“Data Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today's column is by Mark Trefgarne, CEO of LiveRail, a provider of a supply-side platform for video.
The need for online GRPs has come clearly into focus this year. Solutions like ComScore VCE, DoubleVerify VRF and the emerging market leader, Nielsen OCR, have seen significant adoption. This movement proves that for advertisers, the ability to unify TV and online metrics provides significant value. Finally, advertisers can buy and measure online video identically to television, making it easier to merge TV and online planning and ultimately extend TV budgets to the web.
Thanks to partnerships with data providers like Facebook and Kantar, these solutions give advertisers a post-campaign breakdown of the age and gender of the audience reached by their ad. These products can then extrapolate to obtain reach and frequency data for the audience as a percentage of the population, expressed in terms of good old GRPs.
Voilà! Online video audience measurement is now "apples to apples" with Television. Everyone's happy, right? Actually, no.
GRPs are proving difficult to adapt to for online publishers. They fail to account for the biggest single difference between Television and Online Video; the ability to target individuals. This shortcoming has created a wave of semi-panic among the inventory management teams at major publishers. Without the ability to target, how can you avoid wasting inventory by showing ads to the wrong audience? And when buyers insist on paying based on GRP measurement, as they are increasingly doing, the result is lost dollars for publishers.
Here's how it typically happens: The agency will inform a publisher prior to a campaign launch that it wants to reach two million males ages 18 to 24, but the GRP measurement vendors won't provide guidance to a publisher about which individuals/streams it has determined will match that target. Instead, the publisher often must show the ad to millions of viewers and hope that there are enough males ages 18-24 -- as defined by their GRP measurement vendor. They can only find out if they were successful post-impression and in the meantime they've filled millions of inventory slots with ads for which they won't get paid.
For premium publishers who've spent the better part of a decade perfecting a science around how to optimally match each individual inventory opportunity to the highest value ad - this new approach is seriously counterintuitive.
One major publisher tells me, “We are seeing a hit rate of approximately 30% while the buyers are expecting to see a hit rate of 80% to 100% on their buy. This means we waste anywhere from 50-70% of the delivered inventory and eCPM drops by 300%. This brings us to a place that we have to triple pricing for buys that require an 80% hit rate in order to compensate our publishers.”
The response from those promoting GRP-based measurement has been that publishers need to "adjust to a pricing model that accounts for inventory waste." However, for a medium built around one-to-one user delivery, a model that requires enormous waste of a premium publisher's limited video inventory is proving hard to swallow. And telling advertisers they will have to pay 2x to 3x more per in-target impression (to make up for the value of the impressions they got but did not want) is hardly an appealing solution either.
For publishers, there appears to be no perfect solution on the horizon. Wasted impressions will be unavoidable without the ability to know whether a given user is in the targeted audience for a specific campaign pre-impression. However, due to the privacy policies of the root data providers, pre-impression data is unlikely to ever be made available.
It’s time we had a discussion as an industry about how to address this. If GRP is to succeed as a metric (and it must if we want TV dollars to flow to online) then it needs to consider the needs of all participants within the ecosystem. A solution that caters to advertisers without appreciating its impact on publishers is no solution at all.
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