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Pay Per View Comes Full Circle in Test

Advertisers love to remind ad-weary viewers that commercials keep broadcast television free. Now, facing heavy pressure to prove that their marketing investments are working, some advertisers are going a step further: They're paying people to watch.

Selected consumers will get as much as $100 in cash, along with coupons and prizes, in return for watching TV spots and offering up information on their viewing habits, in a test of a new technology designed to help marketers better gauge the reach and effectiveness of their ads. Subway Restaurants is among 30 national and local advertisers participating in the test.

A company called MediaCheck is recruiting about 5,000 households in Omaha, Neb., to put devices in their homes that will record when an ad is watched in full. The machines, which pick up a coded signal that is embedded into the TV commercials of participating advertisers, will give marketers detailed reports with information such as how many times their ads were skipped or time-shifted and how long viewers watched the commercials.

For every ad they watch, viewers will earn points that can be used to redeem rewards via the Internet. Marketers will also gain insights into how ads are resonating with consumers, data that will let them make specific changes to commercials based on real-time consumer reactions.

The traditional TV ratings system -- and the ad prices based on it -- is built on the assumption that if someone is watching a show, he or she is watching the ads as well. But as advertisers are quick to point out, that decades-old assumption is beginning to crumble.

Consumers are "zapping and 'TiVoing' commercials," says Ed Valle, Subway's director of marketing, referring to a popular brand of digital video recorder. "We need more information on who is responding to our commercials." Subway is a unit of Doctor's Associates, Milford, Conn.

"It's much easier for consumers to avoid advertising today, so any kind of new approach is worth checking out," says Zack Apkarian, director of consumer and customer insights at Cadbury Schweppes' Cadbury Adams USA, another advertiser participating in the test.

Media-buying firms and marketers have been critical of old audience-measurement systems used by the likes of VNU's Nielsen Media Research, which has a monopoly on TV ratings. In response, Nielsen said earlier this year that it would offer viewership data from DVRs as result of partnerships with TiVo.

"There is a lack of real data on viewing habits of commercials," says Tim Hanlon, vice president and director of emerging contacts at Publicis Groupe's Starcom MediaVest media-buying firm. The strong demand for greater measurability has caused a slew of new companies to pop up on the ad landscape, but many are still in their infancy.

"I don't want TV commercials to have a problem with becoming obsolete because of technology," says Jim McKernan, the general manager of KMTV in Omaha. The CBS affiliate, owned by Emmis Communications, is conducting the four-month test program beginning in May. MediaCheck, which developed the technology, is a subsidiary of PreTesting, a Tenafly, N.J., company that has worked with advertisers such as Pfizer and Colgate-Palmolive on testing ads before they air.

Is greasing the consumer's palm the answer to fixing the challenges facing TV commercials? While some big-spending advertisers have agreed to give the new technology a try, the business model isn't perfect. The Internet landscape is littered with defunct ad concerns that offered similar ploys to pay consumers to watch online ads.

"People get paid for plasma and blood, too, but the quality of their blood or plasma may not be worth the expense," warns Starcom's Mr. Hanlon.


Suzanne Vranica, The Wall Street Journal. April 4, 2005

Copyright © 2005 Dow Jones & Company, Inc.. All rights reserved.