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Cynopsis: DIGITAL: Video Ad Measurement Report
09/26/12

Good morning. It’s still Wednesday, September 26, 2012, and this is a special Digital edition. Despite a gold mine of digital data and a huge increase in viewers, ad revenues for online video lag far behind traditional television. How can digital distributors close the gap? Just maybe by taking a page from the TV playbook. Discover why video ad metrics are going back to the future.

CYNOPSIS DIGITAL: VIDEO AD MEASUREMENT REPORT

by Arthur Greenwald

Every marketer knows John Wanamaker’s famous complaint: “Half the money I spend on advertising is wasted. The trouble is, I don’t know which half.” The department store magnate’s dilemma was easy to understand. The only media measurement in the 1800’s was comparing ad costs to total sales.

Almost 150 years later, advertisers still worry about wasting money, but not for lack of data. Digital media can deliver targeted messages with unprecedented precision. And it offers hundreds of metrics to measure their impact.

But that’s a mixed blessing. Digital media can generate massive amounts of information, but not all of it is consistent or useful. Instead of a clear snapshot, marketers must assemble a complex mosaic of disparate data points. It’s as much an art as a science.

“The science is that each piece of data is pretty solid,” says Kate Sirkin, EVP and Global Research Director of the Starcom MediaVest Group. “But it can’t be purely scientific because you’ve got to use deep analytical skills and your knowledge of historical data. The art is pulling all the data pieces together to project what will happen in the marketplace.”

That’s no small puzzle and there’s a lot at stake. According to eMarketer, the online video ad spend for 2011 totaled $1.8 billion. That’s up 38 percent from 2010 and projected to surpass $5 Billion by 2013. Not bad, but a fraction of the $60.7 billion spent on TV ads. Of course the ad load for television is 25% vs. online video’s timid 1.5%.

How best to increase that revenue will be the focus of the first annual Cynopsis Digital Video Measurement Summit on Wednesday, November 14 in Manhattan. (For details and registration click here.)

But what really holds back the bucks? According to comScore:

• Marketers are comfortable with traditional TV formats, ad rates and measurements. They’re still experimenting to with digital video advertising.
• Despite strong evidence that online video ads are as effective as traditional TV ads (and sometimes moreso) the metrics and standards that support them are not fully accepted. This commoditizes online video ads and depresses pricing.

• While consumers now watch more video than ever, online video remains a small fraction of total consumption. Just HOW small a fraction is debatable…

A CYNOPSIS MESSAGE

Clearly little of that online viewing comes at the expense of traditional television. Nielsen’s latest Cross-Platform Report reports that the average American watches almost five hours of video a day, 98 percent of it on a traditional TV set. That leaves only 6 minutes per day for online video (9+ minutes for 18-34 year olds.) But comScore touts a much higher number: “21 hours per month,” or 42 minutes per day. Why the discrepancy? comScore’s number includes full-length movies and TV series streamed by Netflix, Amazon and Hulu, as well as “adult” video content. (comScore declined to specify what percentage of those 42 minutes is ad-friendly short-form video content.) Still, there’s wide agreement that online video viewing is growing fast — as much as 50% per year.

For decades Nielsen‘s TV ratings and demographic breakdowns have been the common currency of TV ad buys. Nielsen gross rating points (GRPs) are easy to understand and widely accepted as a gold standard. But because digital ad networks like Brightroll and spotXchange and Specific Media deliver such precise consumer data, video ad vendors have resisted, even ridiculed the GRP model. Not any more.

“We were pushing the advantages of digital and it just didn’t happen,” says Charles Gabriel, AOL’s VP of Video Sales. “Without a common currency, the largest pool of money sits on the sidelines. We had to change the mindset. GRPs are not the enemy, they’re a starting point that links two converging worlds so everyone can compare their buy to a standard they agree upon.”

Nielsen’s Online Campaign Ratings (OCR) uses Nielsen’s TV “currency panel” to illuminate third party web data and generate on overnight GRP with reach and frequency analysis. All video and display ads in a client’s online campaign are pre-tagged so that each time they pop up on a browser, they ping both Nielsen and the participating website. Nielsen cross-matches demographic data from its home TV panels with additional insights from its digital partners, then corrects any statistical bias. Ratings are accurate to the household and user level but strip out any data that threatens consumer privacy.

Facebook was an early OCR collaborator. And just before last April’s Newfronts, Nielsen announced OCR partnerships with AOL and the video ad networks TubeMogul and Tremor Video’s VideoHub. Just this week Nielsen increased their partner deals to a total of 15 video ad platforms including FreeWheel, Adap.tv and Videology.

OCR is for web campaigns, but later this month, Nielsen will formally roll out its Cross-Platform Campaign Ratings (XCR). “More than half of the homes in our TV currency panel now also measure computer use,” says Nielsen’s Eric Solomon, SVP of Global Digital Audience Management. By encoding TV commercials that correspond to online campaigns, Nielsen “can provide unduplicated reach and frequency across TV and online and measure simultaneous web activity plus cause and effect.”

Reach is “the opportunity to see the ad,” explains Solomon and the first of what Nielsen calls its three R’s of Cross-Platform Ratings. The other two are Resonance — did the ad affect a user’s recall or opinion? — and Reaction — did the user seek more information or make a purchase?” The latter two R’s are measured by Nielsen’s Brand Effect, which generates user questionnaires to test how well consumers remember the campaign and tracks subsequent online actions. “Reaction is the Holy Grail of brand advertising,” says Solomon. “If you’re thirsty, that’s when Coca Cola wants to make an impression on you.”

