John Wanamaker, a 19th-century Philadelphia retailer, is credited with uttering one of advertising's most celebrated conundrums. "I know that half of my advertising is wasted," the quote goes, "I just don't know which half."
Alan Gould thinks he may have found an answer. The founder and co-CEO of Interactive Advertising Group (IAG) is hawking a new product, TrendReporter, which purports to rate the effectiveness of television ads. IAG has signed up some potent advertisers, including Coca-Cola, Unilever, and restaurant group Tricon. Media buyers OMD, Mindshare, and Initiative are in as well.
"Most advertisers want their ads to be seen and recalled — that's why they put them on the air. Our data enables them to understand what's going on in the show environment that they've actually purchased, and that data has never been available before," Gould says.
Before partnering with Ken Orkin to found IAG in 1999, Gould was CEO of GC Group, an Internet marketing and branding firm. His advertising and marketing background includes time at Bozell Sawyer Miller Group, where he served as a senior managing director. He holds a law degree from New York University, a master’s from Harvard and a bachelor’s from Georgetown.
Gould says he always found it curious that advertisers would spend $50 billion a year on television commercials, yet have little information about which ads on which programs actually reached the audience. Thus IAG was born.
Typically, advertisers invest heavily in audience research and refine the message before an ad ever runs. Except for direct response, there has been little syndicated data on how viewers respond to ads. TrendReporter is available only for prime-time broadcast programs, but IAG intends to expand the service to cable and other dayparts later in the year.
At the core of the ad rating system is Gould's belief that the audience that watches a given show is not necessarily reflective of the audience that sees the ads. Previous research has shown that as many as half of viewers never see the commercials, and only a fraction of those who do actually connect with the ad's message.
An advertiser buying a spot on a popular program like Friends expects to reach the legion of viewers who tune in to the show every week. Knock off half the audience, who won't see the commercial, and another fraction that sees it but doesn't "get it," and the actual number of people who saw and understood the commercial may be fewer than 500,000.
"If nobody watches the advertising, then you cannot influence anybody. You need information that tells you who is most likely to respond to your ads. Nielsen can tell you the audience for the show. We can tell you the audience for the ads," Gould says.
How it works IAG generates data from a panel of about 100,000 TV viewers who log onto a website (rewardtv.com) and answer questions about programs they watched the previous night. About half the questions come from the program, the rest have to do with specific ads. Viewers opt in to the service by providing some basic demographic information.
IAG has built a database of more than 6 million responses since the beginning of the 2001-2002 prime-time season. Each week the company publishes its list of "most effective" ads, based on viewers' recall scores. Media buyers can get relative recall scores by product category. They can find out, for example, whether a soft drink ad in ER generates a higher recall than one in The West Wing. Individual advertisers can get a different set of data by brand. Pepsi could learn whether its ads perform better than those for Coca-Cola’s.
"This gives us a way of testing the hypothesis that there is a positive relationship between program attentiveness and advertising recall, and at the end of the day, that's what it's all about," says Andrew Green, managing partner at OMD, the biggest buyer of national TV ad time.
A question of value Right now, TrendReporter is a neat tool, but it threatens to smash yet another television myth — the one that says broadcast viewers are more valuable than those of a cable channel. One could argue that a rating is a rating is a rating, and that a 1 rating delivered by The Simpsons would be just as valuable to an advertiser as a demographically similar 1 rating on A&E's Biography. Intuitively, they should be valued the same. But they are not. Advertising on broadcast networks typically costs far more on a cost-per-thousand-viewers basis than does cable advertising.
Then there is the question of the validity of IAG's survey sample. Although large in number, the survey sample currently includes only those viewers with Internet access. "You need a sample that reflects the demographic group you are surveying, not a subset of that demo who like to go on the Internet or who go to certain sites. The data could be very skewed," says Tim Brooks, senior vice president of research at Lifetime TV.
Gould counters that Internet users have become reflective of the population as a whole, and can be considered a valid sample.
Long-term prospects As useful as IAG's service could be, it may have arrived too late in the game to assure its long-term viability. Personal video recorders threaten to completely transform the television landscape. Some seers, including OMD's Green, think that the days when captive viewers could be expected to sit in front of a TV set and watch four minutes of commercials will fade rapidly as PVRs proliferate.
IAG's Gould believes there is always a need for the kind of data his company provides. "Ultimately, we are like Switzerland," he says. "We are a third-party data collector. Our entire goal is to provide clarity."