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No Metrics = No Buys: The War of Metrics Has Begun (10)

 

As of this upfront period, the U.S. division of Starcom MediaVest Group (SMG) – one of the largest media communications companies – will only be buying media that can produce more advanced metrics.

According to MediaWeek, “Starcom USA will no longer do business with unrated networks that are not measured by companies or rating services that can offer documented data on viewership.”

“In prior years, standard industry practice has been to negotiate TV buys from unrated networks based on estimates from those networks and disparate sources,” Starcom said in a statement. “The availability of second-by-second data from companies such as TNS, in its alignment with Charter and DirecTV, allow for national performance metrics for these previously unrated networks and reveal never-before-seen insights into behaviors of those networks’ audiences.”

The move is significant (if it had been in the 80s, I would have said: paradigm shift), as Starcom USA is probably the largest media agency, and when it sets the bar for accountability and ROI higher, others will certainly pay attention. It will also prompt the channels with less adequate metrics to try and comply in the nearest future.

Since the Internet started providing reports on referring sources, targeted impressions, click-throughs and sales conversion data (for e-commerce), it has been enjoying double-digit growth in ad revenue and, along the way, has pushed the standards for accountability for other media. This, along with traditional media fragmentation, led to advertisers’ increasing disenchantment with network TV and the gradual shifting of the budgets towards online, outdoor and now to digital out-of-home (digital signage).

It looks like Starcom is determined to break the 60-year-old advertiser-agency-media relationship system, which has been centered around network TV and newspapers, while everything else was essentially an afterthought. The wise joke: ”I don’t know which half of my ad budget works” is not amusing to national advertisers any more, and agencies are finally hearing this, embracing the most measured medium: digital. Starcom recently discontinued a contract with Donovan Data Systems (DDS) – a near-monopoly software platform for tracking media buys and billings – citing DDS’s inability to efficiently process digital media transactions.

The agency’s divorce from DDS sent shock waves throughout the advertising community and put extra pressure on DDS to catch up with its smaller rival MediaBank in introducing digital media management capabilities.

In a separate development, Advertising Age reported recently that digital services in 2007 accounted for 12.3 percent, or $4.7bn of worldwide revenue for advertising’s Big Four — Omnicom, WPP, Interpublic and Publicis. “Put another way, writes Ad Age, “digital’s share of revenue at each of the top holding companies is higher than digital’s estimated share of worldwide media spending.” Or, “put another way”, as marketers shift money from TV and print, the Big Four have become more aggressive in increasing their digital spending than the industry on average. Starcom MediaVest Group is a subsidiary of Paris-based Publicis Groupe.

As organizations like OVAB, OAAA, Arbitron and Nielsen are spearheading the development of metrics for digital signage, we can expect similar budget shifts towards our field within the next couple of years. Meanwhile, TV channels are working to offset the losses and bring their own measurement instruments closer to par with the Internet. The war of metrics has begun. 

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