Rentrak Outlines Plans, Tries Not to Mention Competitor

Bruce Goerlich joined Rentrak two years ago after a quarter century poring over Nielsen data and spinning it into advice about what shows to buy and demographics to target. Now, as the Chief Research Officer at Rentrak, the upstart TV measurement entity, he prefers to go with vague references about the giant, entrenched competitor that rhymes with Neil's son.

Last week, he used terms such as the "other folks," "other guys" and "another company." Other times, he used the euphemism "sample currency," referring to Nielsen and its process of gathering a panel of viewers and making ratings projections.

Still, it's hard to turn an elephant in the room into an ant.

Goerlich offered his comic avoidance while joining other executives at an investor event for Rentrak, which has a share price that's about half its 52-week high. So, there was plenty of salesmanship and optimism, but also a rather comprehensive rundown of where the company stands and its potential.

The future looked pretty good at least on that day, maybe even as a potential Nielsen acquisition target.

Much of what Rentrak put forward was not new, having made its case while moving aggressively into TV measurement under the leadership of CEO Bill Livek. Yet, it was a solid primer and it was clear the company has a cogent plan to build its separate -- though similar -- national and local businesses.

There are no grand ambitions to really topple Nielsen, but Rentrak believes the industry is likely to settle on two metrics for trading currencies: the Nielsen panel and a census-level stream culled from set-top-boxes (STBs).

The race is on to join Nielsen, which is likely to always be the go-to guy. Yet, there are hundreds of millions of dollars to be made as a vibrant currency used for secondary guarantees or directional insight.

Livek described the end game as yielding a "natural duopoly."

With its national measurement business, Rentrak wants to build by having its agency clients -- such as Publicis and Omnicom units -- to nudge networks to buy its system. With the local operation, the focus is on the sell side and signing up stations, where it has made impressive strides in signing 27 station groups.

As he made the Rentrak case, Goerlich again hit on the large and diverse database it uses to produce its metrics -- the access to 19 million TV sets and as the only company culling data from STBs owned by cable, satellite and telco TV companies. No one else in the business has that depth, Goerlich said. Not TRA, not Kantar, etc.

"They do not match us in any way, shape or form," he said. "This allows us to do much more than anyone else."

Goerlich argued Rentrak has superior national and local measurement because its system is based on data at a zip-code level, rather than the wider county level.

Taking a shot at Nielsen, he questioned the benefit of its C3 currency, which is used in the national marketplace, suggesting it doesn't give an advertiser a complete picture of how a particular ad performed. The C3 stream is the average of all commercials in a program, so the other spots can push the number up or down and a single advertiser may be paying more than actual delivery, he said.

Rentrak, on the other hand, offers "exact commercial ratings." The company is also proud that its data is integrated with the processing systems such as Donovan and MediaBank agencies use to analyze information and execute buys.

Specifically with set-top-box measurement, Rentrak also believes it has a leg up on others in working through one of the most vexing questions: determining when the box is on or off. A viewer easily can leave it on and leave the room.

Rentrak, however, says it has a two-fold advantage: it gathers data from 2 million-plus boxes that go off when the TV goes off. And, Goerlich's team has developed 10,080 probability curves to make projections.

Which hits on a major issue that takes some of the steam out of Rentrak's bullishness as it compares itself to Nielsen and others. All ratings rely on estimates.

Rentrak may have a head start with its database and may believe it makes better projections with superior algorithms, statistics and differential equations, but it is all subjective.

That was abundantly clear when Livek was asked if Rentrak would acquire more STB data. It would be nice, he said, but not necessary.

"The difference between having 19 million television sets and 40 million television sets is just around the margin," he said.

Really? Doesn't that go against Rentrak's assertions about its large database? Doesn't it repeatedly say the more the better?

Nonetheless, Rentrak executives took pains to tout their ability to offer metrics that go beyond just the age and gender of the audience. With advertisers seeking more accountability, Rentrak is pushing its ability to offer "advanced demographics."

Under a recent deal with Polk, which specializes in auto marketing insight, Rentrak will attempt to provide advertisers with information such as what people interested in buying cars are watching, by make and model. Are viewers of the "Real Housewives of Beverly Hills" in the market for a BMW?

That could be particularly beneficial in the local business, where stations rely so much on auto dollars. Rentrak is providing data to about 80 stations in 45 markets and hoping peer pressure will help it expand.

It wants to establish toeholds in markets, then prove its worth and make it hard for competitors to sit on the sidelines.

In Columbus, for example, it recently signed the PBS station, its fifth in the country's 32nd largest market.

Besides growing in markets where it already operates, it wants to leverage relationships with station groups such as Gray Television and Sinclair and bring on more of their stations. It works with 27 groups, which collectively have about 400 more stations Rentrak could bring into its fold.

Cathy Hetzel, who leads the Rentrak unit that includes linear TV measurement, said that with local station clients about a third began using Rentrak and decided to drop Nielsen, and another third use both.

Rentrk argues on the local level that its larger database offers far more stable numbers compared to the "sample currency," where Nielsen uses limited-size panels. If 15 people watch the news Tuesday, but don't Wednesday, there's a notable ratings impact, according to Hetzel. Rentrak considers small stations in Nielsen diary markets as particular low-hanging fruit.

Late last year, the Media Rating Council (MRC) that evaluates media measurement services withdrew its accreditation for Nielsen's diary-based service. And Rentrak's Goerlich couldn't resist a jab -- "a snide little note" (his words) -- about the devaluing.

Rentrak is in the process of seeking MRC's approval for its system, which could make it the first STB-based product to hold gain accreditation. That is a laborious process and between now and then a lot of questions about Rentrak's long-term viability, appeal and muscle could be answered.

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