By some estimates two-thirds of TV viewers cut the sound during commercials, channel-surf, or skip them altogether because they are annoying or irrelevant. In fact, if TV commercials were subjected to ratings the way TV programs are, most would be canceled faster than Martha Stewart's The Apprentice.
So what did Lee Weinblatt do? The CEO of Tenafly (N.J.)-based PreTesting Co., figured out a way to scientifically measure ad viewership, much to the concern of the advertising world. By this summer he expects to have 35,000 households in four to seven cities wired with boxes that monitor how audiences respond to ads, both on live TV and in programs taped on digital video recorders (DVRs). Daily "ratings" of TV ads -- tallies of how many people are watching or skipping -- from the service, called MediaCheck, will enable advertisers to determine quickly whether spots should be yanked off the air or at least switched to other time slots. His digital boxes can even reward consumers for watching ads with giveaways. "TV ads aren't ineffective. Bad TV ads are ineffective," says Weinblatt.
MediaCheck is one of a handful of services emerging to make TV ads prove their worth, in part to answer the challenge posed by Internet ads, whose viewers can so easily be counted by clicks. Advertisers and networks are coming to view ad ratings as a necessary part of competing with the online ad boom. More important, the new tools will help them put the screws like never before to often free-spending Madison Avenue idea factories. They also stand to wreak havoc on the process of buying and selling ad time.
What accounts for viewers' continued disdain of ads anyway? Clutter and irrelevancy are often blamed. But now ratings are able to cast a spotlight on the quality of ads. "The bigger issue," says David Poltrack, executive vice-president for research and planning at CBS Broadcasting Inc. (VIA), "is whether the ads are any good in the first place."
Determining what's good and what isn't in the world of advertising is getting easier. Besides MediaCheck, Nielsen Media Research now offers advertisers and media agencies a "minute-by-minute" audience measurement, gauging how many viewers stay tuned during ad breaks. And upstart firm IAG Research Inc. is able to report, by means of thousands of daily Internet surveys, which programs, product placements, and 30-second ads are watched "most attentively." Advertising based on how big an audience is -- counting eyeballs -- has become a commodity business, says IAG CEO Alan Gould. "The new currency is measuring engagement," he says.
Early adopters of ad ratings are finding some hidden benefits. Advertisers that have quietly been using IAG's data are able to negotiate smarter deals, cobbling together lower-rated, cheaper programs that add up to a better per-viewer ad buy. Chrysler Group, for example, has advertised on NBC's The Office, despite ranking below Nielsen's top 20 shows. But IAG has been able to prove that the comedy show is, most weeks, only slightly behind ABC's top-five rated Desperate Housewives in terms of details viewers recall about program plot, product placement, and ads. "We're pursuing any move to get the accountability -- the real numbers -- on TV audiences that we are getting with our Internet ad buys," says Julie Roehm, Chrysler's marketing communications director.
Weinblatt's MediaCheck service doesn't rely on surveys but rather the passive measurement of what viewers are watching and skipping. MediaCheck's digital box measures how fast viewers zap an electronically coded ad: within 10 seconds, 20 seconds, or 30 seconds. In MediaCheck's five-month test run last year in 2,500 Omaha households, viewers didn't click away or skip ads because of clutter. Instead, "poor executions and the fact that they had seen an ad too many times were the chief reasons," says Weinblatt, whose company has long tested ads with consumers.
One Burger King Corp. franchisee learned some unexpected truths after supplying MediaCheck with coded ads. One featured a fictional rock band called Coq Rock, whose members donned chicken masks. It was a hit with the ad critics -- but a ratings bomb. MediaCheck's results showed the ad was viewed by no more than 5.8% of households between 5 a.m. and midnight, vs. an average of 12% to 16.5% of households for a more conventional BK ad tied to a Star Wars promotion. "We never had any way of measuring [the] effectiveness of ads before, except for store traffic and our own gut," says Mike Simmonds, CEO of Simmonds Restaurant Management, which owns more than 70 Burger Kings. After all, if an advertiser pays to reach 1,000 viewers and only 200 watch the ad -- and only about half of those recall anything about it -- it's not exactly money well-spent. But MediaCheck's fast feedback allowed the franchisee to adjust, running more Star Wars ads and fewer Coq Rock commercials.
TV networks, faced with a slower-growing ad future than the Internet, are cautiously signing up. CBS buys IAG data. And sources say ABC and DirecTV Group Inc. (DTV) are among those negotiating with MediaCheck to encode ads and use the ratings data to attract advertisers thirsty for the insight. The Weather Channel is buying Nielsen's minute-by-minute ratings, including ad breaks, to show advertisers and agencies the payoff of running ads on its channel even though viewers tend to watch for just a few minutes.
Still, ad ratings could upset the decades-old system of pricing ad time based on how many viewers are watching a show and instead force networks to price time based on how many watch the commercials. CBS' Poltrack says a future development for the networks could be charging advertisers who put up poorly rated ads higher prices for airtime than those with better ads, on the premise that bad ads spur viewers to surf to a competing channel. But he acknowledges there's a lot to figure out. Will an advertiser with a high-rated ad on one channel, say, get punished on another just because the same ad follows a poorly rated spot that viewers skip? "You have to be careful what you wish for," says Poltrack.
Madison Avenue, too, is bracing itself. Scott Goodson of agency StrawberryFrog, whose clients include Heineken (HINKY) and Old Navy (GPS), says ratings could rob commercials of edgy creativity by pushing agencies to produce ads to satisfy a ratings scheme instead of a target audience. "They've been trying to turn advertising into a science for 20 years, and look where it's gotten us," Goodson complains. But Rich Stoddart, CEO of Leo Burnett USA Inc. and former ad chief at Ford Motor Co. (F), says there's no reason why effective, creative advertising can't stand up to ratings. "Knowing how many viewers skip and why will change the economic model of TV advertising," Stoddart says.
For now advertisers and agencies are left with the hard truth that 8 out of 10 DVR buyers took the plunge to avoid ads, according to media agency MindShare. MediaCheck's Weinblatt has a possible solution for that, too. Besides delivering ad ratings, his digital boxes also let an advertiser offer consumers coupons, product samples, or discounts.
The box flashes a light at the TV viewer indicating there is a reward for watching the ad. A few times a week, the consumer can pull a memory stick from the box and plug it into a USB port on a computer. Up pops a list of loot earned by watching the ads. In the Omaha test, 600 of 2,500 households checked their haul of goodies daily. And 52% of the coupons printed out from the system were redeemed -- 50 times the national rate for newspaper coupons. Because the box is cheap to produce, says Weinblatt, the system, which essentially pays consumers to watch ads, could be scaled up to millions of homes. If ratings don't force advertisers and agencies to make more compelling ads, just paying consumers for their time could be the next frontier.
By David Kiley