• by Joe Mandese  @mp_joemandese, December 5, 2007

It's been a while since I've contributed a post to this board, and much of that time has been spent thinking about some recent developments taking place at Google, and how they may ultimately reshape the way we plan, buy, watch and think about television. The development that's had me thinking the most was Google's deal to license demographic ratings data from Nielsen. This surprised me for several reasons. First and foremost was that I thought the industry was heading in the opposite direction, that demos were doomed, and that it would be Nielsen that would ultimately need to license data from Google -- not the other way around.

Ultimately, I think that is true, and the industry will shift to a census-based measurement of actual viewing behavior, scrapping long-used surrogates like demographics. The reasons: 1) Demos are poor proxies for actual consumer targets and genuine consumer behavior; 2) behavioral targeting is far superior, because it is based on, well, actual viewing behavior; and 3) such data is abundant and is slowly finding its way into the commercial advertising marketplace thanks to companies like Google, TNS, TiVo and others.

I'm not entirely clear why the cable and satellite industries are suddenly willing to play along. Maybe it's because they finally realize the shift is inevitable, and that if they don't begin making the data available, someone else will. One reason why Starcom MediaVest Group cut its landmark deal to license and apply the cable set-top data TNS has begun aggregating, is that beginning with the conversion to digital broadcast spectrum in February 2009, upwards of 90% of U.S. TV households will be capable of generating return path data streams. How that market will ultimately play out is anybody's guess, but some smart people are guessing it will look more like the Internet than television, and a few pioneers like SMG, TNS and Google are trying to make it happen now.

The problem is that not everyone is ready for it to happen now. During Google's presentation at the UBS media conference in New York this week, ad chief Tim Armstrong said it could take several years for Google to develop the kind of market structure for Google TV Ads that it has for its online AdWords program.

A significant part of that lag has nothing to do with the data or the technology. It has to do with human beings. And let's not forget, people are still a significant factor in making markets happen -- or not. And the real reason for Google's adoption of Nielsen demo data is all about people. No, not those 18-49 or men or women 25-54, but the people who are used to buying those demographics. The real reason Google is appending its digital clickstream data with Nielsen demo data is that it's the way people are used to buying television.

Even more ironic, it's also the way our industry systematically "optimizes" the way it buys television. Yeah, that's right, those big, black boxes that agencies use to optimize television buys are all programmed to accept gross rating points based on Nielsen demos. Without them, a fairly knowledgeable source tells me, Google was having a hard time working with the TV buying systems of big TV shops.

If you think that's ironic, consider the discussion that took place during a panel I moderated at the Interactive Advertising Bureau's recent online metrics summit in New York. The panel was comprised of some of the top online researchers in the business: vendors like comScore's Josh Chasin and Nielsen's Manish Bhatia, and clients like Microsoft's Stephen Kim. Much of the discussion centered on the debate surrounding the value of panel-based methods like comScore's and Nielsen's systems vs. direct, census-based measures. Session participants agreed that one of the chief advantages of the panel-based systems was that they provide profiles -- normally expressed in the form of demographics -- of online users to advertisers, agencies and publishers.

I find this even more ironic than the emerging debate that is only just about to hit the TV industry, because the Internet theoretically should have bypassed this step altogether and begun by profiling consumers based on their actual behavior, not crude surrogates based on age, sex and income.

But even a savvy data user like Microsoft uses the panel data as its default when pitching advertisers and agencies, Kim acknowledged, because, after all, it is still the coin of the realm. But ultimately the coin will change, because of an even great pressure that has become prevalent in the advertising world: accountability. It's something that has been growing over time, as big corporate marketers seek to justify the allocation of their marketing budgets with measures that prove their return. Judging by comments made this week by leading forecasters at the UBS conference, those pressures are increasing as corporate profit margins slip, and they will become quite acute over the next couple of years. By then, Google's TV Ads system should be pretty well up and running, and it will officially be time to demolish he demo. R.I.P.