In an ever-fragmenting media universe, audience-measurement issues become more crucial. To create a forum for these issues, Advertising Age organized a roundtable of four of the most knowledgeable people in the business on the subject: Barry Cook, senior VP-research for the ratings service at Nielsen Media Research; Kate Lynch, VP-media research director at Starcom USA, Chicago; David Marans, senior partner-director of U.S. media research and resources at J. Walter Thompson USA, New York; and David Poltrack, exec VP-planning and research for CBS. Ad Age Media Editor Chuck Ross posed the questions.
This is an edited transcript. For a more detailed version of the transcript visit our Web site, adage.com.
Advertising Age: There's been a lot of talk this year that we're basing billions of advertising dollars on data from Nielsen Media Research that people in the ad and network community find questionable. David Marans, could you address your concerns on the kind of data you're getting from Nielsen?
David Marans: There really are a lot of positives and negatives going on. You get what you pay for and we're not exactly spending tens of millions of dollars on the agency side. So maybe our needs are not necessarily being adhered to. We have to applaud Nielsen for having an operation that produces so much national, local and other data. One of the reasons we don't think there can be a competitor so quickly is because it's a gargantuan enterprise. Also, when you're generating extraordinary numbers, there's going to be problem -- things that look like anomalies. On the other hand, the idea that diaries are being used is laughable. The idea that People Meters have been labeled the best technology as we get into a new millennium is absurd. It was about a decade ago that we talked about a truly passive meter, but it's disappeared.
I'd like to hear Barry address that.
Barry Cook: The challenges are daunting and we're investing a lot to try to meet them. Thank you for your acknowledgement that we do produce a lot of data. We try to make the quality as good as it can be. The challenge of measuring local markets is huge. The diary is a device -- a measurement device -- designed a long time ago for a world that is very different from today. It isn't ideal. We have hopes that we'll be able to make improvements at that end of the spectrum. At the other end of the spectrum -- the People Meter or the current set meter -- these are not the tools for a future with a great deal of interactivity and without channels; a fundamentally different medium.
AA: AP stands for active passive. So this is the passive People Meter?
Mr.Cook: No. The AP is a set meter that uses active codes plus passive signatures to identify what's on the set. The passive People Meter -- we, frankly, put that project on hold while we were working on the AP set meter, because we just had to make a tough decision -- that the AP set meter couldn't wait. We are considering revving up the effort on the passive People Meter again, because there's a lot of industry interest in getting finer time-segments-of-persons-viewing measured than you can possibly measure with an active measurement system.
AA: This AP set meter, is that satisfactory alone, without passive People Meters?
Mr. Marans: No, it's not.
AA: Kate, do you agree the AP set meter is something that's needed?
Ms. Lynch: It's needed to measure TV in a world where we don't have channels. So it can track what's actually on the TV screen.
Mr. Marans: It's absolutely needed. They will not be able to measure digital TV if they don't convert to an AP meter.
AA: On the other hand, do you agree with David that they need to move forward on the passive People Meter as well?
Mr. Marans: Or whatever device they come up with.
Ms. Lynch: Yes. As TV continues to develop over time, we need more accurate information about who's watching at any particular time. That's one of the gripes I have with the current situation. Nielsen collects all this fabulous data, and I believe it's good quality. I'd just like to see some of it on my desk quickly.
Mr. Marans: The truck is on its way. [LAUGHTER]
Ms. Lynch: I know, I know, I'm so desperate for it. And the merging and the linking of the commercial ratings and break information with the program ratings. I had two secretaries watch the [March 21 Academy Awards] Oscars from beginning to end to record the minutes of the break, so we could match that up with the minute-by-minute data that we had to buy especially for this project. That's crazy. That should not have to happen.
AA: What do you think on the network side about getting a passive People Meter or some device like that.
