Book Excerpt: Who’s Selling, Who’s Buying, Who’s Counting

Jun 4, 2007  •  Post A Comment

David Verklin burst upon the ad media scene almost 20 years ago as one of its young Turks: brash, outspoken, optimistic and smart as all get-out. Back in those days he was helping put the legendary Hal Riney ad agency in San Francisco on the media map.
Today Mr. Verklin is CEO of Carat Americas and chairman of Carat Asia-Pacific. Carat is the sixth largest media agency in the U.S., according to Advertising Age. That’s quite a feat, considering its parent company has none of the formal ties to creative shops that most media agencies have.
And Mr. Verklin is still brash, outspoken, optimistic and smart as all get-out. Furthermore, he’s actually a little older now—though, amazingly, you couldn’t tell by looking at him.
Most recently Mr. Verklin, along with the late well-known marketing writer Bernice Kanner, has written a book titled “Watch This, Listen Up, Click Here: Inside the $300 Billion Business Behind the Media You Constantly Consume,” published by John Wiley & Sons.
The idea behind the book—which was Ms. Kanner’s idea—was to reveal the “behind-the-scenes tribulations of media minders as their landscape morphs before their eyes into something they wouldn’t have recognized a mere five years ago,” she wrote.
In the following excerpt, Mr. Verklin and Ms. Kanner tackle the long-held faith in gross ratings points and cost per thousand and, as the two co-authors wrote, “why our eyeballs stopped counting” for companies that want to sell us products and services.
We are indebted to Mr. Verklin for granting us permission to run this excerpt.
—Chuck Ross, editorial director and publisher
Since Court Television Network launched on July 1, 1991, it has become identified with trials of the rich and famous (Michael Jackson) and the particularly vicious or snarky (Scott Peterson). Although available in nearly 80 million homes, it has never been a ratings blockbuster. At their peak, its highest-rated shows, the original series “Forensic Files” and “Psychic Detectives,” attracted at best 1.2 million viewers each.
In the spring of 2005, Court TV took a risky step concocting the mix that it was offering viewers. It split into two distinct programming entities: daytime agenda, devoted to trial coverage and news, and its evening and weekends block, given over to original narrative drama reality and its own tagline, “Court TV: Seriously Entertaining.”
It took an even riskier step in what it was offering advertisers: both the traditional guarantee of ratings points and a minimum of engaged viewers—that is, that viewers will not only watch the programming but that they’ll watch the ads within it … guaranteed. Court TV had its back to the wall. It needed to break from the welter of cable channels competing for ad dollars. If Court TV were to fall short on either front, it would owe the advertiser a hefty “make-good” of free ad time. If it met its goal, advertisers agreed to send more ads its way.
Happily for Court TV, 97 percent of its schedule met or exceeded what it has promised. Impressed, Pfizer upped its commitment to the network, and agreed to help sponsor the launch of the third season of its “Psychic Detectives,” including a “Psychic Circle” stunt at Time Warner, where 50 psychics read tarot cards, palms and passersby’s fortunes. IAG Research suggests that the show, about real-life crimes that psychics and law enforcement officers joined to solve, engages viewers more than the average broadcast show does: 10 percent higher when it comes to viewer attentiveness and 21 percent higher for brand recall of the commercials within the show.
Court TV has been peddling “involvement” for some time, claiming that viewers stay riveted to its investigative shows to learn “who done it” and that that intense focus transfers to the commercials surrounding the show. Only recently has the rest of the ad community caught up and come “courting.” The rules of engagement have changed. In a headlong rush for accountability, ROI today could just as easily stand for return on involvement as return on investment.
Virtually since television flickered into America’s living rooms more than half a century ago, advertising time on it has been sold on the basis of audience size translated into gross rating points and CPM (cost per thousand). But lately marketers have become less interested in the number of eyeballs that see a screen or hands that touch a page and more interested in the behavior of the owners of those hands and eyes, and how the ad message connects with them. The Advertising Research Foundation calls engagement “a search for 21st-century GRPs” (gross rating points).
The Dashboard Light
The conundrum that retail magnate John Wanamaker voiced almost a century ago—that half his marketing budget was wasted, he just didn’t know which half—still weighs heavily on marketers today. But now, they’ve got the tools to find out.
The need has never been more pressing. A recent survey of CEOs identified their most urgent developmental priority as making their marketing more efficient. Under tremendous pressure to produce results pronto or vacate the chair, CEOs are demanding to know the return on every marketing dollar spent. Almost half of companies with sales above $500 million are “creating a dashboard,” lingo for a performance measuring system.
