• by June 13, 2002

“Traditional advertisers will take up the slack.” That’s been the mantra of many online advertising industry evangelists since the Great Dot-Com Collapse. But it’s been well over a year, and we still haven’t seen the big brand advertisers rush to advertise online like the dot-coms once did.

While many of those same evangelists are scratching their heads and wondering why the likes of Coca-Cola, Budweiser, and General Motors haven’t spent outlandish sums of money on online advertising, some of the online media professionals with traditional media experience have started a movement within the industry. Many of them would like to plan, buy, and evaluate online media in much the same way that traditional agencies evaluate television, radio, and print.

Call it the movement for audience-based measurement. It involves placing less emphasis on the raw number of impressions that a website can generate and making use of measurements that many traditional media planners can relate to, like reach, frequency, GRPs, and TRPs against demographic audiences. Proponents of audience-based measurement would argue that speaking in a language that’s familiar to traditional marketers will help online media earn its rightful place alongside TV, radio, and print.

But the notion of shifting online media’s measurement model has proved to be a polarizing issue. Detractors feel as if the traditional-media industry should be the one making changes to its model, not online media. After all, when J. Walter Thompson invented advertising to demographic audiences, he realized that the practice was based on broad generalizations, and one of the web’s great strengths is its ability to reach very targeted niche audiences. Wouldn’t moving to buying ò½=œselling on demographics sell the Internet short?

Years ago, I posed a question to online marketers in my weekly column on ClickZ: Would it be possible in the future for a media buyer to call up his Yahoo sales rep and ask to buy a specific number of GRPs against Adults 18-49? Would we ever want to move to that model? Back in 1998, most of the feedback I got from that column criticized the mere suggestion of moving to what most online media planners thought was an inferior model. Of course, back then, most Yahoo reps were struggling to keep up with sales calls from dot-coms with unrealistically huge advertising budgets. Now that things have cooled down significantly, the media business is ready to once again look at this issue and give it some serious thought.

—MODERATOR, Tom Hespos, Internet Strategist, Mezzina Brown and Partners Hespos: Is there anything fundamentally wrong with using GRPs and TRPs on the web? And what impact would it have on the buying community?

Jason Burnham, media director/president, Mass Transit Interactive: At first glance, there’s nothing wrong with using GRPs and TRPs as tools. But I’m afraid buyers will tend to get lazy and use GRPs as a standard metric, the way many buyers these days try to use Media Metrix and @Plan as the be-all, end-all to justify why a site should be on a plan. I think it just does an injustice to the medium, when you’re dealing with psychographics being much more important than the demographics of a particular audience. I think we’ll be shooting ourselves in the foot to just revert to using GRPs.

Hespos: Are the big traditional advertisers asking for this from the web? Are we having people saying to their media-buying agency or to some of the publishers, “We want to see this in a format that we’re comfortable with and that we do all our other buys on”?

Dave Morgan, president/CEO, True Audience: That’s what I’m hearing, and actually I’m hearing it in a lot of the ways Jason fears it will be used. They want to dumb down what interactive media can deliver so that it can be bought in packages with other media. I think it’s a fine line we walk as an industry: On one hand, we’d like to be compared on an apples-to-apples basis with print or TV. On the other hand, we’re in danger of selling the medium short, because you can do deep psychographics and you can deliver more than just points.

I actually think that part of a long-term strategy shifting to GRP or TRP gets us on equal footing, and long-term, we’ll beat the pants off the other media.

Burnham: It’s a matter of who really constitutes the online industry. The people who have gotten into it in the past 5–6 years, who are more of the younger generation (in which I’ll include myself), who have been really focused on interactive and their experience is solely with interactive—they’re going to take the stance I do: that it’s really not necessary to move to a GRP type of measurement. But with the large part of the industry that is made up of people who have recently moved from the traditional world, from the print world, from the TV world—it’s more just a lack of knowledge of how to evaluate all this stuff. And if you don’t have the experience of seeing how the medium has evolved over the past five years and haven’t worked on dozens and dozens of campaigns on different types of products for different types of companies, you won’t really have that knowledge or prior history of what works and what doesn’t work online. So, it’s just a matter of making it easier, saying, “If we move to an audience-based measurement, it fits with everything else we have prior history of and it will be easier for us to sell through to the client.”

Hespos: So this could end up almost being a power struggle between traditional agencies that want an interactive capability or have had one for a year or two, and the seasoned professionals of the Internet who came up with the existing model. Does that present a problem for those seasoned specialists? Does that decrease the need for folks like that?

Morgan: Well, it changes the roles inside organizations. I work a lot with traditional media companies. Men and women who two years ago were running independent arms of major traditional media companies have found themselves faced with two choices: Toe the line, come under the wing of the traditional company and start wearing suits to work again and lose your attitude, or maintain your attitude and most likely be out of a job. And that’s going on on the agency side as well.

