Copyright © Information Resources, Inc. 2005. Confidential and proprietary. 1 March 01, 2005 The Channels They Are A-Changin’ ANALYTIC SERVICES Presented

Copyright © Information Resources, Inc. 2005. Confidential and proprietary.

1

March 01, 2005

The Channels They Are A-Changin’

ANALYTIC SERVICES

Presented by: J.P. Beauchamp

Panel & Test Solutions Group

Information Resources, Inc.


2

Objectives

Can the 40 year old TV business model, both recalcitrant and petulant, survive to see 50?

What of technology: Can new media be held accountable?


3

Agenda

The Death of Mass Media

The New Television Revolution

Media Accountability•Market Researcher’s Obligations

BehaviorScan.com

TV 2006

Radio Advertising Effectiveness Lab


4

The Death of Mass Media


5

The Halcyon DaysIn 1965, the average network

commercial break in primetime contained one :60 commercial.

This equated to 18% of non-program content.

And only 17% viewing done by individuals


6

But My How Things Change61% increase in clutter over the past forty years

29%28%

22%

18%

1965 1985 2001 2004

TV Dimensions 2004


7

Channels/Remotes Proliferate

Avg # of Channels

6 17100

1965 1985 Today

Channels now rising at 8-10 channels per year.Flipping is a sport in everyone’s home!

TV Dimensions 2004

Remote Penetration 97%45%

0%

1965 1985 Today


8

Too much of a good thing

77% 84%

10%35%

0%

50%

100%

1965 1985 2004

:60s:30s:15sOthers

We are addicted to :15s to add weeks or GRPs

TV Dimensions 2005


9

Business Model Begins to BreakdownWhile TV still delivers more

impressions accidentally than many media deliver purposely, there is that question of effectiveness.

Clutter is not just annoying – it affects recall.

• According the Cable TV Ad Bureau, unaided near coincidental recall was at a mere 2% in 2000.

• In 1965, it was 20%.

Program Quality: The “reality” is pretty bleak on broadcast.


10

Less HHs For More MoneyPrime network ratings decrease 54% while cost increase 1000%.

02468

1012141618

1970 1980 1985 1990 1995 2000 2004

$0

$5

$10

$15

$20

$25

Avg Rating

Avg CPM

TV Dimensions 2004


11

The Prime Network Upfront MarketFor the last decade clients have threatened to not pay double digit increases for that next seasons programming

9%

-13%

15%17%

13%14%

10%

1998 1999 2000 2002 2003 2004

TV Dimensions 2005

2001


12

Are Marketers Moving Away From Television?Overall TV spending has increased 10% while prime network TV spending was flat from 2003 to 2004.

TNS Media Intelligence, 11/04

2004 vs 2003 % Dollar Increases

10%

18%

26%

17%16%

Tota

l TV

Cable

Synd

icatio

n

Outdo

or

Inte

rnet


13

CPG Ad Dollars Moving Away From NetworkAd spending was up a mere 9% in network TV from 2003 to 2004.

IRI Analysis of NMR MonitorPlus Data/TNS Media Intelligence Nov 04; AdAge, July 04

2004 vs 2003 % Dollar Increases

15%

28%25%25%

Cable Syndication Outdoor Internet


14

Forecast of On-Line SpendingMerrill Lynch forecasts that online ad spending will increase to 7% of total US Ad Spending.

0%

1%

2%

3%

4%

5%

6%

7%

8%

2004 2005 2006 2007 2008 2009

Merrill Lynch Forecast


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A Sea of Discontent

As marketers move away from traditional TV… Where do they go?

In 1994 90% of P&G’s ad budget was on TVToday—Prilosec OTC launched with 25% TV

Closer to the consumer and purchase occasionPRProduct PlacementSpotIn-store


16

The New Television Revolution“JPTV”

HDTVDCT

ON DEMAND: TV on your schedule.


