Clutter Pollution Solution: Make 'Em Pay for Bad Ads

How TV Commercial Ratings May Change the Game

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BATAVIA, Ohio ( -- Whereas global warming is still sometimes appended by the word "theory" and engenders heated debate, no one -- not even vested insiders -- debates the
Illustration: John Kuczala

Little has been done to address consumer feelings about the rising clutter of TV advertising but some say the new TV commercial ratings system may finally offer a partial solution. | ALSO: Comment on this article in the 'Your Opinion' box below.

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existence of commercial clutter. Everyone from the remote-control-wielding consumer to the CMO admits there are enough ad messages spewing forth to block out the sun.

A solution?
And commercial clutter is also different in that there might be a solution right around the corner -- and from perhaps the most overt polluter, network TV.

At the heart of the issue is a simple fact that is sometimes lost in the hand-wringing about clutter, ad-skipping and crumbling marketing models: Consumers zap ads because they don't like them.

Regardless of how well technology lets people avoid ads, consumers don't necessarily avoid ads they like -- and, as proved by YouTube and the Super Bowl, they'll actually seek them out. The problem is, consumers have been seeing far too many ads they don't like for far too long.

Flawed incentives
And, much like environmental pollution, commercial pollution proliferates because the economic incentives are flawed. Marketers don't fully pay for the damage they do when people hate their ads, or necessarily reap all the benefit when people like them. In other words, why worry about alternative fuel when you can get away with burning old-growth forests?

Presently, advertisers can louse up the public green of advertiser-supported media all they want. The ugly truth is that the networks will gladly take the money and that unlikable ads can still sell product, especially if given sufficiently heavy weights.

As production costs have risen and audiences have fragmented in recent years, marketers have been running the same commercial more often to maximize reach and their investment in production, notes media consultant Erwin Ephron. Perversely, advertisers who annoy people may actually benefit. A 1993 study found that ads people zap with their remotes have significantly stronger impact on brand purchase than others, probably because people are paying more attention to the TV when they zap the ads.

32% of air time: commercials
That may all be about to change -- at least for TV, where the networks have increased commercials to an average of 32% of air time.

The overlooked advantage of commercial ratings -- which are about to emerge in the U.S. next month and could be part of the 2008 upfront -- is that they'll give networks a much stronger incentive to fix their business model so it rewards marketers whose ads people love and penalizes those who produce ads that viewers hate.

The reason is simple. Once networks start getting paid based on how many people actually watch the ads vs. how many watch the shows, they'll want to ensure that each spot helps hold the audience for the next. And the networks will have a strong interest in passing those incentives along to marketers.

"It's a three-way problem [involving marketers, agencies and networks], but it's a problem I think all three parties have a vested interest in solving," said Joe Abruzzese, president-advertising sales of Discovery Networks. He believes the switch to commercial ratings, which Nielsen Media Research is expected to deliver starting in May, will be the catalyst for that.

Commercial ratings impact
Mr. Abruzzese and other media executives expect commercial ratings to become a new currency for buying and selling time by the 2008 upfront. That means networks will suffer financially for factors within their control -- like long commercial pods -- and outside their control -- like boring ads.

In an ideal world, this would lead networks to start charging variable rates to advertisers based on how much people like their ads. Better still, as a consumer-engagement tactic, consumers could vote on how well they like ads, "American Idol" style, knowing their votes will reward ads they like and punish the ones they find annoying.

But getting industry consensus on a statistically valid system for rating how likable an ad is, be it via copy-testing services or text messages, would be daunting. The wide discrepancy in popularity polls of Super Bowl ads and the inexplicable longevity of Sanjaya Malakar on "American Idol" are but two cautionary tales here.

"As CMO of Kimberly-Clark, I'd say bring it on," said Tony Palmer, chief marketing officer of Kimberly-Clark. "I'd back my people against the rest of the market to create compelling ads," he said, even given such categories as toilet paper, diapers and feminine care. But he said getting industry agreement on a fair system to rate popularity of ads would probably be impossible.

That doesn't mean, however, that networks won't push for other ways to address the problem once confronted with a payday based on commercial ratings.

Minute-by-minute ratings
Even though initially Nielsen will only deliver average ratings over entire commercial pods, networks such as Discovery are already mining minute-by-minute ratings to see how individual ads and lineups of ads affect those ratings.

Discovery's Mr. Abruzzese believes that with commercial ratings in place, advertisers whose ads hold audiences better will ultimately end up getting the best positions in commercial pods.

Some networks already have found that movie ads, for example, have considerably better audience-holding power than ads from other categories, and the networks have been more likely to give them up-front pod positions as a result, according to people familiar with the matter.

It's not quite the same as charging differential pricing. But premium pod positions clearly do have value. Indeed, they already command higher prices in major events such as the Super Bowl or NCAA "March Madness" programming.

"Where it's not equitable now is where a client is trying to move a product with an ad ... but it may not hold the audience," Mr. Abruzzese said. "They're never going to get [first-pod position under commercial ratings]. So you're faced with the rules of rotation being questioned."

Basing pod position on audience-holding power could start to make TV economics work more efficiently-like online search, said Rishad Tobaccowala, CEO of Publicis Groupe's Denuo.

Consumer-preferred advertising
"In the digital world, [preferred pricing for consumer-preferred advertising] already happens, and it happens in the most extreme form clearly with search advertising," he said. "You are listed higher the more likely people are to click on you, and you are listed lower the less likely people are to click on you. So what tends to happen is the more relevant you are, the cheaper it is for you, and the less relevant you are, the more you have to pay."

One major flaw in any theory about providing incentives for more likable ads is that even the most engaging ads may not overcome consumers' basic displeasure with ads interrupting what they're watching, said Charles Rutman, CEO of Havas' MPG.

On one hand, the fact that Super Bowl ads were among the most-watched online videos the week after the game this year indicates that conventional TV ads can still find an audience, even when the audience can flee. On the other, TiVo data suggest most people fast-forward through whole commercial pods when they can, without discriminating much among the commercials.

Mr. Rutman also said it's far from certain anything can overcome such basic economic factors as supply, demand and buying power in media negotiations. But he does believe commercial ratings could change the conversation.

"If the marketer is producing something that's very effective but people are getting turned off by it, then it's not very effective" for the network, he said.

And so while marketers and their agencies have been the ones clamoring for years for commercial ratings, the system could have an unintended consequence. Commercials that get rated like programming could get treated like programming too. The least-popular ones could effectively get canceled-or at least shoved into weaker slots. And in the end, that could start to undo damage done by years of commercial pollution.
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