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Massaging The Buy

There are some in the advertising industry who yearn for days when “shifting metrics” referred to the failed U.S. conversion to the metric system. But new ad metric models are resodding the long-standing TV advertising playing field, with networks and advertisers at loggerheads about how—and how much—to get paid.

David Verklin, CEO of Carat Americas, the world's largest independent media buying agency, is an interested observer of the action. In his new book Watch This, Listen Up, Click Here: Inside the 300 Billion Dollar Business Behind the Media You Constantly Consume (written with Bernice Kanner), he posits that the future of advertising and marketing will be as “significant, scary, unstable, fruitful, imaginative and innovative” as it has in the recent past.

Verklin talks to B&C's Marisa Guthrie about these shifts, the future of advertising, and why the industry is moving toward a Web-based ad model.

Was the shifting metric a roller coaster for you during the recent upfront or did you look at it with a yawn because you knew where it was going?

It was a bit of a horse trade really. I would argue that there are two bits of gravity pulling the advertiser moon everyday. The first is this concept of advertising to the interested: Putting dog food commercials in front of people who own dogs. The second is the trend of our entire culture, which is “watch what you want when you want to watch it.” So when you look at advertising to the interested, one of the most important parts of that is commercial ratings. The upfront was a seminal moment not because of the C3 metric [commercial-minute ratings with three days of DVR playback]. It was the commercial rating moving to the data that, in my opinion, was a watershed, because it takes us more toward only paying for people who are interested.

There has been some hand wringing over the accuracy of Nielsen's commercial ratings. And some companies have done deals based on second-by-second data. Will Nielsen continue to dominate?

[Nielsen] is the playing field. But you have to remember that MSOs [cable operators] basically have a superior product. If Time Warner and Comcast take the data that they can receive from their set-top boxes—who is watching the commercials on a second-by-second basis—you have a superior, census-based system. I'm not convinced that Nielsen, over the next 32 to 48 months, will not have a potential competitor with MSO cable data.

How do you think the industry is doing in integrating advertising into streaming video, which seems to be not much integration and a lot of ad interruption?

If people want to see a video, sticking an ad in before they can do that is a bad idea. You have to get people to opt in or to put ads in front of people who are interested in your product.

How can this kind of micro-targeted advertising support such very expensive content?

You're going to see much higher, effective CPMs [cost per thousand viewers]. The calculation takes the waste out of the equation and educates the client as to what they're really paying to reach a target audience. The effective CPM concept begins to address the dirty secret that no one's ever wanted to talk about in the American TV business, which is waste.

What will the industry look like in the future?

I believe the ad business is moving to being consumer-centric and digitally led. Consumer-centric, you study who your target is, and digitally led, you start your media planning with digital media and work your way out. It's the difference between buying time and creating time. Buying time is what we've always done. Creating time is to try to push the consumer into a place where I can have a much longer dialogue.

Media owners in television figured out the Web very quickly. If you look at ABC, CBS, NBC, Fox, they've done great on the Web because they grew up in a place where you create content, put it out for free, and people pay you for it in advertising. That's what I call 'embracing the click.' Look at the Wall Street Journal; I believe that as soon as Rupert Murdoch takes control of the Journal, will become a free service.