Often considered Nielsen’s chief online competitor, comScore was among the first research companies to measure trends in e-commerce. Founded in 1999, they have since branched out to measure all forms of electronic advertising and media, drawing data from their enormous million-member U.S. tracking panel (two million participants worldwide.)

“We are the leader in measuring the breadth and reach of the digital world in terms of how deep we can go with behavioral insights,” says Carmela Aquino, comScore’s Senior Marketing Communications Manager. “In addition to online video we can provide a wealth of other insights such as where certain demographics are spending the most time online, whether an ad is seen by the right audience, and confirm that it hasn’t been placed near questionable content.”

comScore has also become known for its monthly Online Video Rankings which list the top video content sites by total unique viewers, numbers of videos streamed, and minutes per viewer. The rankings also display the highest traffic video ad services by number of ads streamed, reach and frequency and total minutes viewed.

This year comScore introduced its own product to forge a comprehensive GRP from complex digital data.  Like Nielsen’s OCR, Validated Campaign Essentials. (VCE) tags client ad campaigns then cross-references that information with its two million panel members. “We’re focused on validating ad impressions of both display and video ads by confirming that the right audience has seen the ad where the advertiser wants it to be seen,” says Aquino.

A CYNOPSIS MESSAGE

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AWARDS GALA: Spring 2013

Nomination Questions: Jenn Sredzinski | Ad/Sponsorship Info: Mike Farina.

comScore can determine whether the ad was “in view,” that is, actually fully visible in the browser window and how long the banner or video was displayed. Nielsen’s Video Analytics product offers similar data.

Acronym fans will be glad to know that both OCR and VCE have been accredited by the MRC in accordance with 3MS. Translation: the nonprofit Media Rating Council, which oversees industry-wide standards for accurate media measurement accredited Nielsen’s OCR methodology last year then last spring blessed comScore’s VCE. MRC incorporates the guidelines of Making Measurement Make Sense (aka 3MS) the best practices guidelines devised by top advertising trade groups. All this is welcome news for those who sell video ads. But up to now, standardization has yet to improve ad revenues.

“The MRC accreditation will help,” says Randy Kilgore, Chief Revenue Officer for Tremor Video. “Both Nielsen and comScore’s GRP product is very accepted, but it’s problematic that the two products are different from one another. It’s not like TV where Nielsen has been the de facto measurement metric. There are two camps.”

AOL’s Gabriel thinks both products benefit the industry. “They’re trying to get beyond age, gender and household to target the individual,” says Gabriel. ‘We want to provide a metric that’s as close as you can get to the GRP in television.”

Neither of the competing GRP measures is likely to be declared the winner anytime soon. And additional rivals are eager to join the fray. Rentrak is promoting its own “census-based currency” tied to set top box data while Arbitron has teamed with comScore to announce a new “five-platform measurement initiative” that includes radio, smartphones and tablets.

To instill even greater confidence in its ad delivery, AOL signed last year with Freewheel to deliver and verify its online ad content. “We felt it was important to have third-party validation on all of our metrics,” says Gabriel. “Most of the ad networks try to differentiate themselves with proprietary ad serving.”

Starcom MediaVest Group’s Sirkin agrees that the ad server companies provide important perspectives and insights. “For the next couple of years we’re looking at a media mix of interesting companies that adapt TV assets to create more interactive and customized ads,” says Sirkin. She cites Seattle-based Mixpo as one such company whose consumer data “tends to focus on the richer assets they deliver against.” And because consumers themselves now cause entertaining video ads go viral, Sirkin highlights Visible Measures. “They have lots of original rich data about who shares videos, what makes them go viral and how quickly. They can also say where to place videos to make them go as viral as possible.”

So far, efforts to standardize multi-screen media measurement have centered on TV’s and computers. But sellers are eager to fully monetize video ads on smartphones and tablets.  Accordingly, comScore is sharpening its MobiLens and soon TabLens products, while Nielsen Watermark data, in active use since 2010, will soon be fully coordinated with the TV currency sample. Likewise, AOL recently launched new monetization efforts for mobile, tablets and connected TV devices like Boxee, Roku and AppleTV. But Tremor Video’s Kilgore estimates it will be more than a year before mobile metrics achieve standardization, let alone accreditation. “Unfortunately you can’t simply take the online methodology and apply that to mobile viewing. There are many more variables involved,” says Kilgore.

Meanwhile the greatest opportunity for boosting online video revenue may depend more on marketing than measurement. “Ninety percent of what’s viewed online is between 2 and 5 minutes. Short professional programming is the trend,” says AOL’s Gabriel. That’s the reason a powerhouse content companies are making huge investments in original content with celebrity partners Yahoo is promoting high profile projects with Jay-Z, Tom Hanks, and just this week, CSI creator Anthony Zuiker. YouTube has launched entire channels with Amy Pohler, Shaquille O’Neal, the Wall Street Journal and famously with NBC’s Olympic coverage.

In fact, Gabriel sees this as a first step to a world of lucrative content partnerships that further marry online video and traditional television.  “It’s a great opportunity for AOL and others to partner with the current cable providers and MSO’s to aggregate video across all the different screens.” Gabriel goes even further, envisioning Yahoo, YouTube, Hulu and AOL as “digital MSO’s for the content companies. That’s the trend you’re starting to see.”

But to capture those TV ad dollars, says Gabriel, online video must “prove out the value of short content vs. episodic, show we’re giving similar value and a better audience and delivering better metrics across multiple screens.”

AOL intends to do just that with a study scheduled to finish in Q1 next year.
So no matter what screen you’re watching today, stay tuned.

Later – Arthur
Arthur Greenwald for Cynopsis Media
09.26.12

Any questions or comments on this Special Edition, please contact Sahil Patel

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