Making a Case for Set-Top Box Data Over Ratings Numbers

Former Nielsen exec sees advantage for TV ad buys

By John Consoli -- Broadcasting & Cable, 2/16/2012 10:40:07 AM

Jon Mandel, who was recently named CEO of PrecisionDemand, a TV ad targeting and measuring company, has spent more than three decades in the media agency business. After 22 years at Grey Advertising, where he rose to director of national broadcast, and 10 years as chairman and CEO of MediaCom, he left the agency business to become CEO of Nielsen Connect, the division of Nielsen formed to create new services and products built around the measurement data.

Regarded as one of the most outspoken executives in the media agency business, Mandel talked to B&C contributing editor John Consoli about the role he sees PrecisionDemand playing in the television advertising media buying landscape.

What motivated you to get back into the daily grind of the media ad buying business by taking this position as CEO of PrecisionDemand?
The system they have in place at PrecisionDemand is one that I've been looking for my entire career and now I've found it. I'm looking to make this job my legacy in the business. No one, including the media agencies, has the data, the resources or the scientists that we do. Our special sauce is not in the media buy but in knowing who the customers are for each specific brand and how to best reach them. Our system is the Holy Grail in advertising. There is not a media agency buyer right now capable of doing what we do. It's just a totally different way of operating than what they are used to. I've been in the agency business my whole life and I have not seen anything like this.

What makes your system so different?
First of all, we have so much data. So much set-top box and other data that goes beyond simple TV ratings. We ask our client who the target audience is for a specific brand. Then we target that audience with ad buys. But our data is so sophisticated that we can predict how much in sales the client's brand will do based on the TV buy they make. There is very little waste. We can show our clients how a TV buy can be cheaper than an online buy if they do it right. You don't buy audience clusters. You fine-tune the buy for each brand. We ask our clients how much in sales they want from a buy and then we make that happen. We can provide a CMO with so much data to justify a buy that they are on the same level as the CFO in their company.

And your success rate is?
Right now, we don't have a client that we haven't increased their business by at least 25% through our TV buys. Now going forward, I don't think we'll be able to sustain that, especially for clients beyond the first year, but right now we are doing it because the research is finally being used the right way to buy television. Right now, we tell our clients when to buy and what to buy. But we won't make a buy unless we can predict more business for the client based on that buy.

So, cheaper is not better when it comes to buying TV advertising?
A spot could actually be expensive, but as long as we project that it is reaching the target customers and that the client will get more in sales than was paid for the advertising, then that's OK.

Has set-top box date become more vital than Nielsen ratings data to advertisers?
What we've learned is you can't use data from Nielsen. All Nielsen data should come with a Surgeon General's warning. We have accumulated more set-top box data than anyone and our latest deal with Rentrak data adds to it. If you're not using set-top box data to plan and buy television, something is wrong with you. Now that we have all this set-top box data, we realize how dangerous to your business using just Nielsen data alone was. Nielsen ratings are 10-15% off for the broadcast networks in primetime. Once you get outside of primetime or get into the cable networks, the Nielsen data is way far off from that. I would say advertisers would be more accurate if they picked programming randomly. The Nielsen sample is too small and it does not go deep enough demographically. With so many channel options today, you need to get more fine-tuned information about the audience that's watching.

Who are your clients?
Right now we are working directly with advertisers. We have our own research people, as well as planners and buyers.

So you are competing with the media agencies?
Yes, right now we are. Maybe someday we will have them as clients. Maybe three or four years down the road, an agency might want us to train their people to use our system, and we might do it. The agencies will tell their clients they can do what we do with all the set-top box data, but they really can't. If Starcom would have used our system, they would never have lost the General Motors account.

Right now, PrecisionDemand only deals with TV ad buys?
Yes. PrecisionDemand has been quietly buying TV advertising for its clients for two years now, but we are going to start to get more aggressive and make a lot of noise. Eventually, we could move into online video or even radio ad buying. But right now there is so much opportunity in television. For us, it's low hanging fruit.