Forget General Motors – Nielsen’s online currency metric will bail out Facebook

May 22, 2012

With Facebook’s share price in an 11% freefall (when I last looked), thank goodness for OCR. That’s what I say. And maybe it’s the mantra nervous Facebook investors should be chanting, too.

OCR? No not Optical Character Recognition, silly – Online Campaign Ratings. It’s the new Nielsen media metric with which the research giant hopes to corner the elusive online ‘currency’ market. And it’s being backed by one of the ad industry’s biggest traders, WPP’s GroupM – which is a good start if OCR is to gain credibility.

Acquiring a universally accepted trading ‘currency’ – sometimes referred to as a “gold standard” – is an important breakthrough for a new medium. No matter how fast it has been growing, or how trendy it has become, its effectiveness will be (rightly) disputed by advertisers and media traders alike in the absence of any agreed benchmark. The result being a tethered and volatile ratecard.

It might seem a fine distinction, but there is a world of difference between what we have at the moment – which is a medium whose value is defined by analytics – and one which is regulated by currency. Analytics are proprietary: they do not command universal respect and are therefore open to debate. The finer points of currency may certainly be subject to academic criticism (look at the BARB ratings system governing UK commercial TV) but no advertiser or trader seriously questions its status. If they did, we might have a pocket version of the euro-crisis on our hands.

With a currency in place, a behavioural change takes place in trading. The key word is “guarantee”. In the network TV market, for example, all three elements to the media deal – media owner, advertiser and trader – have sufficient confidence in the system to make “upfront” or forward commitments into the future, usually a year ahead. The guarantee is the delivery of a specific kind of  audience in sufficient numbers; failing which, a financial penalty will be imposed on the media owner and, increasingly, on the trader.

In that sense, AOL’s recent decision to offer guarantees on online advertising delivery, covering certain agreed demographics such as age, gender and social type, was highly significant.

As is GroupM’s proposal to make joint TV-digital “upfront” buys, the plan being to compensate any shortfall on the TV-side with OCR-defined ratings acquired from digital platforms.

So what has all this got to do with the Facebook share price? With over 900 million registered users, among them half the population of America, Facebook forms the backbone of the online display advertising market. No advertiser can easily afford to leave it off the schedule. Dean Evans, chief marketing officer of Subaru of America, is typical in his attitude: “If half the US population is on Facebook, you have to work it to learn it.” Hence Nielsen’s decision to make Facebook data its OCR “tentpole”.

But what if one of the world’s biggest advertisers defies the orthodoxy, and pulls out of Facebook display – what then? There’s no doubt that General Motors’ announcement last week has had a profoundly destabilising effect on Facebook, all the more so as it came shortly before the much-hyped market flotation.

Actually, GM spends very little of its advertising budget on Facebook display: about $10m a year out of an estimated $3bn. Indeed, it spends more on its Facebook pages ($30m a year in content provision), to which it says it is still firmly committed. But that’s not the point. What if other advertisers, taking GM’s lead, start a Gadarene rush to the Facebook exit? GM’s announcement has, in a nutshell, reinforced a growing conviction within the investment community that the Facebook IPO is “Muppets’ bait” (to use Business Insider founder Henry Blodget’s singular phrase).

In point of fact, many fellow advertisers (particularly those in the auto industry) see GM’s surprise move as motivated less by an ideological stance on Facebook display ratings than by its global chief marketing officer’s desperate determination to wring $2bn out of marketing costs over 5 years. Joel Ewanick (for it is he) has a well-attuned eye for catchy headlines, and few could have been more catchy – as the lengthy piece in the Wall Street Journal clearly demonstrated – than his bombshell last week before the IPO.

But now that the second shoe has dropped, we have a better idea of what Ewanick is up to. He has just announced (to his favourite journalists at the WSJ again) – and presumably at his new media agency Carat’s behest – that the Super Bowl is way too expensive as well, and he won’t be participating in that either. Some doubt that he means exactly what he says. They believe he will only pass on the Super Bowl in the sense that Nike passes on the World Cup. But let’s put that aside for now. Taken at face value, what Ewanick is telling us is that neither Facebook nor the Super Bowl sell enough GM vehicles, because they are both massively overpriced.

That may well be trivially true. But display advertising has never been simply about shifting metal (or any other branded product for that matter). It’s also about maintaining and propagating your image. The question for Ewanick is not whether he can afford to skip Facebook and the Super Bowl, but for how long.


New Nielsen ratings system knocks the spots off online ad targeting

August 8, 2011

So who said audience measurement had to be boring?

Nielsen, the world’s number one provider of the stuff, has just launched something called Online Campaign Ratings. Now I’d be the first to admit that doesn’t sound the most riveting event since Janet Jackson last maladjusted her wardrobe in public.

But stay with me. This is a well and truly iconoclastic product. No, really.

It knocks for six all those vapid, complacent notions we had about online display ads being somehow better targeted than the mass-market ones featured on television.

What NOCR, which launches to US media buyers on August 15, does is combine anonymously-sourced US Facebook data with traditional TV-style ratings reporting in a novel way.

The jaw-dropping conclusion to be drawn from the new metric, according to Nielsen president of media products and advertiser solutions Steve Hasker, is that just 30% of branded display advertising aimed at specific age- and gender-defined demographic targets is hitting its target. Compared with mass market campaigns that are 75% efficient.

Aside from bringing joy to the heart of Tess Alps and her friends at TV-advertising ginger group Thinkbox, the new metric also has implications for niche and specialist online publishers. Their ratecards will stiffen as the flim-flam stuff targeted at general audiences is exposed for what it is.

Early heads-up from media specialists, such as managing director EMEA at Essence Joseph Leon (quoted in New Media Age), is positive:

Facebook’s pervasive reach means that any campaign able to overlay Facebook profile data will benefit from a huge, natural sample group, overcoming two of the key issues with previous solutions: sample sizes and the potential bias of an incentive-based panel. I think it also highlights the inaccuracies and frankly debatable effectiveness of some of today’s campaign planning methodologies, which regularly depend on incentive-based panel solutions, to identify target audience media consumption.

Dominic Finney, co-founder of digital benchmark specialist FaR Partners, is also upbeat but a tad more cautious in his outlook:

The challenge would appear to be partnering with just Facebook, which potentially could limit Nielsen’s OCR’s findings as it will only have Facebook as a third party provider and Facebook currently only reaches around half of US users online.

Only a half of all US users online, eh Dominic? Not a bad start though, since Comscore, Kantar and the rest of the gang are going to have to play rapid catch-up. And, given that Nielsen has signed an exclusive deal with Facebook and has promised other third-party metric providers are on the way, that sounds to me like a clear market advantage.


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