whose upfront was Mar 25 in NYC) to give us his take on the evolution of C3 ratings.

By Bill Abbott

The economies of the United States and the television advertising industry have evolved into a tale of two worlds. While the country’s economy is struggling and perhaps headed toward a recession, television’s prospects for a strong Upfront in 2008 look extremely positive.

The great irony in this is that C3 ratings are one of the reasons for television network optimism. Going back only a few months, C3 was the cause of great consternation and uncertainty from all corners of the business. But, now that we have lived with C3 as our primary currency since October, it has emerged as a stabilizing force. The fear of wide discrepancies between C3 and live program ratings did not develop, as we have learned that viewers do, in fact, watch commercials—even on DVR playback. This fact has helped confirm advertisers’ confidence in television, which has been clearly demonstrated by an extremely robust scatter market that speaks to a renewed zeal for our medium among brand marketers and their agencies.

Even the mostly slight drop-off in commercial retention identified by C3 serves to reinforce bullish upfront forecasts, as the resulting reduction in impressions will help boost prices in television’s supply-and-demand marketplace. And, again, the tremendous scatter market that we have seen this year points to high demand in the upfront.

The networks that will benefit most from a bullish upfront are those that enjoy strong emotional connections with their audiences. These are the networks that perform best in the C3 metric, indicating viewer loyalty and involvement in the programming and, in turn, in the commercials that air within that programming. This network-audience bond helps advertising messages resonate with viewers, which leads to a logical conclusion that the spots are more effective in influencing consumer behavior.

In many ways, it is quite gratifying to those of us on the sales side to see C3 ratings prove what we have been saying for years about viewing levels for television commercials. It will be even more gratifying when this C3 data helps push this year’s upfront to record heights.

Bill Abbott is EVP, advertising sales for Hallmark Channel and Hallmark Movie Channel. He can be reached at billabbott@hallmarkchannel.com.  3/21/08

More of CableFAX Daily’s upfront coverage below.
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People Get Ready… 5Q: CAB Pres/CEO Sean Cunningham

The Upfronts are coming! For a bit of perspective, we asked CAB pres/CEO Sean Cunningham to give us his take on this year’s Upfront season—and what it all means for cable nets, media buyers and of course those advertisers who ultimately write the checks.

Attitudes seem to be evolving. How will this year’s Upfront be different, if at all?

I think what has evolved is an understanding of what the Upfront is and what it’s not by those peripheral to the TV market. Each Upfront season is unique, and the conditions ramping to this year’s season, such as the impact of the WGA strike, another year with commercial ratings and the 2008 quadrennial inventory-tighteners (political/presidential/olympic ad spending) should set the stage for increased demand for cable networks.

How exactly will the strike—and its recent resolution—factor in?

I believe the WGA strike forces advertisers to take an even closer look at the value proposition and disparity between the continuously growing cable audience and the continuously shrinking broadcast audience. On the whole, TV viewing stayed healthy during the strike due in large part to cable’s audience growth outpacing broadcast audience decline. In effect, we may see the strike accelerating the audience advantage to cable networks—thus cable’s value as a ratings/reach foundation for achieving an advertiser’s sales goals will likely stand at an all-time high.

Some seem to think the Upfronts have outlived their usefulness. What’s the prevailing opinion among advertisers, media buyers and cable nets?

The television marketplace is active 52 weeks of the year; however, the need for a common annual time for buyers/sellers to set price on a bulk of multi-quarter inventory for each advertiser’s specific needs will endure as a best practice.

How are Upfront presentations evolving to account for the shift to multiplatform advertising, as well as new media like VOD?

Multiplatform deals have become the rule rather than the exception for cable networks in both the Upfront and scatter markets. The success of these deals naturally leads to them being taken to center stage as "here’s what’s possible" in Upfront presentations. The popularity of these multiplatform plays are also increased by the metrics these deals can generate as proof of campaign effectiveness. The fact that these types of deals have become more the norm speaks volumes for the primacy of cable television as an on-going centerpiece in selling goods and services.

How is CAB working with its members to make the Upfronts a more efficient and fruitful process?

We are constantly seeking to identify the unanswered television/video questions that intrigue advertisers and agencies. We conduct a considerable amount of consumer research designed to help find those answers. In recognizing the industry questions and assisting our members in finding the answers, we’re focused on keeping the buyer/seller dialogue as productive and forward-looking as possible for both our national and local members.  3/3/08

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