It’s unfortunate that the pendulum is going to swing back too far, but I think that if we believe in the basic premise that online interactive marketing is better than any other broad media platform that exists today, the people who are really smart will go back into those organizations, the small companies will get absorbed by the big ones, and they will ultimately rise to the top. Because what’s different about this medium from traditional, and will probably change in traditional, is that the rules are changing, and you’re going to have to be a lot smarter. Being able to buy on just GRPs won’t be enough; it’s going to be understanding what else you can bring to the table to differentiate media, because there’s too much fragmentation in media right now. There are so many other choices out there right now, you can’t just buy TV and be safe.

Burnham: Let’s face it, what it really comes down to is people want to move to GRPs so they can go ahead and just have it on the same spreadsheet as TV, print, and radio. Hespos: Let’s say it does swing more toward the GRP model. I want to get an idea about what the level of compatibility is between the online media and the more traditional media that traditional agencies might be planning out, based on price. If you were to take an adult 35–54 CPM or cost-per-point, does that price out similarly online to how it prices out offline? If you were to revert to this model, are you going to have any cost-per-points or CPMs sticking out like sore thumbs on plans?

Burnham: I think you’ll see a lot of variety. [Laughter]

Morgan: Yeah, I’ll agree with that. That’s an easy answer. This is the place that publishing or planning or packaging is going to make a big difference. There’s no question that a year-and-a-half, two years ago, online on a CPM basis was priced above most other media, at least on a reach or distribution method. But if you took it down to a readership or actual viewing or actual awareness, it probably was being priced better than a lot of other media.

Burnham: That actually brings up another point: If we were to move to GRPs, yeah, that solves the issue of “OK, at least there’s one measurement we can use across all platforms.” But with the Internet starting to drive all kinds of hybrid models and maybe that will leverage offline, well, now you’re dealing with a whole other issue. And around and around we go. I just think reverting to one type of measurement across the board is not the answer if it’s not pertinent.

Hespos: Well, I think what Dave’s referring to is the difference between planning and buying: You may plan something out on a flowchart one way to make it fit with all the other media in your mix, but then you may buy in a completely different way. My follow-up question to that notion is can both the models—the one we currently use and the audience-based model—comfortably coexist in this market?

Morgan: I think so. I don’t think we’re going to get away from buyers buying on certain levels of effectiveness. Like it or not, interactive media is a whole lot more measurable than everything else. So it’s going to get hammered by the buyers for that. We’ll see a lot of comparability with how we’ve done things in the past with online. What that means is if you’re on the media side, the seller side, you have no choice but to understand a whole lot better who your audience is, to manage your inventory better, or you’ll get killed.

Hespos: What do the publishers have to do to better understand their audience, and to be able to demonstrate the audiences that they have back to the buyers and the clients?

Morgan: The first thing they’ve got to do is stop the fraud.

Burnham: Spoken like a true buyer, Dave!

Morgan: I say that very directly, but games that are played to create media metrics numbers are fraudulent. It’s time, let’s talk about it. I’m tired of this pop-behind window—all these companies building up their average time, their stickiness quotient, by firing pop-behind windows and serving it out of their domain so they could count it as a part of their metrics numbers. That kind of stuff has to stop.

Burnham: There’s been a big problem with that, people trying to sell on gross impressions. Maybe you’re buying 10 million impressions, but you may only be reaching 300,000 users. They are inflating those numbers.

The fact of the matter is, clients who are marketing online are looking for results, whatever form it may be, even just getting an email address, forget about sales. If they’re seeing that it costs them $60, $70 just to acquire an email address, do you think they’ll continue spending more money with that individual site? It’s a matter now, especially where we are right now with our industry, of publishers and buyers coming together and figuring out what’s really going to work for the advertiser.

Morgan: We’re going to have to start to use the higher ends of our brains to manage this complexity and take advantage of everything.

Burnham: Getting more complex is not a bad thing. People are going to have to get a little more educated. Let’s face it, over the past four or five years, people have been making really good money for something that hasn’t even been standardized, and now it’s a matter of savvier people stepping up to the plate to manage this industry. It’s about time people got off their lazy asses and worked a little harder.

Hespos: I want to talk about the other part of the infrastructure that would be necessary for this model, and that’s the publishers having to integrate the data they collect from their users in order to be able to tell their buyers and clients who they’re reaching. I’m curious as to whether there are any forward-thinking publishers out there who are really jump-starting their data-mining initiatives in hopes they’ll be able to snag some extra ad dollars if we move to the audience-based model. Is anybody seeing that?

Morgan: What I’ve seen on the infrastructure side is each of the portals has an initiative that’s probably been started and restarted a number of times over the past several years to start universal site registration and universal application registration, where they try to create a universal ID for each user for everything they do. Almost none of them has been able to convert this into their advertising systems and really deliver value on them, but they’ve been trying. You’ve got people from traditional media companies like NYTimes.com with a registration system, or WSJ.com with their subscription system, where they’re starting to collect a lot of that information. In each of these cases, they’re doing it all on their own. Taking it to the next level is a challenge, but they’re well-positioned to do it. Speaking from the seller, the publisher side, free content is clearly here to stay, and that model is under the gun right now to get more value out of their audience. I’m hearing of a ton of initiatives in this right now even with the downturn, because these people, the traditional media companies particularly, know that if they’re going to survive and protect their offline properties, they have got to get this part down now.

