It is a dysfunctional way to run a business, while waiting for something better. Eventually, all media will be digital and quantify who it reaches. And then it will reach well beyond traditional demographics. Media metrics will track consumers' interactive movements, transactions and responses in ways that click for advertisers, content producers and distributors. It will report the dollars spent relative to those interactions, and in that way, track the flow of money between consumers, companies and content in the digital economy.
For now, digital transition is in a purgatory that has media hanging between the conventional estimates of who is watching and reading and the evolving online click accountability. Until all media flows through a digital filter, a compelling universal standard of measurement is not possible. In fact, it is challenging to lay various forms of media measurement side by side to achieve a broader multi-platform performance snapshot.
The newspaper industry is sinking fast--even with ad revenues topping $43 billion, according to Morgan Stanley. Its controlled circulation numbers were never an accurate reflection of who actually saw and acted on print ads. Newspaper online extensions are generating real revenues, and its content appears to resonate with readers, but its legacy costs are formidable. Plus, it has already lost so much of its valuable classified business to the likes of Craigslist.
Broadcast television is in a similar quandary, with more than $46 billion in annual ad revenues. NBC has decided to measure the performance of the online video streaming of its series, which are more popular with Internet users than prime-time TV viewers. It said Wednesday that it will report monthly demographic details from Nielsen on its streaming shows, such as "30 Rock" and "Heroes." NBC is also working with Nielsen to create a new ratings system that merges TV ratings and online streaming data as well as sales data from Nielsen's measurement of consumer product sales. The jury is still out on whether this integration of dissonant metrics--which best suits NBCU's purposes--proves to be a new model for valuing ad sales or a desperate experiment in creative accounting.
Clearly, the media spending grids of ad agencies and their clients are becoming heavy with calculations, but few are clear and accountable. Despite the three-day and DVD extensions of conventional TV ratings, it's still an elaborate math puzzle that at best only estimates who might be watching a video commercial, much less responding to it. The deteriorating economy will prompt media, advertisers and measurement players to become more creative about their algorithmic justification for making and spending a buck.
The shift of television series--complete with 15-second online commercials--to network branded Web sites and online aggregators like Hulu and Veoh is easy and safe. It is taking what TV audiences, content providers and advertisers are most familiar and comfortable with and putting it on a new interactive platform, where they can mostly be statically viewed.
Even the Internet in its nascent stage of commercialism has problems, despite slowing double-digit advertising growth that will top $26 billion this year. Everything about the Internet appears more monetizable, although the science of metrics and digital adoption are in flux.
It isn't that social networks, Web sites and other Internet iterations don't have value. It's just that their value to advertisers must be qualified. With every new measurement configuration there is a motive. For instance, Google's Trends for Websites Tool, while useful in applying some of its research data to determine a site's effectiveness, does not measure Google's sites.
Mining the plethora of individual consumer data available--considered the brass ring of marketing--faces a tricky and challenged evolution. Charter Communications, the fourth-largest cable operator in the U.S., recently backed off plans to monitor customers' Internet transmissions to mine data about where they spend money and their special interests and needs. The profiling data would be better used to match advertisers with their target consumers on cable and online, while protecting personal information.
Internet service providers already have access to the online behavior of consumers through their every keystroke and click. Fundamentally, the ad dollars spent are primary contributors to company revenues, which ultimately determine overall media values. It is important that they get it right.
If it's any consolation, the most essential metrics are in flux everywhere--partly because digital technology allows for more exacting and detailed measurement, which in turn impacts revenues generated, profits and a company's market cap. The values of just about everything stand to be reassessed, if not redefined. That includes the venerable economic yardstick, Gross Domestic Product (GDP), the definition and application of which appears to be self-defeating in these times of change.
The British government is toying with the notion of measuring an individual's subjective well-being and personal happiness on the basis that countries with higher GDP do not necessarily have happier, well-situated populations. That would mean measuring things like universal health care, the level of joblessness, maintaining family stability, lowering crime and securing personal freedoms. That measurement challenge makes hammering out new media metrics seem like a cakewalk.