• by Joe Mandese , June 5, 2006

Media auditing firms have been probing into every facet of TV advertising buys. Now they are turning their attention to other media, including magazines, and the Internet may be next. Media IQ, the firm created by former Madison Avenue media chief Mike Lotito to audit the performance of ad agencies' TV buys for big marketers such as IBM, Sears, Toyota and American Express, is now turning its proctoscope on the magazine industry. But unlike the TV audits, Media IQ will not be probing advertising buys. Instead, it is focusing on the element media planners and buyers use as the basis of those print media buys: circulation.

Circulation, the official, usually audited estimates of magazine subscription and newsstand sales, are the basis of most negotiations between publishers and agencies, but they have recently become the cause celebre of the print advertising world, because of some high profile scandals surrounding some misstatements and because reading circulation data can be complicated and subject to interpretation.

"Somehow, over the past five years, circulation has become a negative," declares Lotito, whose team has quietly developed a new product, Circ IQ, to help agencies muddle through the arcane world of circulation data in an easy, comprehensive and systematic way that enables planners and buyers to focus their judgment on the areas that require value judgment. As such, Circ IQ is also the first media-auditing product created specifically for ad agencies, and not their clients. It's designed to be a time saving devices that will enable agencies to both save on labor costs, as well as letting their planners and buyers make smarter print buying decisions for their clients.

In fact, Circ IQ, which is officially being announced today, has already has seven agencies subscribers, including some of the biggest print buyers in the business: MediaVest, MindShare, OMD, Saatchi & Saatchi, Starcom, Targecast and Universal McCann.

Lotito and his team are scheduled to brief the research and circulation committees of the Magazine Publishers of America later this week on the new product, and how it might impact the way agencies buy magazines, but Lotito says it should elevate conversations on both sides of the table, instead of bogging buyers and sellers down in the drudgery of data.

"The biggest issue is that the ABC reports is that they have become so hard to get through," he notes, referring to the Audit Bureau of Circulations preliminary and final magazine audit statements. "They've become more detailed, which is a good thing, but you're bogged down in the statement, and the big picture gets lost."

At the same time, advertisers' expectations for quicker, on-the-fly magazine purchase decisions has made the task of evaluating magazines increasingly challenging for agencies, which have to deal with an increasing number of titles.

One thing Circ IQ will not be doing is vetting the authenticity of the ABC's audits. Instead, the system assume that data to be accurate and gives buyers the tools to quickly check the accuracy of what publishers are claiming, including the difference between preliminary and final statements, as well as the qualitative elements of circulation statements, including how circulation was derived, what percentage of a magazine's circulation comes form newsstand vs. subscribers, and how much consumers paid for them.

Media IQ has developed an intricate scoring system for evaluating the quantitative and qualitative aspects of a magazine's circulation statement, as well as magazines competing in the same category. The system uses a simple 100-point scoring method, which agencies and advertisers can adjust based on their own criteria and knowledge of a magazine's strengths and weaknesses, giving them the tools to put the circulation data into context.

The system, for example, assigns qualitative values to magazines based on the amount of their circulation that is derived from "transfers," or the acquisition of subscriber lists from magazines that have gone out of business. Many advertisers might see such transfers as a negative, while some might actually see them as a positive depending on how they are derived and where they came from.

Initially, Circ IQ will focus only on ABC audited magazines, but Lotito says Media IQ already has begun talking with BPA International, another major circulation auditor that is known primarily for business publications.

Media IQ is not the first company to turn its attention to the magazine circulation arena. Long-time magazine research and circulation guru Rebecca McPheters' McPheters & Co. has launched similar services to provide both publishers and agencies with an on-the-fly database of accurate circulation data analysis. But Circ IQ is the first product tied to a broader based media auditing organization, and is part of an expansion by firms such as Media IQ and rival Media Performance Monitoring America from TV into other media.

Lotito says Media IQ is looking at whether there might be similar demand for a Circ IQ system for newspapers circulation reports, but questions whether there is sufficient demand for that product. Newspaper circulation, he says, may be far less subject to interpretation by media planners and buyers, and consequently may not require advanced analytical tools.

A medium that clearly does, says Lotito is the Internet, which is most likely next up on Media IQ's agenda.

"We're going to go to the Internet next and we'll figure out where the clogs are there," he says, adding that Media IQ still is trying to figure out how to develop an Internet evaluation system, and whether it would be a tool designed more for agencies or advertisers. One big area of focus, says Lotito, are the differentials between website and server data and panel-based online audience research reports.