It may not be as memorable a milestone as Ohio State establishing itself as the inaugural national champion of the College Football Playoff era or Golden State's unprecedented 24-0 run at the start of the 2015-16 NBA season, but in becoming the first network to successfully negotiate deals that include an out-of-home TV audience, ESPN's ad sales team this summer accomplished a feat that no group in the history of the medium had ever managed to pull off.
As it promised on the eve of its May upfront presentation in New York, ESPN took out-of-home deliveries to market during the summer bazaar, and one major agency holding company agreed to play ball. In a time when traditional TV deliveries are eroding faster than Peyton Manning's QB rating during his last year as a pro, the agencies' willingness to recognize out-of-home viewership as a valid source of GRPs marks a significant leap forward.
The out-of-home deals were confirmed by Eric Johnson, ESPN's exec-VP of global multimedia sales, and the top buyer at the holding company, who spoke to Ad Age on condition of anonymity.
"As we told you before our upfront show, we recognized that a not-insignificant amount of live impressions were not being captured," Mr. Johnson said. "When our research team started digging into the out-of-home numbers, we felt comfortable going to advertisers and saying, 'Look, this is something to transact against.' And so, yes, we successfully did some deals in the upfront."
Mr. Johnson said that in addition to the agreement it hammered out with the holding company's agencies, a few smaller shops and individual clients had agreed to kick the tires on out-of-home. He also acknowledged that ESPN was met with resistance by a number of agencies that, in accordance with historical precedent, declined to transact against out-of-home audiences. For one thing, buyers have objected, the cost of reaching audiences that watch live sports in bars, restaurants, hotels, fitness centers and other public venues has forever been baked into the negotiated CPM. For another, because earlier attempts at measuring extra-residential deliveries never quite got off the ground, buyers said they wanted more time to get a handle on Nielsen's new out-of-home measurement system.
"We did hear those objections and certainly anticipated that kind of reaction," Mr. Johnson said. "But this is more than us getting compensated for all those 'lost' out-of-home impressions. It's about capturing consumer behavior in an environment that's changing radically, and learning from the data."
Ad sales execs have been trying to get agencies to bite on out-of-home viewing for decades, but their overtures always fell apart in the face of the argument that the cost of reaching this protean audience is already factored into the sticker price. Back in the 1980s, ABC execs charged with selling "Monday Night Football" failed to convince a single client to cough up extra cash for the out-of-home audience generated by what was then the NFL's only weekly primetime broadcast.
But the ongoing destabilization of the traditional TV model, rapidly-shifting consumer habits and the fact that out-of-home will become an integral part of the currency once Nielsen officially blends the data with its in-home ratings has taken some of the air out of that thinking.
Naturally, the buyers who've agreed to jump into the out-of-home pool aren't being motivated by any sort of ill-defined charitable impulses. Without going into any great detail, there is a not-insignificant pricing consideration for the first movers involved in what amounts to a pilot program. (Nielsen is planning to launch a pre-currency, or syndicated, version of its out-of-home measurement service early next year, and network execs expect a complete implementation in 2018.) In other words, in exchange for accepting guarantees that include out-of-home estimates, clients can expect to get a discount on ad rates for marquee ESPN properties.
While the first batch of out-of-home results that include ESPN's early college football and NFL broadcasts has not been released -- as is the case with the C3/C7 commercial ratings, it takes a number of weeks for Nielsen to process the fortified numbers -- a look at the data for September 2015 reinforces the case for a more comprehensive measurement system. According to Nielsen data furnished by ESPN's research department, all four of the network's college football windows showed meaningful lifts when out-of-home was factored into the overall TV mix.
For example, overall deliveries for ESPN's Saturday afternoon/early fringe games (kickoff time: 3 p.m.) last September saw a 10% boost thanks to out-of-home, which lifted the average traditional TV audience from 1.27 million viewers per game to 1.41 million. College football games that kicked off at noon saw an 8% lift, while early prime games grew 7% upon application of out-of-home views and primetime games improved 5%. All told, the Saturday games enjoyed a 7% increase with the out-of-home kicker, and when streaming was tossed into the mix, the lift jumped to 9%.
Of all the college football games that aired on ESPN and ESPN2 last September, the one that boasted the greatest out-of-home boost was Temple's 27-10 upset over Penn State. In beating the Nittany Lions for the first time since 1941, the Owls helped scare up nearly 300,000 verified out-of-home viewers, which padded ESPN's linear audience by 15%.
As Artie Bulgrin, ESPN's senior VP-global research and analytics notes, the out-of-home estimates would actually be much more pronounced if Nielsen's methodology were more expansive. "Keep in mind that these are relatively conservative estimates," Mr. Bulgrin said, adding that the Portable People Meter data underlying the numbers only captures out-of-home deliveries in the top 40 U.S. media markets. That accounts for just 62% of all TV homes, and leaves out such football-crazed DMAs as Oklahoma City (No. 41), Birmingham/Tuscaloosa (No. 45) and South Bend, Ind. (No. 96).
For all that, Mr. Bulgrin's team is not modeling the 40-DMA sample out to the rest of the country. ESPN's out-of-home results are strictly calibrated to Nielsen's 70,000-person PPM sample.
If the out-of-home component is more additive than streaming, the importance of ESPN's digital simulcasts is hard to overstate. In a move to merge its traditional TV and digital reach, ESPN for the first time this summer began running identical commercial loads on its telecasts and over its WatchESPN streaming service. According to last September's Nielsen data, WatchESPN contributed a 2% lift to ESPN's overall college football deliveries, adding on average some 45,124 viewers per game.
Not only should the more inclusive measurement scheme help ESPN extend its overall reach, and thereby recapture ratings that otherwise may have been lost to the ravages of millennial drift/cord-cutting/you-name-it, but the audience that watches out of home tends to be younger and more affluent, Mr. Bulgrin said. And, in the early analysis, ads in the out-of-home environment "perform almost consistently on par with what we see with in-home viewing," he said, before adding that he expects to have a more comprehensive read on commercial engagement, retention and so on as more data is made available.
"We think it behooves the marketers to start capturing and learning about out-of-home," Mr. Johnson said. "Like it or not, it's going to be part of the currency, so the sooner we an all get our heads around it, the better."
