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Earlier this month, Michael Dowling, Grant Johnson and Jason Kramer founded Interpret LLC. The company's main focus is to plan, test and measure content on new media platforms. Interpret LLC pledged to "bridge the knowledge gap between the key stakeholders of the new media world"... but how exactly?
We spoke with Michael Dowling, CEO of Interpret LLC and Jonathan Epstein, Co-Head of the Gaming and Interactive Group at the United Talent Agency (and a board member of in-game ad firm Double Fusion) about Interpret. We talked about what the company will do, what Interpret offers that others cannot, and the future of metrics and in-game advertising.
What is data if you don't Interpret? Interpret probably formed at just about the right time. In-game ads are just starting to come into prominence and several key publishers are signing agreements with companies like Massive, Double Fusion and IGA Worldwide. Now, these companies need to find ways to "interpret" their data and get back tangible results.
"Data without 'interpretation' is under-optimized," said Dowling. "In this digital media environment, tracking consumer attitude and usage data is never more important. Today, compelling content experiences are exploding, giving consumers greater choice with new technologies enabling more control and convenience. As a result, consumer behavior is not as predictable as it once was. Instead, it is evolving constantly. Interpret is the realization of our entrepreneurial drive to build a different type of market research company focused on pioneering cutting-edge methodologies and injecting creativity and strategic insight into a numbers-driven business."
He continued, "One of the key things we learned from our time at Nielsen is that unmeasured media is not as valuable as measured media. Without a data currency, the marketplace is inefficient, which ultimately undercuts the overall revenue potential."
"There's a major market for in-game advertising already, which is expected to grow one hundred-fold or more in the next several years," estimated Epstein. "The growth in the core in-game advertising market drives opportunities for companies that perform critical enabling function[s] such as reach and results measurement and auditing. In-game advertising is the most important medium to be developed for this decade and beyond, so I think the early movers that deliver meaningful measurement products to advertisers, publishers, and companies like Double Fusion and its competitors are exceptionally well positioned, strategically."
"The team is very skilled and experienced in thinking through the issues of measurement of new media like in-game ads," said Epstein of Dowling's new company. "They are also taking a holistic approach across multiple media forms, which I think is critical. We're very interested in the work they have discussed to date, and look forward to seeing more of their product set come out."
Why Interpret LLC and not other sources? While the company seems well positioned, it must be asked why someone should go to Interpret LLC and not a company like Nielsen. The Nielsen name is practically synonymous with metrics. The company also benefits from greater resources at hand compared to a newly founded company like Interpret LLC.
"Interpret is a bit different - we're smaller, but agile with deep category expertise in interactive entertainment and emerging digital media platforms; all our team members have equity in the company, and a stake in its future; our work environment is more like an ad agency/branding consultancy than a typical research firm; and we're open to new methods and ways of looking at research problems," explained Dowling. "This is crucial in delivering actionable solutions for interactive entertainment. We are not tied to antiquated 'tried-and-true' methodologies. We are methodology-agnostic, applying the right approach based on a respect for the consumer, the content, the platform and how they all inter-relate."
"Both parties [Nielsen & Interpret] are very active in the space and it remains to be seen how both will evolve their product lines to adapt to the fast growth of the in-game advertising segment," remarked Epstein. "As is the case in many markets, it may be easier for Interpret, to the extent it raises outside capital, to invest in new business models that are still being built, than it can be at larger companies that are already obligated to deliver profitable results to their shareholders and are past the financing stage."
The question could also be asked why a company like this is needed for in-game ads at all. These companies have their own metrics, and they can be taken and recorded much easier than other forms of advertisements. They can tell what has been looked at for how long, and by how many people.
"By their nature, third-party measurement companies offer advertisers and other stakeholders the independent verification of reach and/or campaign results that help give them the comfort level required to invest significantly," said Epstein.
"In-game ad companies need standards to fully realize the market potential: standard data measurement metrics, standard units of exposure, standard contracts, etc," said Dowling. "The IAB is working hard to solve a lot of these problems, but the marketplace is in need of an independent third party company to provide the most informed and consistent data currency now. The technology to track ads is not a major issue. The major challenge is for the industry to organize itself around these standards."
Interpret the Future In-game advertising is expected to expand greatly in the coming years. While it was worth roughly $56 million last year, some analysts estimate it to balloon to roughly $750 million dollars by 2010. Since it's expected to be a new, important source of income to video game publishers, measuring the success or lack thereof will likely become a profitable cottage industry.
"What metrics are important to the industry depends on the business models that drive that industry," offered Epstein. "Tracking buzz and awareness and purchase intent for games (such as offered by services like GameSpot Trax and IGN's GamerMetrics) are key and as the market for games broadened we'll need to see services like that broaden. Tracking the real-time play levels of games (as well as the advertising in those games) is a key data stream that doesn't exist for the industry as a whole (although Double Fusion and other in-game advertising providers can track play time for the titles they work with.) Tracking the continuing spread of gaming through the populace at large -- and what types of games are being played -- is critical for understanding the landscape of the future. Of course, the most important metrics for the games business are its revenues and its profitability. Advances like in-game advertising help drive those metrics for publishers and developers, and the metrics which support and further enable the growth of in-game advertising are therefore hugely important."
"We are at a watershed moment in the media industry. A multitude of technologies are driving a paradigm shift in which existing business models are being challenged, new models are emerging, and the entertainment consumption landscape is being redefined. This impending revolution is being driven by a confluence of factors: a consumer conditioned to demand more choice, control and convenience in their entertainment; the rapid embrace of new technologies driven by sleeker consumer designs and declining price points; increased broadband & wireless penetration in both developed countries and in emerging markets; [and] the need for marketers and advertisers to adapt to new consumer behaviors," concluded Dowling. "This has fueled significant product innovation and revenue opportunities for media and technology companies, as well as new strategies for advertising firms and marketers. While these new platforms have generated a myriad of revenue opportunities, they also present significant challenges. With content creators, distributors, technology companies and advertisers all vying for a place in this new digital landscape, Interpret will provide services to help these constituents plan, test and measure their strategies."
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