Advertisers have long distrusted the system. Costs for TV time kept climbing. The advertisers’ voice has faded to dim. Wielding just the remote control, more than three out of four TV watchers often mute the sound during commercials or surf to other channels, or use that time to grab a snack or use the bathroom. Those with a digital video recorder largely skip the ads altogether. And even when they’re watching, chances are it’s not with their undivided attention. Studies show that the average American adult does 2.5 additional activities while taking in a TV show. (They’re involved in three additional while surfing the Net.) Younger people cram in even more than the 39 hours of activity that the typical adult does in a day by constant multitasking.
At the same time, a plethora of other media highways, like video games and cell phones, have materialized and they provide real accountability. Clicks on the Internet indicate not just who is glancing at a Web site, but who is engaged, who is acting on it. The closest TV has to demonstrate the effects of its “suggestions” are the Home Shopping Club and its clones, infomercials, and the late-night Ginsu knife or BowFlex home gym-type direct response ads or long-form infomercials.
Although disdained as media’s cheapest slum, this “real estate” is gentrifying. The Little Giant Folding Ladder that rolls on built-in wheels and can hold a 300-pound man, and folds up and stores under the bed, still struts its stuff here, along with Proactiv Solution acne treatment (hawked by Jessica Simpson and Diddy), the Gazelle Freestyle exercise machine, and all manner of get-rich-quick schemes. But classy residents have started moving in. Procter & Gamble is promoting mainstream lines like Cover Girl, Iams and Old Spice here. And the success of the George Foreman Grill made the neighborhood seem more eccentric than scruffy. Indeed, one in four American viewers has bought an infomercial product — which took advantage of their boredom — and the Leisure Trends Group says viewers trust these long-form ads more than they trust Congress, used-car salesmen or corporate executives.
En Garde!
Marketers trust them because feedback from them is instantaneous. Studies show that at least 85 percent of infomercial-inspired purchases are made within 10 minutes of the end of the program. That means, if it’s not making the phone ring, it gets pulled … immediately.
In the Darwinian evolution of advertising, it’s not hard to see why more and more commercials will incorporate some form of direct response, like a toll-free number or URL.
Surprise, it seems, breaks though clutter because of something experts call peripheral apperception. When something on the fringes of your field of perception doesn’t fit with what you expect, you are en garde. And when you see an ad for something you’ve been shopping for lately, but in a context where you don’t expect to see it, it grabs your attention more than when you see the same ad in an environment where you expect to see it.
Another thing few can agree on is whether engagement with a medium has any spillover effect or whether media engagement and advertising engagement are different. If a person is absorbed by a show, article, song or chat, does it follow that he or she will be immersed in the ads surrounding it?
A 2006 Starch Research study suggests not. Starch found that advertising in high-engagement magazines didn’t perform any better than ads in magazines where the readers paid a lot less attention. Some miffed publishers snapped back that those findings defied common sense and were akin to claiming there’s no definitive evidence that smoking causes cancer. Yet in homes with digital video recorders, shows that are said to be most engaging (high-rated sitcoms and dramas and movies) are the most frequently time-shifted with the commercials fast-forwarded through.
The Weather Channel came out with a sunnier, self-fortifying conclusion. It found that deeper viewer involvement in a TV program—that is, watching with a purpose—translates into higher recall of ads in those shows and increased engagement with advertising. Not surprisingly, since viewers tune to this channel for specific information that affects their lives, more than two times as many watch with a purpose as are deemed purposeful viewers of conventional TV.
Another reason why the eyeballs taking in shows (i.e., TV ratings) stopped counting as the way to price advertising is because researchers can now confirm who is actually staying put during a word from the sponsor. Nielsen now provides a “minute-by-minute” audience measurement to ascertain who is staying tuned. And Pre-Testing Co.’s MediaCheck service has digital boxes in 35,000 households in a handful of cities wired to TVs to monitor how the people who own those sets respond to ads, both on live TV and in programs taped on digital video recorders. Daily tallies let advertisers decide to put more money behind winners, kill losers or try them in different time slots.
Burger King discovered that while admeisters applauded its ad where members of the fictional Coq Rock rock band donned chicken masks, viewers did not. Less than half the number of those who stayed through a conventional Burger King spot followed this one (6 percent vs. 12 percent).
A 2005 MediaCheck test in Omaha revealed that the main reason viewers skipped ads was that the spots were dull or tired—that they’d seen them too often. (MediaCheck can also induce ad viewing by “paying” consumers with coupons, product samples or discounts. In the Omaha test, 52 percent of the coupons printed were redeemed—50 times the national rate for newspaper coupons.)
MediaCheck is on to something, recognizing that there are lots of ways to change a channel, or in this case, engage a viewer. And their way may well become the highway. After all, we all know that no commercial is effective if people don’t see it. A market as fluid as the one we’re living in needs predictive tools to ensure that when the marketer builds it, they will come.


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