Auditors Question Ad-Buying Logic

Sep 20, 2004  •  Post A Comment

Given the push for greater accountability in media planning and buying, a new breed of auditor has emerged that is beginning to track, analyze and question some traditional agency practices. Unlike their predecessors, which were focused primarily on compliance audits verifying whether an advertiser actually got the media that the agency planned and bought, this new generation of auditors is monitoring how well media buys actually perform in the marketplace.

These auditors are probing every facet of media plans and buys to ensure that agencies are delivering maximum returns for clients and are beginning to question some of the logic used by planners and buyers, as well as offering them some new direction and guidance on how to improve their process.

These performance monitors, who are being retained by big consumer marketers, are relatively new to the U.S. marketplace, but they are rapidly having a profound impact on advertising plans, questioning obvious elements of a media mix, such as whether a TV schedule included the best mix of shows for an advertiser or a brand, as well as other rarely documented aspects of a buy.

One of these firms, Media IQ, which was founded two years ago by former agency media chief Michael Lotito, recently developed a unique database that its clients are using to track and evaluate what is increasingly becoming a sore spot among advertisers, agencies and networks: where and when an advertiser’s ads are placed in a commercial break.

The database, which analyzes where commercials run in network advertising breaks for all advertisers and brands on the major TV networks, so far has served as an internal management tool for Media IQ’s clients and their agencies. But beginning this month the firm plans to make some of its top lines available to the public, including a report that shows how each network treats each of the major advertising categories.

An example of that report, which Media IQ previewed to TelevisionWeek, reveals some striking patterns among the major broadcast networks, as well as for the major ad categories. It also disproves a fundamental part of most network advertising agreements: that an advertiser’s ads will get an “equitable” rotation in a network’s commercial pods.

To determine such equitability, Media IQ has developed scores based on the percentage of an advertiser’s commercial schedule that get the first position in a commercial pod. The first spot, or what is commonly referred to as the “A” position, is considered to be much more valuable than other commercials in the pod, because viewers are known to linger on them longer before they switch channels or fast-forward using a DVR or a VCR.

“The little we know about channel-changing and zapping tells us that the first announcement and the last announcement have a greater impact,” acknowledged Shari Anne Brill, VP and director of programming at media-buying giant Carat USA. “All the old evidence that’s out there indicates that the bulk of the channel-switching occurs in between those two bookends.”

“The assumption,” she noted, “has always been that everyone is getting an equitable rotation in the pod.”

As the Media IQ data reveals, that is anything but the case. The actual percentage of “A” positions that is equitable, or average, said Media IQ’s Mr. Lotito, varies based on how each network manages its ad inventory, including the amount of commercial time it sells, the number of units of varying lengths and the type of daypart in which they air. But on average, he said, about 21 percent of a typical advertiser’s commercials will run in “A” positions.

According to Media IQ’s report, the actual average for advertising categories on each network can vary considerably, with some averaging far more or far fewer “A” positions than what could rightfully be deemed equitable.

For example, nearly half (48 percent) of the ads garnered by the entertainment category on UPN were in “A” positions, according to the Media IQ report, which essentially covers the official 2003-04 season, from October 2003 through June 2004. On the low end, only 14 percent of soft drink category commercials airing on CBS ran in “A” positions.

“That’s really surprising,” said Mr. Lotito. “Soft drinks aren’t as big a category as they once were, but you still think of them as being huge and influential. But they’re not being treated equitably by the networks.” In fact, soft drinks ranked ninth or lower in terms of share of “A” positions among the 13 largest ad categories advertising on five of the six broadcast networks: CBS, NBC, Fox, UPN and WB. They ranked seventh on ABC.

Other major categories that don’t appear to get their fair share of prime commercial positions are financial services and computers. Categories that typically get better than average positions are entertainment, which ranked No. 1 on all the networks except one (NBC), retail, drugs and automotive. But the treatment is far from uniform among the networks. Autos, for example, ranked only eighth on Fox and 11th on The WB Network, while retail ranked 11th on Fox and drugs ranked 12th on NBC.

Mysteriously, the entertainment category, in which the major movie studios are known to pay top dollar to secure the best commercial positions possible, ranked only fifth on NBC. The top category in terms of pod position treatment by NBC is telecommunications, which ranked poorly among the other networks.

“It would be fun for us to guess why they do that, but that’s not the important thing,” Mr. Lotito said. “The important thing is that the agreements we have with the networks say that they will make equitable rotations, and the reality is they don’t do that.”

Overall, Media IQ finds that NBC has the most equitable rotation among the major advertising categories, with relatively little variation among the biggest ones, which all average well above equitable rotations. On the other hand, Mr. Lotito noted that means NBC is mistreating smaller advertising categories.

To date, such data has been used mainly on an internal basis between advertisers and their agencies, and generally is a flag for their buying departments. However, some observers believe it could begin to impact how agencies plan network buys, or even network TV across the media mix, as the data becomes more publicly available.

“I think it comes down to accountability,” said Brad Adgate, senior VP and corporate research director at Horizon Media. “If you can put your arms around the fact that you’re not getting the return on your investment as much as your are in other media then it is absolutely a planning issue. And pod position may have something to do with it. If you can put your finger on it.”