Metrics Make The Market

Whoever owns the metrics owns the market.  And in advertising that market is worth hundreds of billions of dollars.  For a long time the largest media market - the US - has been organised by Neilsen's ratings system which determines the flow of something like $70bn annually.  And in the UK BARB's TVR ratings have kept a cartel-type arrangement ticking over for years.  Clearly, Google has managed to  upset this cosy market in a very big way using technology to show up a lot of conventional wisdom for what it is - vested interests.  It's reward has been a $175bn valuation which the DoubleClick deal could build upon.  However, a recent McKinsey report shows that despite the fact that the web can offer data like no other, it still hasn't come up with a metrics package and system that is sufficently user-friendly and stable to attract the really big brand budgets.  Scott Karp says the report shows that sentiment is really what's holding back the advertising world from taking the plunge.  A top media executive described the same idea to me very succinctly as: "We know the bike is broken, but it's the only one we've got".  But as Hugh notes (point 7) brands are offering more money to the online players than they can currently handle - because their models on the metrics side don't scale sufficiently to suck up TV's oceanic budgets.  The breakthrough is likely to come from closer co-operation between the GYM titans et al than they may be comfortable with.  But as it stands, the opportunity remains open - possibly for someone to change the way the whole market is viewed...

Comments

[Dan Schawbel]

It all comes back to the idea that you can't improve what you can't measure. Metrics are so important right now especially in the advertising world, where you have to prove your success with numbers.