• by Joe Mandese , May 27, 2004

On the eve of 2004-05 network upfront negotiations, SQAD officially launched NetCosts, a new open-market TV advertising database using a data exchange model that draws on the actual TV buys of advertisers represent 40 percent of network TV billings.

"With two years of history already built in," said SQAD president-CEO Neil Klar, NetCosts "will allow subscribers to look both into the past and into the future with absolute transparency."

SQAD has long maintained that NetCosts would provide the type of information that would finally equalize the national TV advertising marketplace, equipping advertisers and media buyers with the same, or better market intelligence than what has historically been controlled by the networks.

Klar said NetCosts is launching with 30 charter subscribers. While he did not disclose them, SQAD has been known to have had difficulty convincing some of the largest media buying shops to sign on, mainly because they fear NetCosts would dilute the competitive advantage they say they tell their clients they have over the rest of the marketplace's market intelligence. As a result, SQAD has gone directly to clients to obtain data and licensing agreements.

Klar said SQAD is in negotiations with 10 additional subscribers, which would make NetCosts database even more representative.

The 40 percent coverage of network TV billings is a critical milestone for the launch of the product, because SQAD's has said that was the minimum level needed to make the database representative of the overall marketplace, and all of the charter subscriber contracts were guaranteed to deliver that level.

To ensure that SQAD is actually fulfilling on that commitment, Klar said it has retained the Media Rating Council to oversee third-party "compliance" audits, which will be conducted by Ernst & Young. Separately, he said the MRC would also conduct audits to ensure that NetCosts is properly capturing and crediting the TV ad buying data from agency and marketer computer systems. Lastly, he said SQAD plans to apply for MRC accreditation of the service.

While NetCosts will not provide advertiser-level or brand-level data on national TV advertising costs and schedules, Klar said the company is in discussions with Nielsen Monitor-Plus to license NetCosts' data. The result, he said, could generate explicit TV costs and schedules for specific advertisers and brands based on buys monitored by Monitor-Plus. Additional the SQAD executives said advertisers and agencies could incorporate NetCosts with their own information to replicate such competitive intelligence.

The insights may be striking, said Larry Fried, SQAD's chief revenue officer and developer of the NetCosts database. Noting that a "variance" of as much as 30 percent in the network TV ad costs is not uncommon between two advertisers buying the same network inventory, Fried said the information would transform the way network TV is bought and sold. He said without the data, 2004-05 upfront buys would be, "like walking into a casino. It's all stacked in favor of the house," adding, that "hen it's over, it's impossible for an advertiser to know if he's really gotten a good deal."

In truth, Fried said the NetCosts data is not likely to have much bearing on 2004-05 upfront negotiations, but he said the data would be used by subscribers to "benchmark" their performance coming out of the deals and would definitely have an impact on 2004-05 scatter market negotiations.