Ad Firm Tracks Consumers Across Media

For years, marketers measured the reach of their ads one medium at a time. For TV, it generally was Nielsen; for radio, Arbitron; newspapers and magazines report circulation figures; while the Internet shows hits and page views and other traffic data.

But there haven't been many ways to measure an ad campaign across all of these media at once.

A small media research company called Integrated Media Measurement is trying to bridge that research gap with a new technology that measures consumers' exposure to the audio in ads on television, radio, computers, mobile phones, DVDs and inside a movie theatre -- using a consumer's cellphone.

NBC Universal

NBC is among the networks using the cellphone-based data to track how people watch shows like 'Saturday Night Live.'

The Internet's ability to produce evidence on the effectiveness of ads -- such as how many people viewed an ad and whether or not they clicked on it -- has led to something of an industry obsession with new forms of measurement. The financial crisis promises to make marketers even more reluctant to risk money on ads, especially if they can't keep score on how effective the spots are. Meanwhile, media fragmentation continues, as big-tent events like the Olympic Games and the Super Bowl are consumed in more and different ways.

"People don't know how to measure the multimedia world we live in, so any piece of the puzzle is helpful," says Brad Bortner, principal analyst at Forrester Research.

IMMI embeds its software into the cellphones of the company's 4,900 panelists. The software picks up audio from an ad or a TV show and converts it into its own digital code that is then uploaded into an IMMI database, which includes codes for media content such as TV shows, commercials, movies and songs.

IMMI's database then figures out what the cellphone was exposed to by matching the code. Cellphone conversations and background noise are filtered out by the software, IMMI says, since there is no "match" in the IMMI database.

To get a handle on the effectiveness of a given ad, IMMI's data can show, for example, when a panel member is exposed to a movie trailer on TV and whether that same consumer later goes to see the movie. Similarly, IMMI data can show if a panelist watching a promo for a TV program will later watch the show, either on TV or online. IMMI thinks it can expand that idea from films and TV shows to consumer products like shampoo or toothpaste. It is testing its technology with a national grocery store chain.

NBC Universal

"We follow the same person from end to end," says Tom Zito, IMMI's chief executive.

IMMI isn't the first company to attempt this kind of measurement, but past efforts were stymied by the costs of creating a large-scale panel. IMMI's use of cellphones means that consumers don't have to labor over diaries or push buttons, says Mr. Zito, who worked for years as a journalist and rock critic before launching a number of Silicon Valley start-ups since the mid-1980s.

IMMI is still a tiny company, especially compared with competitors like Nielsen Media Research. The company's 4,900-person panel has teenagers and adults in just six major markets -- New York, Los Angeles, Chicago, Miami, Houston and Denver. IMMI panelists are paid $50 a month or receive free phone and data service in exchange for making the cellphone their primary phone, and carrying it with them at all times.

But the San Mateo, Calif.-company has managed to attract the attention of movie studios and broadcast networks like General Electric Co.'s NBC Universal and Walt Disney Co.'s ABC. NBC has used IMMI data to track how people watch shows like "Heroes" or big sporting events like the Beijing Olympic Games.

While the technology isn't perfect, IMMI is helping NBC answer questions about how viewers watch its programming, says Alan Wurtzel, president of research at NBC. "I'm convinced the handset will be the way we will measure media going forward," he says.

Still, IMMI is unlikely to change the way marketers develop ad campaigns. Mark Loughney, vice president of sales and strategy research at ABC, says that IMMI's panel is still too small to make long term decisions. "For now, it's a supplement, not a replacement to what we use," he says.

IMMI also doesn't measure outdoor or print ads, or Internet ads that don't use audio.

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But the company is already getting the attention of big competitors like Nielsen, which teamed up with IMMI to sell a service that tracks ad exposure in places like bars, health clubs, hotels and the office. Walt Disney's ESPN and Zenith Media have already signed up for the service.

http://online.wsj.com/article/SB122394454320231201.html?mod=rss_media_and_marketing

Newspapers’ Web Revenue Is Stalling

Newspapers, already facing a grim economic forecast, are digesting another piece of bad news: the growth in online advertising they saw as their salvation has slowed to a crawl.

USAToday.com uses ad networks to fill unsold spots for ads.

In the last few years, newspaper companies have been rapidly expanding their Web presence — adding blogs, photo slide shows and podcasts — in the belief that more features would bring more advertisers. But now, after 17 quarters of ballooning growth, online revenue at newspaper sites is falling. In the second quarter, it was down 2.4 percent compared with last year, to $777 million, according to the Newspaper Association of America. It was the only year-over-year drop since the group began measuring online revenue in 2003.

Overall online advertising, however, is strong. Display advertising, the graphics-rich ads that newspaper sites carry, grew 7.6 percent in the second quarter, TNS Media Intelligence reported.

Newspaper executives say the new features have drawn bigger, more engaged audiences, which they hope will translate to more advertisers. Unique readers in August were 17 percent higher than a year earlier, at 69.3 million, according to a Nielsen Online analysis of newspaper sites for the newspaper association. They also point to other factors for the decline, including the economic downturn and the continued flight of classified advertisers away from papers and their sites.

But the advertising glut, particularly in display advertising, on which companies had based their optimistic projections, has shrunk. As newspapers keep adding pages, they are forced to sell ads at cut-rate prices.

