Starcom Courts Guarantees

Jun 6, 2005  •  Post A Comment

In a deal that could mark a change in the way media is sold, Court TV has guaranteed Starcom media agency that viewers will not only see ads during Court TV shows, but pay attention to them.

Starcom, one of the largest buyers of national television, whose clients include Kellogg’s, Allstate, Walgreens and Sara Lee, agreed to an upfront purchase worth at least $20 million that is pegged to a formula measuring viewer engagement in addition to the ratings computed by Nielsen Media Research.

Advertisers have been questioning the cost and effectiveness of traditional 30-second spots and looking for ways to measure the sales they get in return for their advertising buys. They’ve also talked about shifting spending to other forms of media with more accountability, including the Internet.

Broadcast and cable networks have been talking about providing more information about return on investment, but “as far as I’m concerned, Court TV is really the first network to put their money where their mouth is,” said John Muszynski, CEO of Starcom USA.

“Everyone talks about the advantages their network brings to the table-and Court TV was among them, doing the same thing-but they have actually said, ‘We’ll guarantee it. We’ll take the schedules that we’re selling you and we will guarantee it against different metrics,'” he said.

Court TV’s executive VP for ad sales Charlie Collier, said the deal represents a milestone for the industry. “It proves that we can have a conversation about accountability because we know that television works,” he said. “And the more we can show how and how best to use it and how we’ll back it up as an industry is good for the agency business and it’s good for the network business and its good for building clients’ business.”

“If you really look at where things are going, guarantees are going to be based on engagement in the future. They just are,” said Mr. Muszynski.

“We’ve got to start doing some sort of benchmarking so we can move away from this current model. We’re not abandoning the [cost per thousand] model, but we are evolving it, and this is the first step,” he said. “Three, four years from now we may look back on this and say, ‘can you believe how archaic that move was?’ But the fact is it’s the first move.”

The importance of the deal to Starcom was underscored by the fact while most upfront deals with cable networks have not been negotiated yet, this deal was done two weeks ago.

“We are not paying more on a typical cost-per-thousand measurement, but we are in fact partnering with them in a bigger way through greater investment,” Mr. Muszynski said. “The point, though, is we’re spending more money with them and we’re partnering with them.”

According to TNS Market Intelligence, Starcom clients spent about $17 million on Court TV last season.

Viewer involvement has been part of Court TV’s pitch for the last couple of years. The network claims that its investigation programming keeps viewers watching through commercial breaks because they want to know ‘who done it.’ That leads to a relatively high average length of tune-in among its viewers. The network also pointed to qualitative research showing that viewers were very engaged with programming in the investigative genre and said that involvement would transfer to the commercials that run on the channel.

“No commercial is effective if people don’t see it,” Mr. Collier said. “The union of someone who’s exposed and someone who’s paying attention is this involved viewer, and really to a large degree for television that is the Holy Grail.”

The pitch resonated with Starcom. “Clients are asking ‘are our ads being seen?'” said Sam Armando, VP/media director and director of television research at Starcom USA. “At the same time we started getting a lot of information from Court TV on their attentiveness levels to their programming given the type of programming it is. And so in talking to them we sought to try to measure attentiveness, loyalty to their programming and how it relates to attentiveness to the ads, and in doing so we decided to measure attentiveness to programs and actually get a guarantee based on that element.”

During its upfront presentations Court TV came up with a formula for putting a value on its more involved viewer, multiplying the typical cable CPM by measurements that took into account viewer interest and involvement in programming, receptivity to advertising and brand recall.

The deal with Starcom uses a similar formula to quantify engagement. “We’re trying to measure something beyond price and cost per thousand and exposure and it focuses on the number one thing, which is effectiveness,” Mr. Muszynski said. He declined to describe the formula but said it takes into account engagement, attentiveness and recall.

“We do not think in any way, shape or form we have the perfect metric. We have a stake in the ground. We’re making progress and we’re trying to gain some learnings,” he said.

If Court TV’s ads don’t deliver the guaranteed number of involved viewers, the network will have to provide make-good spots. If they deliver the right number of involved viewers, but fall short of the number of gross rating points promised, it will also owe make-goods, but “if we are convinced that what we’re getting is more engaged viewers we will work with Court TV if they’re falling short of the typical exposure model,” Mr. Muszynski said.

Eventually both Starcom and Court TV would like to find a way to track the way advertising affects sales.

“I think that is the goal,” Mr. Collier said. “The purist of ROI is ‘you place a spot, you get a sale.’ We are nowhere near that, but this is a start down that road to greater accountability and greater effectiveness.”