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“The future is here. It is just not widely distributed yet.” – William Gibson

Digital Cable provides one option•Channels options•VOD/SVOD•VOIP – Telephony•ITV•HDTV

Nearly 21% of TV HHs subscribe to digital cable (or 1/3 of cable HHs)

Data return path•Order fulfillment•Viewing data

CTAM, 7/04


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Estimated DTV Household Growth in the US

eMarketer, 8/04

Digital TV is predicted to grow from 50 million HHs in 2004 to 70 million HHs in 2007.

0

10

20

30

40

50

60

70

(mil

lio

ns

)

2004 2005 2006 2007

HDTV

DVR

VOD

Digital TV


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Video On DemandVODs promise is unlimited choice:

•Variety of Content•Time Shifting•Ad Avoidance

SVOD allows consumers to watch premium programs without subscribing to premium services.

More than 36 million digital cable homes will have access to VOD by 2008.

VOD usage by consumers is expected to increase 33% by 2007.

Forbes 7/04, Fortune 10/04


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Digital Video RecordersOffer ability to record programming and store it directly on

the machine’s hard drive

Unlimited playback control•Takes control away from the “suits”

No more missed moments•Pause live television

Currently 4.5% of US households

Expected to grow to 20% by end of 2006


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33%

PrimetimeOther

66%

34%“TV on my schedule”

“TiVo changed my life”

“There’s no going back!”

Source: Tivo

DVR Viewing Behavior70% of viewing is recorded.Drama and Sitcoms rarely watched

liveLive Viewing: Events, Reality, News,

and Sports may support :30s indefinitely!


22

New Technology “Sexes Up” The Status Quo

7 7

72

8

0

10

20

30

40

50

60

70

80

Before DVR After DVR

Extremly Satisfied

Somewhat Satisified

Neutral

Somewhat Dissatisfied

Extremely Dissatisified

Lyra Research – March/April 2004


23

Death of the :30Marketers still need to generate brand awareness and purchase

intent, but without relying solely on a :30 spot

•Improving CreativeCollaboration with Hollywood

•Innovative channel marketingProduct Integration

•AgenciesConstantly reevaluateP&G’s creative tracking

•ResearchersNew Media must be measurable (ROI)

•RetailersIn-store marketing critical in cluttered world


24

But New Media must be AccountableQuantify the impressions

•Accurate reckoning of OTS

Quantify the leads generated• Interactive nature of new media facilitates reallocation

Quantify the sales generated•How do you measure success


25

Technology is Moving Forward. Are You?

Marketers must go beyond concept testing• It is not so much if the technology works•But how well

We (researchers) have a responsibility•To be neutral arbiters of what works and what does not work•Design initiatives for the industry not just proprietary studies

Consumers are not standing still•Embracing technology that shakes up the status quo

But Neither are smart marketers•TV2006•RAEL


26

February 28, 2005

The Channels They Are A-Changin’

ANALYTIC SERVICES

JP Beauchamp

Vice President

Testing and Analytic Media Services

[email protected]


27

BehaviorScan.com BehaviorScan.com is a cross-marketing agreement between

IRI and comScore.

IRI will recruit current BehaviorScan panelists as well as cable subscribers who live in the BScan markets to participate in this program.

Participants will be required to download comScore software which will monitor Internet activity for appropriate individuals in each household.

Clients will have the opportunity to track:•Online advertising’s effect on offline sales through IRI’s UPC scanner data

•Offline advertising’s effect on online sales through comScore’s surveys and behavioral tracking data


28

TV 2006Ad skipping with Digital Video Recorders (DVRs) like

TiVo clearly have the potential to dramatically impact how companies use advertising as a marketing tool.

To date, little has been done to measure DVR impact or to investigate alternative media strategies.

IRI and a consortium of national advertisers, each with at least $100MM in ad expenditure, aim to determine the impact of DVRs in order to reduce the uncertainty of the television advertising investment decision in light of growing DVR technology adoption.


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TV 2006TV 2006™ is a large-scale BehaviorScan® test to measure the

impact of DVR technologies on television advertising practices.