David Poltrack: Well, in the first place, TV in the U.S. is measured in three different ways. If you are a network, or a national cable network, you are measured by People Meters; if you are a local market in a major market you are measured by set meters with diary supplements; and if you are in a small market you're measured by diaries. And someone who actually thinks that these three numbers have any relationship to each other is crazy. So, that is one of the major issues going forward.
Mr. Cook: So what should it be, diaries everywhere? [LAUGHTER]
Mr. Poltrack: Oh, right, diaries are the answer, definitely. Seriously though, on the AP meter clearly you need a meter that's going to measure in the digital age. You also need a metering technology that will be adaptable to the interactive nature and the addressability of TV in the future. That's so -- sometime in the near future -- we need samples of a much greater magnitude than the ones we currently have.
My problem with the current technology is that if you look at the current national TV buying and selling process, it reinforces the acceptance of the limitations of the current measurement system. It's a chicken or egg situation. If we don't change the buying and selling process, the momentum is not there and the economic momentum is not there to change the measurement system. But if we don't change the measurement system, then they say we can't change the buying and selling process.
If I were in the Nielsen organization, I would say, basically, "I've got a mature product, it's given me a nice margin," and I'd have a maintenance strategy concerning that product. And then I would say, "I have a future, and the future is in measuring the Internet, measuring the interactive world of the future." That's where my future growth is going to come from. I wouldn't make the high-priority be to fix the system. I don't see where the incentive is. So the question is: how do we create the incentive to fix this system?
AA: Barry, does Nielsen have that incentive?
Mr. Cook: I think we do. Convergence is the pathway that links the growth opportunities of interactivity with the core business. Do we measure them both in the same sample yet? No. But, it is inevitable. As TV viewing becomes intertwined with interactivity it doesn't make sense to measure TV viewing without interactivity in that sample. It's also questionable whether a stand-alone Internet panel that doesn't measure the TV usage in that panel is really the right tool to express what's going on in the Internet.
AA: But there isn't a competitor your clients can turn to, as of today, anyway.
Mr. Cook: We get a lot of encouragement to improve our system. That encouragement occurs in part through the graces of print vehicles like yours, in direct communication with our customers. We have every incentive to grow our existing business any way we can -- to provide better data and to measure more complicated and different viewing behaviors that will be occurring.
I have a concept of where we fit in the big picture. And I've been selling this internally at Nielsen. There's a lot of change that will happen in the way people view the medium. That viewing behavior is the piece we have to measure. We have to keep up with it and keep ahead of it in a sense. But then there's another piece -- the business models -- that straight ad-supported TV isn't the only game out there today. There's a subscriber model; there's a subscriber plus ad-supported model; and there's a pure ad-supported model. And other models that are nothing like those things become possible with the new technologies. The advertiser can play a role in different parts of the distribution chain. The programming can be sold without advertising content. All of these things can change the revenue model for everybody in this room. We want to get thinking about it as soon as possible, because there is lag time in building the system to measure it.
Mr. Marans: I am alarmed by something Barry said a little earlier, because it is true. The question was, "What happened to the passive TV meter?" And he said Nielsen put it on hold so it could marshal resources to focus on the AP meter. How could a company play triage that way? It makes me feel uneasy about the changes that might occur unexpectedly in the coming few years if this is a corporation that's unable to walk down a couple of paths simultaneously. Is the revenue not there? Is the interest not there? There's been other problems like delays in N-Power. Short term I'm very optimistic about Nielsen, though I could be wrong. But when we talk long-term, I'm concerned.
Ms. Lynch: I'm optimistic long term, but unhappy short term. What I saw in Palm Springs [at a Nielsen client meeting in March] was some great thinking and ideas and questions from Nielsen about the future. Lots of different systems, news of technology and new tools. But nothing that helps me with my business problems today. That's what really frustrates me.
If you think about the way the agency world is changing, we have media independents, media specialist companies merging and people focusing beyond just cheap TV. Media buyers are focusing more on strategic planning. The tools you have to help us with these areas are not up to the business needs of today. There's very little that allows us to create a competitive advantage for our agency vs. another agency. We're wasting a lot of money not being able to evaluate quickly and inexpensively the value that we get from TV today.
