This is part one of a three-part series where Andy Fisher of Merkle sits down with Bill Harvey, cofounder of TRA (TiVo Research) to discuss the state of the evolving television industry.
The Genesis of Tivo Research
Andy: Can you start by just grounding us a little bit? Can you describe TRA and TiVo, their relationship, and what they do?
Bill: TRA was a concept of mine. I had a company called Next Century Media in the 1990s, and we were the first to do set-top box data. I wanted to do more with set-top box data. But competing against Nielsen didn't seem to me to be a useful endeavor, since the beach is littered with the bones of all of the companies that did try to take Nielsen on. So I didn't want to add my bones to the pile. And I thought, "Well, there's been this concept in the industry forever of single-source data," meaning longitudinally measuring what a home purchases and all the ad stimuli that goes into that home so you could see what stimuli were effective, and what frequency level was effective, and which target group should be your target group, and so on and so forth. But every time the industry tried to do single-source data, they did it with a small, expensive panel. Even Project Apollo, the most recent such experiment, they all went out of business.
So I set myself the challenge of, “What can I do with set-top box data that will finally give the industry sustainable single-source, where we can actually have single-source and have it last?” And I said, "Well, we could match the purchase data at the same household to the set-top box data, and later we could add digital, mobile, social, print, outdoor, everything else. And that will give us single-source, and it'll all be based on naturally occurring data. We won't be getting any stated data from people self-reporting. We won't be getting anything like push-button people meters where it's really like an electronic diary. There won't be any response error. And it won't just be research co-operators. It'll be everybody."
So that was the idea of TRA. And people said, "Well, Bill, you're trying to get the stars to line up. It'll never happen. You have to get too many companies to cooperate, blah, blah, blah.” But it turned out to be doable. And TiVo was A-1 of the set-top box sets of data that TRA used along with Charter data and other set-top box data. And TiVo then came in on the B round as an investor with WPP, Arbitron, Intel, BlackRock. And then in 2012, we sold the company to TiVo. They bought everyone else out, the management and the other investors, and changed the name to TiVo Research. And it's still doing what TRA did.
The State of the Industry
Andy: So jumping into the state of the industry, everyone's going to be talking about 2016 upfronts. And as all of that money changes hands, what are some predictions you would make about how the 2016 upfronts are going to be different from the more recent upfronts?
Bill: Right now, there are a number of big sellers who are talking about making guarantees based on actual business performance. The TRA idea of, "Let's not just measure eyeballs. Let's measure sales effects." And, of course, Dave Morgan has already put out a guarantee on Simulmedia buys. He guarantees based on sales effects or store traffic or something countable, something beyond eyeballs. And I think that there are others who are going to follow in that approach to guarantees, guarantees based on some form of business results. It could be lifts in awareness. It could be lists in brand favorability or other communications measures. And it could even be hard sales, all-out TRA.
Andy: Gotcha. Television right now is really selling itself as data-driven linear where advertisers have the ability and networks have the ability to combine first-party and third-party data to the media buying. Do you see that as something that is real, that is something that is mostly hype right now, or is something that is somewhere between the two?
Bill: Well, the safe answer is somewhere between the two, but it's also the right answer. This is a long journey. If you analyze what you have to optimize in order to get the highest return on investment on advertising, there's nine different things you have to do. You have to pick the right target group. The budget size has to be right. The mix of media has to be right. You have the recency, frequency, continuity dimension that has to be perfect. I wonder how many I'm going to remember. The creative, branded integration, native...I think I forgot one. But all of those things can be manipulated in order to get the ROI higher.
TiVo Research is mostly experienced using two of them, and really just one. The one that everyone uses at TiVo Research is instead of just using sex/age targeting, let's somehow infuse purchaser targeting in with that since we know who is the purchaser. We've got all the frequent shopper card data. We know everybody's purchase habits. And so TiVo Research has evolved as a methodology for defining who is the right purchaser target. Should you try to reach people who are currently loyal? Well, if you do that, you're not going to have that much of an effect because they can't fall off upward from the ceiling. So it turns out that for most packaged goods brands, the ideal target to get the most bang for your buck are people who are heavy category purchasers who have had previous purchase experience with your brand, but don't buy it loyally. We call those heavy swing purchasers. So targeting heavy swing purchasers alongside the sex/age target is what most of the customers of TiVo Research have been doing, buy-side customers have been doing. And the average ROI increase is 28%. But if you do all of those 9 things, you can get a 300% increase.
So it is a journey. People are doing a little bit of it at a time. It's mind-boggling to conceive of flipping a switch and doing all of this at once. So some advertisers are ahead of other advertisers within any given advertisers. Some brands are ahead of other brands. And on the sell side, some networks and publishers are ahead of others. So we're really closer to the beginning of the journey than to the end.
For more insights on the state of the television industry view the next video post in the Future of TV Series, “Targeting and ROI.”