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Omnicom’s Thompson Urges Upfront Currency Change

Mar 6, 2009  •  Post A Comment

The CEO of the biggest media agency in the U.S. is advocating a radical change in the currency upon which deals are brokered at the upfront television advertising market.
Page Thompson, CEO of Omnicom Media Group North America, said that given the current economic climate, media agencies have an obligation to force broadcast and cable networks to sell their time in the upfront using return-on-investment metrics, not the ratings performance of the shows.
Mr. Thompson made the proposal, which would radically alter the business of television media buying, at the closing panel this morning of the annual media conference of the American Association of Advertising Agencies in New Orleans.
He was quickly rebuffed by Irwin Gotlieb, the Global CEO of Group M, who said deals can’t be brokered on the basis of return on investment because “you can’t get a currency based on ROI.” Group M is made up of the media agencies MindShare, MediaCom, Mediaedge:CIA and Maxxus.
In recent years, some cable networks have moved away from basing advertising time sales on ratings alone, adopting various metrics that touch on return-on-investment.
A media agency can be paid by its clients based on ROI results even if deals aren’t struck based on that currency, Mr. Gotlieb said. Furthermore, just looking at ROI “oversimplifies what we do,” he said.
Mr. Gotlieb noted that there needs to be a distinction between long-term and short-term advertising effectiveness. Sometimes one needs hypertargeting and sometimes one does not, he said, adding that some messages still need to rely on reach and frequency, while others focus more on immediate sales.
Consider the example, Mr. Gotlieb said, of a 45-year-old who realizes that he or she can purchase a luxury car. Even though the person is 45 before he or she can make this purchase, brand-building for luxury cars needs to be in that person’s consciousness for decades.
(Editor: Baumann)
[Title corrected in second paragraph at 1:11 p.m.]

2 Comments

  1. What exactly are the criteria Mr. Thompson is envisioning for an ROI currency for TV? Given the variables involved I am interested in how the programmers/distributors can be held responsible. For example, what exactly is the goal for a TV spot: drive Search? drive store traffic? drive online sales? brick and mortar sales? online research? awareness of new product intro? Recognizing all or any of the above, how does an ROI on a TV buy reflect creative performance for the ad? Is the message right? Is the execution engaging? for the other ads in the pod? for buying the wrong programming because the agency/client are cpm driven on broad demographics? for being outspent by the competition? for macro issues, such as a snowstorm on Black Friday? Distribution challenges in-store?
    Etc. etc. etc. Greater accountability for TV performance is in everyone’s interest but a lot of the hard work still needs to be done by the clients and agencies in terms of modeling the levers for individual brands. I simply don’t understand how we can hold American Idol responsible product XYZ’s sales…
    I suppose if every pod is restricted to two ads and can’t be skipped etc. it could become an ROI proxy, of course the CPM would more than treble to maintain viewer satisfaction and thus we would begin again…
    This just doesn’t feel realistic to me.

  2. The problem with ROI is that the I is easy to measure, how much money is invested in the buy, but the R is not. Further, ratings are the best metric for measuring Return, and what Page is really suggesting is that another ROI metric be developed wherein Omnicom clients will pay less money for more air time. Nice try.

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