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COPYRIGHT 2005 Cambridge University Press
Procter & Gamble's 1997 Agency of Record pitch spurred agencies to develop new tools for analyzing television audience data and to schedule advertising. However, there is only limited evidence that the new tools took hold in the market.
INTRODUCTION
IN THE SPRING OF 1997, four U.S. advertising agencies started preparing for an important new business pitch. Procter & Gamble (P & G) had announced that it was putting its $1 billion television agency-of-record assignment up for review--one that would encompass not only traditional buying of airtime, but also what was termed "tactical" planning.
Tactical planning of television--a role traditionally played by the buyer in markets like the United Kingdom but by the planner in the United States--encompasses the discipline of determining the daypart, channel, and program genre mix for a schedule that aims to maximize campaign effectiveness (however defined) for a given budget.
The agencies involved were told by P & G that they needed to master a procedure long computerized in northern Europe and parts of Asia--that of schedule "optimization." Optimization, as practiced in Europe, defined "effectiveness" as reaching as many of the target audience as possible, at whatever frequency level was required, for a given budget.
The optimizer does this by analyzing historical audiences and making recommendations on the appropriate mix of dayparts and programs for the future, taking into account costs, audiences, and any other factors that may be considered important.
BACKGROUND: CHALLENGES
The challenges were both technical and cultural: technical because the optimizers needed a dataset that had not hitherto been released by Nielsen; cultural because planners and buyers operate on different assumptions and prioritize different metrics in the United States than they do elsewhere.
This was important because there were no homegrown optimizers in the market. Systems had been built in other countries: France, Italy, Australia, and Germany to name but a few. But it was to the home of optimizers in the United Kingdom that the U.S. agencies turned. Leading systems in use there--X*Pert and Super Midas--were identified as prime candidates for adaptation.
The process of optimizing media schedules was not exactly new in the United States. As long ago as 1961, David Learner of BBDO had presented to the Eastern Annual Conference of the American Association of Advertising Agencies on the subject (Learner, 1961).
A book published a few years later by two professors of American universities had gone into great detail about the optimization procedure. Much of what they said is as relevant today as it was then:
"Mathematical programming is a systematic approach to problems and represents one of the primary tools or techniques which are grouped loosely under the name of 'operations research.' The essential steps are as follows: 1. A clear statement of definitions and philosophy relating to the problem; 2. Careful formulation of the problem, indicating relationships and weights of the various factors involved and the kinds of data required; 3. Assembly of appropriate data of sufficient accuracy for solving the problem; 4. Choosing or developing a mathematical model or formula which is capable of being solved, with all the variables indicated in the problem formulation; 5. Turning over the materials to a technician to program and solve the problem, usually by means of a high-speed computer; 6. Applying human judgment to examine the outcome to make substitutions or alterations and to arrive at a solution which meets with human judgment and experience" (Lucas and Britt, 1963).
With the exception of point 5--computers are far more powerful today than they were then and can as easily be used by media planners as by specialist technicians--little has changed. Point 6 can never be emphasized enough.
The next issue for the industry was to access the data that these systems needed to carry out their functions. Many European and Asian audience research services provided respondent-level data to customers as a matter of course. Yet although a number of broadcasters had...
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