AA: Barry, do you want to respond to the short-term and long-term issues David and Kate raise? Or if you want to leave at this point I understand.
Mr. Cook: I'm just reflecting on why you didn't tell me who was going to be here.
AA: Oh, no, I thought I did mention who was going to be here.
Mr. Cook: No, I'm fine. I love my customers. [LAUGHTER] Couldn't have a business without customers, could we? No.
David, maybe I didn't give you all the background that went into our decision to put the passive People Meter development on hold. We didn't actually stop it, we just cut way back on the staffing for it. There's still people working on it, but not at the level that we had been working before.
Mr. Marans: I don't need a step-by-step, but that answer is given on several projects, whether it's N-Power, or People Meters locally. That's the answer we hear from Nielsen: "We're interested, we think it's important, but, frankly, we can't juggle everything necessarily at once." That's the end result.
Mr. Cook: Like any business, you have to make some choices. On the passive People Meter, the choice was easy. The choice was, should we try to lead the world in the development of a very difficult engineering and software problem -- image recognition technology? Or let the world do it because they're going to do it anyway, and then we come in at the point where the technology is ready to be applied?.
We could beat our head against this wall for a long time, but we don't have the money to invest against it, like banks, like the U.S. defense department and whoever else has need for image recognition technology. From what I read, the progress is really starting to happen on image recognition, so we're thinking of cranking up our project to take advantage of that. In general, we don't do everything at the same time -- you're absolutely right. Maybe we need to come to you more aggressively and say,"We need to invest in things for your future. Here's the proposal. Let's look for a partnership or a subsidy for this development work. Because we can't do it out of existing resources."
Mr. Marans: It just never happens.
Mr. Poltrack: One of the issues I have with Nielsen [relates] to the sweeps and local measurement. We came up with this idea for expanding the sweeps and checkerboarding and getting rid of the sweeps concept. The American Association of Advertising Agencies and the networks were involved. There's a lot of interest and support.
The year before we did this, there was a problem with local measurement. Nielsen sent a letter to its clients. I believe they said they wanted to increase the sample of every local market 50% and the first 15% in the increase, as I recall, they were going to do for free, and you could go up to 50%. They gave a pricing of what it would cost to do that.
I would argue if you increase the sample 50% and spread it out over some more weeks, you basically could accomplish what I wanted to do. I went and computed that for every single market in the country, and figured if all the stations agreed to do it in all the markets in the country, it costs $4 million.
When we proposed checkerboarding to Nielsen, we got back an estimate of $15 million. Those kind of numbers mystify me. Where is the difference between the $4 million that Nielsen had proposed the year before, and the $15 million? I don't see where that comes from. I was told -- again, in a frightening way to a certain extent -- that it's because the entire staff of the diary-base measurement is part-time, and Nielsen would actually have to hire full-time people.
Well, I don't know how many millions of dollars the local measurement system brings in, but I think a business of that revenue stream would usually have some full-time employees. There's not a major kind of investment. But the investment at Nielsen is challenging Media Metrix as the measurement service in the new era. Part of the reason I've come to that conclusion is because if I put myself in the position of the management of Nielsen, that's what I would be doing. That's what is really frightening about our system. Not only is it not very good, but every indication is it's going to get worse -- relating to what Kate says -- short term. At some time we may pull a switch and go to a whole new high-tech measurement system that will change the whole paradigm. But at this point in time, the current system is more than likely going to get worse, not better.
Mr. Cook: I'm still delighted to be in my shoes. [LAUGHTER]
AA: Barry, could you respond to what David has said about local measurement?
Mr. Cook: Sure. If there were a ground swell of enthusiasm coming from the entire local customer base it would have happened. It's not that we could stop it. And we couldn't make it happen if the local customers didn't want it. Frankly, it was a good idea, and the marketplace wasn't interested in that good