Burnham: I think a lot of publishers are pushing toward the GRP thing because they’re realizing their sites aren’t really accomplishing the things the marketers are trying to. For the most part, publishers are huddling together and saying, “OK, let’s move toward GRP.” But when they’re actually in that room, pitching that client or agency, in today’s age it’s whatever the hell you need to do at this point. The purpose is to move inventory. It’s not so much about audience measurement as about selling inventory right now.

Hespos: Do you think going forward, even if we move to the audience-based measurement, that there will still be room for the buyers to do things like cost-per-click or cost-for-action deals with inventory that the publisher might not know who it’s going to or any remnant inventory that’s left over?

Burnham: Yeah, I don’t think that just switching to a GRP measurement is going to sell advertising. I think publishers would be shooting themselves in the foot to move toward audience-based measurement right now. Let’s look at where we are right now. You can buy targeted inventory right now for dollar, two-dollar CPMs. What happens when you’re just going by audience-based measurements? You’re not going to see any demands of the CPMs climbing that much higher.

We need to start focusing on selling unique user base—to keep the relationships, to keep advertisers on their site. Over the last year we’ve seen sites collapsing and not able to sustain their business model by doing so. Switching over to GRPs is not the solution. They need to increase the value of their inventory or decrease their overhead.

Morgan: I think the death of these sites is a good thing for the industry. I’ve seen very few business models where you can afford to live on a CPM on your salable inventory of one or two dollars. If the company is a pure dot-com, it has no chance, it’s just living off its investors cash. In the traditional media companies, it can only be done if its survival is sustained by some other businesses. I think that kind of inventory will go away, but I do think it’s going to be available for the click-through basis and everything else.

Hespos: What would the audience-based model do to a Yahoo or AOL, where you have a lot of different types of users coming into a big portal? You have your Yahoo! Finance user who is probably very different from your Yahoo! Entertainment user. Does that make the big portals have to separate their offerings into different content sections and sell them as their own publications?

Burnham: At that point, Yahoo, AOL, any major portal is basically a network, as you would refer to it in television, and you do have to start slicing and dicing individual channels and evaluate the audience within each channel. It does make it difficult as far as just doing some run-of-network buy. It’s easy to transfer into the GRP model. It isn’t that difficult to do, but when you’re results-driven, you do need to slice and dice that and it’s something we all do everyday when negotiating with Yahoo, AOL: getting their demographics and going to every channel and subchannel and really looking at the psychographics based on the product you’re trying to market, to project where you are goiTyŒo get your best results from. Honestly, for Yahoo and AOL, it would probably be a dream to them to move to the GRP model. It would be so much easier for them to sell areas of their sites that may not be as high-value as other areas.

Hespos: I’ve noticed that they’re putting together specialized teams to deal with agencies and direct to clients. From an operations perspective, it wouldn’t be too tough if the audience-based model were to take hold with them. It wouldn’t be too difficult for them to sell it.

Morgan: There will still be a lot of packaging. In traditional media, you’ve got some that you’re selling at your highest rates, some that are remnant. A seller is trying to package its inventory to get the most bang out of it. You’re going to have to take stuff you don’t want sometimes to get stuff you do. So the GRP notion just gives us an easier way to package it together.

Burnham: There’s really nothing wrong with having the extra metric, being able to present it in a different way. But if the industry shifts to using that as their sole measure of selling, that’s where we’re doing the industry an injustice and not providing marketers with the biggest bang for their buck.

Hespos: So we’re looking at some different models for different advertisers? This could be just another thing that’s added to the mix to make it more palatable for advertisers who haven’t yet taken advantage of it?

Morgan: The other thing that’s probably going to come out of this, and it’s going to take a number of years to develop, is we’re going to see the media sellers directly compete with the marketers in a number of areas. When they start building and understanding their audience better, understanding their purchasing habits. If they don’t get the appropriate value and margin from the marketers and advertisers, I think they’ll start selling direct.

Hespos: Uh-oh.

Morgan: Amazon, for instance, is all about demand aggregation. It’s not going to work in all sectors.

Burnham: Correct me if I’m wrong Dave, but I think what Dave’s really referring to is these online sites becoming more of distribution partners, not just advertisers, but distribution outlets for consumer brands.

Morgan: Exactly. I don’t think many will develop a Virgin brand, something like that, but I do expect a lot more partnerships where they have to participate. If they’re going to have to participate with results-oriented advertising, then they’re going to want a piece of the margin of the product. I’ve used these examples before, but it’s certainly conceivable that local media companies can become great data bases for the auto-buying habits of their consumers, particularly if they’re newspaper companies and manage the classifieds, which almost everybody uses in some form or another in a car-buying or -selling situation.

Burnham: That’s a direct result of marketers moving more towards integrating kinds of deals. Moving away from the standard banners per say. I agree with Dave, that’s the direction the web is going in, and honestly, that’s the way the web is best utilized and the way sites will start generating revenue, as opposed to just trying to sell on the flat CPM. Being able to yield residual revenue from them. It will sustain a longer business model.