Modeled on Toyota deal
Alan Wurtzel, president-research and media development for NBC Universal, disclosed the offer in a speech at the Information Resources Inc. Summit 2007 here yesterday.
The move is modeled on a deal NBC did with Toyota in last year's upfront. NBC will use data from IAG Research, which bases its engagement measures on recall of various program details in surveys among its 1.5-million-member online consumer panel.
Among other IAG clients that have publicly disclosed they've already used the firm's engagement data in contract talks with networks are Johnson & Johnson, Verizon and Home Depot. Other IAG clients include Procter & Gamble Co., General Motors Corp. and American Express -- though those marketers have yet to publicly declare their desire to use engagement in media deals.
NBC's offer on the eve of the American Association of Advertising Agencies Media Conference, which also opens today here, could pressure other networks to follow suit.
On the other hand, NBC isn't exactly negotiating from a position of strength. The network pulled in $1.9 billion in the 2006 upfront, down from $2.9 billion in 2004 -- the same year its long-running comedy "Friends" ended. Its drama "Heroes" became the most-watched newcomer of this season, and the network's ratings have recovered broadly among viewers in the closely watched 18-to-49 demographic. But NBC is still reeling from $750 million in cost cuts announced last October as hoped-for digital revenue has yet to come close to making up for lost broadcast ad revenue.
NBC's engagement guarantees could help establish IAG data as a currency for measuring engagement akin to Nielsen Media Research's gross ratings points, which are used to guarantee audience size in network deals.
The move also could partly moot what's been a lengthy debate in research circles about how to define and measure engagement. Measurement systems now run the gamut from asking survey respondents to self-report how engaged they are with a program to brain scans that measure what neurons fire when people watch a show or ad. Several media agencies use proprietary engagement-measurement tools.
Mr. Wurtzel acknowledged that "there's very little agreement on what [engagement] is, how to effectively measure it, and third, how do we transform it from a kind of interesting research concept to something we can actually do business on?"
The IAG system is fairly simple, Mr. Wurtzel said: "If you answer 20 out of 20 questions [about a show] correctly, you're probably engaged. If you answer only three out of 20 right, you're probably not."
NBC with IAG has developed a series of engagement norms for different types of programming, including comedies, dramas and sports, and used the metrics with "about have a dozen advertisers" to engagement guarantees last year.
"This was not a hypothetical thing," Mr. Wurtzel said. "Millions of dollars were riding on the engagement measures. ... It worked out very well, to the point that we now are rolling out engagement as a guaranteed metric for the coming upfront for any clients who are interested."
Clearly, NBC is expecting to pass its tests on the engagement-measurement front, particularly heading into its coverage of the 2008 Summer Olympics.
Mr. Wurtzel said the Olympics have proved to be a particularly engaging environment for ad recall, he said.
IAG data showed advertising message recall for ads in the 2006 Winter Olympics averaged 36% greater than for the same ads aired elsewhere in prime time during the same three-week period, Mr. Wurtzel said. IAG's "likability" ratings for the same ads were also 36% higher inside the Olympics than outside, he said.
Advertisers who bought five or more ads during the Olympics, he added, saw their brand message recall scores do even better, he said, averaging 56% higher than running the same ads and weights outside Olympics programming.
The strongest results of all, he said, were for advertisers, such as Home Depot, who ran customized Olympics-themed ads on the Olympics. Home Depot had more than three times the brand message recall for its Olympics-themed ads inside game coverage than outside (31% compared to 9%), Mr. Wurtzel said.
Bravo to Bravo
He said GM's Saturn has had similar results doing ads customized for and run on Bravo's "Project Runway."
Bravo programming, in particular, "has been a very strong environment for brand recall," he added.
Likewise, NBC has found increasingly popular sole sponsorships have delivered superior brand and message recall numbers -- albeit at a price. "Many marketers are realizing that there may be a value in sole sponsorships," Mr. Wurtzel said. "But let's face it: It's really hard to do, and it's really expensive."
He said American Express' sole sponsorship of the "debate" program in the 2006 season of "West Wing" produced 45% recall for its "One Card" campaign among viewers of the show, more than double the 22% recall among viewers of its ads in more conventional multi-sponsor formats on prime-time TV.