Large papers like The Washington Post or The New York Times can sell premium ad space on, for example, a newspaper’s home page, for $15 to $50 for every thousand impressions. But these and other papers of all sizes have increasingly relied on middlemen — known as ad networks — to sell less desirable space, typically for around $1 for every thousand impressions. The networks usually charge advertisers double that or higher, industry insiders said.

While some publishers rely on ad networks, others are devising strategies to avoid them. With networks, “unwittingly, I think, the publishers commoditize their own inventory,” said Paul Iaffaldano, the general manager of the TWC Media Solutions Group, which sells ads for the Weather Channel and Weather.com.

A recent study from Bain & Company and the Interactive Advertising Bureau examining seven high-end publishers (their names were not disclosed) found that about 53 percent of the ad space on newspaper sites went unsold without networks last year, up from 50 percent in 2006.

Given the choice of showing an ad-free page and making no money, or using an ad network and making a few cents, many publishers choose networks. In 2007, 30 percent of the ad spaces sold on their sites came from networks, up from 5 percent in 2006, according to the Bain study.

“If we sold every scrap of inventory, we wouldn’t use ad networks, but right now it makes some sense for us,” said Jeff Webber, the publisher of USAToday.com. At Gannett, which owns USAToday.com, online revenue in the United States rose a modest 3 percent in the second quarter. Results from other chains have been grimmer. In the second quarter, online revenue dropped about 12 percent at A. H. Belo, 8 percent at E. W. Scrippsnewspapers, 4 percent at the Tribune Company, and 9 percent at Lee Enterprises, all compared with the same period last year.

Denise Warren, the chief advertising officer of The New York Times Media Group, saidNYTimes.com used ad networks despite some concerns. She said they were useful when traffic spiked; this September, for example, the financial crisis spurred lots of page views.

“We couldn’t sell that inventory because we didn’t know it was going to exist, so if we have an ad network we’re able to have all those extra C.P.M.’s,” she said, using the industry term for cost per thousand impressions.

At The New York Times Company, online revenue grew a healthy 13 percent in the second quarter. More recent figures indicate sluggishness at the company’s newspaper sites, however. At The Times’s News Media Group, which includes newspaper sites like The Boston Globe, The New York Times and regional newspapers, online revenue grew only 0.9 percent in July and 7.9 percent in August, well below the usual double-digit growth.

Ms. Warren said that the two months were anomalies, adding that growth in display advertising at NYTimes.com alone had been much higher, though she declined to specify a figure.

As for the new blogs and video, “those investments will definitely add to advertising revenue,” she said, but “those things are just getting started right now.”

Steve Stup, the vice president for sales at Washingtonpost.Newsweek Interactive, said he began using networks this year only because the site had unpredictable traffic because of the elections. He said some advertisers might start to see networks as an inexpensive substitute for dealing with papers directly.

“It’s still a situation where if advertisers even perceive they can reach your audience, they might be inclined to go with a network, and that’s a concern I have with networks,” he said.

This has meant a spurt in networks, which are popular with marketers looking for direct response, like eBay and E*Trade. There are now more than 300 networks, most offering custom ads, and they are popular venture-capital investments and acquisition targets. Last year, Microsoft bought the network DRIVEpm, Yahoo bought Blue Lithium, and AOLbought Tacoda.

“The ad networks have actually been using the presence of publisher inventories as part of their selling story to ad buyers,” said John Frelinghuysen, a partner in Bain’s media practice. Many publishers join only the networks that do not disclose what sites they include, but even so, savvy advertisers can guess.

In response to the downturn, some publishers are exploring a larger, counterintuitive strategy: instead of creating more ad space, they are limiting it.

“We’re going to reduce the number of ad sizes we use and the number of units,” said Christian Hendricks, the vice president for interactive media at McClatchy. “It is a case where yeah, you could probably sell another advertiser by creating another ad space,” but that could hurt the revenue over all, he said. Online revenue at McClatchy rose 12.5 percent in the second quarter; a year earlier, revenue dropped 2.2 percent.

McClatchy also tries to avoid ad networks. “We don’t want to get in the habit of filling every little space we have with remnant,” Mr. Hendricks said.

Mr. Frelinghuysen said limiting the ads on a page can be smart. “That high level of unsold inventory often creates a real challenge in terms of sustaining pricing or growing pricing,” he said. “In most media, especially in television, the traditional model has been that you drive sellout, and that gives you the ability to drive pricing over time.”

Some sites unaffiliated with newspapers have also limited inventory and banned ad networks, and many report good results.

Weather.com limits its ad spaces so it can sell out each day, and it does not use ad networks, Mr. Iaffaldano said. Prices there have increased 10 to 15 percent over last year, he said.

Forbes.com stopped using ad networks this year, as did ESPN.com and CNN and other Turner sites. (Turner and Forbes then created their own networks, which they say are different from the remnant networks because they focus on narrow subjects.)

“As more and more sites like ourselves forsake networks and are public about it, the ability for the agency to think for themselves, or even suggest to a client, that they’re going to get quality impressions, will get harder and harder,” said Jim Spanfeller, the chief executive of Forbes.com.

At CNN.com, where display advertising rose 17 percent in the second quarter, the site does not use networks and limits space.

“We want to get as much value for our product as possible, and that means not having an endless supply of inventory,” said Greg D’Alba, the executive vice president and chief operating officer of CNN Advertising Sales.

http://www.nytimes.com/2008/10/13/business/media/13adco.html?ei=5070&emc=eta-1&pagewanted=all