Smart Screen Exclusive

By Paul Sweeting

The proliferation of screens and the fragmentation of audiences has made life orders of magnitude more complicated for marketers and programmers trying to get a fix on how many people viewed their ads and TV shows. But one group of companies is set to benefit from the chaos: those that count the eyeballs and provide the metrics.

That’s according to a new report issued this week by Needham  & Company senior analyst Laura Needham titled “The Economics of Measurement.”

“As screens proliferate, the complexity of deciding where to spend ad dollars rises, and third-party measurement and analytics are valued more highly,” Martin writes. “Given the large and growing size of online and TV advertising spending, coupled with the pressure to waste less, we expect rapid growth of measurement fees globally.”

The most direct beneficiaries of those increased fees, according to report, will be Nielsen, Rentrak and comScore, whole will see their combined revenue grow from an estimated $2.7 billion this year to $3.3 billion by 2018. (The report does not cover privately held measurement services, nor companies that provide analytics as part of a broader suite of services.)

The report notes that overall Internet ad growth in the U.S. is slowing, falling to 15.6% in 2014, compared to a 17.0% rate of growth in 2013. Non-mobile internet ad growth slowed to 4% last year, ti $37 billion (including search) down from 8% growth in 2013 and 10% in 2012. Mobile ad revenue grew 76% in 2014, to $12.5 billion, after rising 109% in 2013.

Nearly all of the growth in internet ad revenue, in other words, is now coming from the addition of new, mobile devices, adding to the complexity of measuring viewership.

With organic growth in internet advertising slowing, moreover, Martin expects ad-driven web properties increasingly to target the roughly $70 billion spent annually on TV advertising to try to jump-start their own growth. Shifting those dollars will require ever-more granular measurement of viewing across devices.

“Audiences are fracturing as screens owned by each consumer proliferate,” Martin writes. “Measurement difficulty is growing every day. As brands follow audiences onto digital platforms, in addition to TV, they are insisting on more and better data. The ability to link ads to purchase behavior benefits any company that can deliver ‘big data’ solutions.”

Other highlights from the report:

• To maximize their spending efficiency, advertising agencies and brands want third-party measurement that makes metrics comparable across TV and websites, including reach, frequency, demos, unique viewers, viewability, etc.
• Only third-party measurement companies can assess how many unique consumers an ad reached over all devices….The ability to assess how many unique (i.e., unduplicated) viewers were reached becomes more valuable as desktop usage cedes to mobile devices.
• Addressable advertising (where new ads can be swapped in or out at any time) enables hyper-targeting, which gives publishers access to very granular data sets and allows audience measurement companies to generate new measurement products that have pricing power.