Specifically, the TV 2006 Consortium will:Quantify the impact of DVR technology adoption on ad effectiveness.

Measure attitudinal differences between TiVo and non-TiVo users.

Directly measure TiVo ownership, ad exposure conditions and brand sales.

Determine the sales impact across major categories and brands.

Measure purchase behavior differences between TiVo and non-TiVo users.


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Radio Ad Effectiveness LabTV advertising tends to “swamp" the effects of radio

because of higher TV spend rates.

A structured test that eliminates impact of TV is necessary to tease out radio ROI.

BehaviorScan®, the gold standard of advertising testing, is being used to eliminate the impact of TV and measure the effectiveness of radio on brand’s sales.

Quantify radio’s ROI in a highly-controlled test environment. Learn how radio works in the presence of TV advertising and other media.


31

Radio Ad Effectiveness LabRadio Effectiveness Laboratory (RAEL) was established

to further understand how radio advertising works and measure its effectiveness.

RAEL is funding an in-market test conducted by Millward Brown, LLC. and IRI to statistically measure the impact of radio advertising.

Test open to consortium of six advertisers for 2005 test wave.


32

Current TV/Current Internet

Heavy TV/Current Internet

Test CellControl Cell

Service BehaviorScan®.com, powered by comScore and IRI Q2 2005 Launch

What It Does

Measures how offline advertising influences online sales (and vice-versa) by combining IRI’s BehaviorScan in-market testing with comScore’s online behavioral tracking capabilities.

Use It

ForTesting advertising spending levels, copy effectiveness and other ad variables to track online sales.

• FINDING: Increasing television advertising caused online sales to increase.

• INTERPRETATION: Offline advertising has an effect on online sales.

• IMPLICATIONS: Increase TV spend nationally.

CLIENT BENEFIT:The only way to accurately measure offline advertising’s effect on online behavior.


33Service TV 2006 Consortium™ Study

What It Does

Uses BehaviorScan to track the purchasing behavior of households with TiVo® vs. those without TiVo.

Use It

For

Calculate the impact of Digital Video Recorders like TiVo on your brand’s advertising effectiveness; alter your ad plan before U.S. DVR penetration reaches 20% in 2006.

CLIENT BENEFIT: The only timely and cost-effective way to measure the “TiVo Effect” across multiple brands and categories.

Adjusted Impact of DVRs on SalesHypothetical Results from Study

• FINDING: Brand-C’s sales were most adversely affected by TiVo.

• INTERPRETATION: TiVo households are “zapping” Brand-C’s ads more than other study brands.

• IMPLICATIONS: Brand-C’s sales will be hurt significantly as TiVo penetration grows.

-2%

-4%

-6%

-1%-2%

-3%

Brand A Brand B Brand C Brand DCategory

1Category

2


34Service Radio Ad Effectiveness Lab

What It Does

Features 4-cell, 6-month BehaviorScan test. HHs are divided into those with vs. without television advertising. Among these two groups, some receive high levels of radio advertising (100+ TRPs/week) and some receive no (or current) radio advertising.

Use It

ForTo create a controlled environment to measure the impact of radio in the absence of TV

CLIENT BENEFIT: Quantify radio’s return on investment (ROI) in a highly-controlled test environment. Learn how radio works in the presence of TV advertising and other media.

Isolate the impact of RadioTest Design if Advertiser using Network (Current) Radio

Then 4 Bscan test markets – 2 will need incremental radio

• Advertisers will not be charged for the research. Their contribution would be the purchase of radio time in the test DMA’s, as well as agree to monitor and report on activities in the test markets to help analysts understand causality.

• Measures of ROI will be derived from comparisons of key measures relative to the cost of media investment. In this way advertisers can assess the value of adding radio to their media mix.

Documents

Copyright © Information Resources, Inc. 2005. Confidential and proprietary. 1 March 01, 2005 The Channels They Are A-Changin’ ANALYTIC SERVICES Presented