• by Erik Sass  @eriksass1, December 7, 2005

Calculating ROI for outdoor advertising has long been an art, to put it tactfully--indeed, many would just call it guesswork. But Nielsen Outdoor claims that its new proprietary measurement system will soon do for billboards and bus shelters what Nielsen Media Research has long done for TV: provide highly accurate empirical viewership metrics that will in turn allow credible, reliable calculations of ROI.

Nielsen Outdoor's new system relies on the remarkable capabilities of the Global Positioning System (GPS)--a precise "locational" tracking service relying on a network of 24 satellites maintained by the U.S. government. Nielsen first tested the system in South Africa before bringing it to America, where it rolled out the first phase of a nationwide program in Chicago in 2004-5.

After assembling a representative sample of 850 ordinary people living in and around Chicago--commuters, soccer moms, college students, and the like, drawn from all walks of life--Nielsen distributed small GPS trackers resembling walkie-talkies and weighing 1.4 ounces to each subject, then tracked the group's movements for nine days. The nine-day study produced approximately 100 million "fixes" (data points where the GPS system locked an individual's location)--or about 13,100 fixes per individual per day.

Nielsen then mapped the wanderings of each individual onto a database of outdoor advertising, including billboards and bus shelters, provided by the Traffic Audit Bureau (TAB), an outdoor industry trade group that has also recently issued a request for proposal to companies including Nielsen to develop a new out-of-home ratings system that would serve as a component of what is quickly becoming one of the most sophisticated audience measurement systems of any medium in the U.S., and possibly the world.

The TAB historically has provided raw traffic estimates for gross exposures to outdoor media, but its president Joe Philport recently launched a series of initiatives to increase the medium's accuracy and accountability. The TAB's core metric -- daily effective circulation, or DEC -- has been the base currency for outdoor media buys, but the TAB recently adopted an industry endorsed method for making it more accurate, known as the visibility adjusted index, or VAI, something ad industry leaders have been calling for other media.

Now the TAB is taking the process one step further, asking the industry's leading research providers to come up with a better mousetrap for measuring demographic ratings for outdoor audiences. The way the TAB has fielded its RFP, has irritated Nielsen, and industry executives say there is a great deal of tension between the two organizations.

Still, Nielsen executives believe their new GPS-based system is the better mousetrap, and are confident it will be embraced as the outdoor medium's solution. "Without this data, it was impossible to calculate reach and frequency, and demographic data was completely lacking," said Peter Doe, chief statistician for Nielsen Outdoor. Meanwhile, Lorraine Hadfield, Managing Director, International Audience Measurement, explained that Nielsen's system allows a subtler, more granular understanding of the interaction between outdoor advertising, location, and commuting consumers.

By way of example, Hadfield pointed to Lake County, Indiana--a suburb of Chicago to the southwest with a proliferation of billboards (often for high-end consumer items) although the county itself has a low average income. By quantifying frequency, exposure, and average income with its GPS-based system, the Nielsen study proved what advertisers understood intuitively: the billboards are indeed effective, targeting not the inhabitants of Lake County, but wealthy commuters from suburbs further out.

Although Nielsen hopes to roll out this system in the top 10-25 U.S. markets by late April 2006, some work remains to be done. For one thing, the study didn't address outdoor advertising on mass transit or commuter rail--crucial niches for transit-heavy markets like New York City. Although Nielsen made vague noises about doing such studies at some future point, Doe said: "I think the logical next step is going to be tracking ads on [the sides of] buses--a project that will require a virtuoso level of coordination, involving tracking two sets of moving targets (buses and pedestrians).

Doe also warned that Nielsen has not yet devised a system for measuring these data for individual signs, dealing rather with outdoor campaigns in their entirety--a number of signs covering a given area. Nonetheless, Nielsen Outdoor's method represents a quantum leap over TAB's old traffic-based opportunity-to-view measure. According to Doe: "What we've produced is a demographic profile of a collection of sites that form a campaign."