To accurately reflect his company's reach, the panelist should have said, "We can potentially reach 115 million people." According to comScore's methodology, in order reach those 115 million people, the network would have to buy every ad impression on every publisher they work with. Furthermore, only those publishers with more than 2% reach are verified to have an actual business relationship with the network.
(full disclosure -- comScore began measuring my company on both actual reach and potential in April, 2009)
As with most misleading metrics, potential reach was likely created to help sell something. ComScore wanted to sell large annual subscriptions to video ad networks and video ad networks wanted a big reach number to sell advertising and compete effectively against the large display ad networks. The metric has fundamentally served its purpose - all video networks are paying customers and many video networks' actual reach is large enough to compete with the large display networks -- and as such, it is time to put this metric to rest.
Nearly every video publisher, network, blogger and journalist I talk to believes this metric is misleading. But, even more than the confusion it causes, I believe the potential reach metric is hurting all players in the video business for the following reasons:
1. "Potential reach" provides no meaningful representation of reach, access to inventory or actual business traction. In fact, if the same methodology were applied to other sectors, any (paying) company has the potential to reach 100 million+ users in email, display, outdoor, television and radio. All that is required to achieve this "potential reach" validation from the most trusted name in measurement is to provide a list of properties a network "works with" -- literally, that's it.
2. "Potential reach" is confusing advertisers, agencies, clients and the press. Yes, the people who buy video advertising do not understand the metric and don't understand the difference between potential reach and actual reach. Why? Because vendors use the inflated potential reach numbers as a sales tool. This inventory Ponzi scheme is a failed strategy. Eventually, it will be uncovered, but not before all industry players have been negatively impacted.
3. "Potential reach" is tarnishing the brand of the leading Internet measurement company. ComScore is clearly in the forefront of video measurement, and it's in a position to champion accurate measurement. Only two other measurement alternatives exist -- Nielsen or Quantcast. Nielsen has yet to commit to the online video category, which resulted in an incomplete solution, and Quantcast is now selling data collected from our ads to our competitors. We need to have faith in comScore's measurement, as this ongoing issue of potential reach is beginning to break trust with key industry constituents.
4. "Potential reach" is hurting the video companies that are doing well. The metric blurs the distinction between the video companies that are doing well (those with large actual reach) and the companies that are new, small or faltering (those with minimal actual reach). This results in buyers failing to understand differentiation in the market. We are a nascent category and we should be promoting our success stories, not clouding them in confusion.
Fundamentally, we deserve better measurement solutions in our industry and we must protect the collective, long-term trust within the agency and advertiser communities. Sacrificing long-term value for short-term profits may seem attractive if you are trying to hit your quarterly goal. However, I suggest we all travel a few blocks -- from Madison Avenue to Wall Street-- so we can remind ourselves of the brand damage that be done when we mislead key customers under the guise of short-term or quarterly planning.