Truth vs. facts: The sequel

Back in April, we commented on TiVos impending challenge to the Nielsen TV rating hegemony in influencing advertising rates: Truths + Facts: Belief systems being challenged [here].

Now, the worst fears of those who extract value through an opaque relationship between TV ad impressions and ad performance may be realized: Google is entering an agreement with TiVo to use its data on ad-skipping in a pay-for-performance manner [here].

So What?

The implications of better data on which TV ads are being seen (as opposed to skipped) exist on a plus or minus scale of positive to negative impacts...if you sell ads based on extrapolated audience deliveries (e.g., based on Nielsen Household Survey data) it may weigh negative. If you want to pay for performance, you'd certainly think it was a positive to have data supporting the invoice.

Of course these are the self-evident truths we hold when stereotyping TV as an old school sales game and Google's pay for performance model as the all knowing oracle of answers to questions we haven't even thought to, er, Google.

Here's three reasons I think TV networks will find a deal like TiVo-Google a good one:

1. TV networks can objectively support their advertising value in the pay-for-performance era and define themselves as a viable part of that mix.
2. Knowing under what circumstances ads work (i.e., which ads don't get skipped) can help networks create more flexible ad packages around second-by-second behavioral data...a single advertiser with a consecutive series of 2, 7, and 50 second spots in a pod might make as much sense as multiple advertisers in a single pod. 
3. Flexible pricing models that enable auction-style bidding (similar to pay per click search marketing) may bring new advertisers to the networks by removing cost barriers.

Certainly there are many other positive implications to be realized. And while it's easy for some to incessantly describe the imminent doom of Big Media, the reality is that knowledge, accountability and transparency are good for everyone in the long run. The alternative---ignorance, irresponsibility and trading in secrets--has no productive place in a social construct--like advertising--that relies on trust.

When down still means up: 4Q08 online ad revenue

The web is not television...or print...or radio. And so it's not surprising really that online advertising revenues might follow a different trendline...even in the face of the steepest economic downturn in modern times (insert ominous bell tolling here).

The IAB and PricewaterhouseCoopers (LLP, dontcha know) reported that 4Q08 online advertising grew at a 3% pace over the same period in 07 to $6.1 Billion (full year report here). And while 3% up when the overall economy was down by at least that much would be good, the subplot is even more meaningful: 

Revenue from search, which makes up the largest segment of the online advertising market, rose 13 percent to $2.8 billion. Revenue from banner ads, fell 4 percent to $2 billion. In fact, for the full year 2008 every other category of online ad format--rich media, digital video, email and sponsorships--was down over the same timeframe in 2007. 

Source: Pricewaterhouse Coopers/IAB

So What?

Certainly one quarter doesn't make a trend...at least let's hope not for 4Q08...But it does seem consistent with a theme: one of our Marketing Themes for 2009 even! (here). In addition to some of the previous postings on ad deflation and banner blindness, the challenges to traditional models moving online are simple: pay for performance versus pay for impression (or pay for annoyance, in the case of intrusive ad formats). In times like these, business performance anxiety among CMOs and other indirect-revenue functions can be...heightened.

Having hard data on what you got for your ad dollar--even if it's still indirectly correlated to sales--beats assertions about marketing impact...at least it will if you report to a CEO or CFO...or shareholders...or banks...or government stewards!

Ads online are good...when they perform for everyone involved. Useful and usable to prospects. Trackable results to advertisers.  Innovative pay-for-performance pricing models, like search ads or from vendors like AdFusion, will continue to gain share from advertisers regardless of the overall advertising revenue direction.  In times like these, performance model purveyors will gain share because they put their pricing model where their mouth is. I think that's a good thing.

Times like these indeed.