GroupM’s Lyle Schwartz Gets Upfront on TV Ad Spending and Measurement Chaos

Q&A: GroupM exec is an influential industry voice on measurement innovation

In an industry in which all eyes are typically on such moguls as Rupert Murdoch or Brian Roberts, here’s a little advice: Keep a close watch on Lyle Schwartz.

Schwartz isn’t as well-known as the heads of 21st Century Fox or Comcast, but he plays an integral part in how those industry giants fill their coffers. As the recently named president of implementation for North America at the large GroupM media buying unit, Schwartz has quietly been prodding the media and ad industries to change the way viewers are counted, so that advertisers might reliably measure how their commercials are being consumed across different screens.

The task is not an easy one, and Schwartz acknowledges his ideas may not be embraced across the industry. Speaking to Brian Steinberg, he weighs in on TV’s upfront market and hints at a new kind of screen that could fascinate Madison Avenue in the not-too-distant future.

Clearly, your client budgets have not been finalized, but what are your early expectations for TV’s upfront season? What business factors are at play?

Some clients are looking at cutting back their budgets, but there are others looking at increasing. A lot of them are looking at video with a more holistic approach. There really is a lot of fluidity there. One of the variables we are looking at is the current economic situation: Obviously, the more disposable income the consumer has and is willing to spend, the more people will be advertising, but with the current geopolitical situation, we don’t know which way budgets are going to end up.

Are there particular ad categories you know are going to be up or down?

I know the pharmaceutical industry seems to have a constant flow of new products coming out. The telecommunications industry seems like it might be gearing up for some new competition. But the brick-and-mortar retailers seem to be reassessing their budgets.

A lot is being made of some of the recent measurement and content hiccups we’ve seen in recent months from Facebook and YouTube. Does that give TV any sort of edge this year?

I am sure there are a lot of people who will be responding very quickly to, as you put it, the hiccups in measurement and content. I’m not sure it’s going to have that much of an effect on the upfront, because I believe the industry will have it fixed. We will have solutions for that when the new season begins, which is more in the October area.

We know last year that a lot of consumer product stalwarts moved money back into TV and that TV attempted to use that new demand as a way to get better pricing hikes. Do you see that dynamic continuing this year?

The packaged-goods companies and some of the other categories may have overspent in digital or may have moved too rapidly into digital before the consumer actually got there. I don’t think we are going to see much more of that. What normally happens in the pendulum swings too much to the left, then it swings too much to the right. I think we are going to end up where the equilibrium should be. There are so many more digital players around and the consumption of non-linear TV is growing so much. Now you’ve got supply and demand there too

Last year, a number of the networks pushed back on some long-term deals they have with some of their biggest and most durable sponsors — advertisers including Procter & Gamble — who have multi-year deals in place that limit how much price rates can increase each year. Will there still be fighting over that this year?

A lot of the networks are allowing their long-term deals to kind of sunset. When you make a deal, you live by it. When people made those deals, they apparently thought they were in their best interest. My feeling is you make a deal, you live up to it.

You’ve been working diligently on devising a measurement system that would give the networks credit with advertisers for viewers who watch shows on new platforms. You’ve gotten some push-back. Is it your belief your efforts will bear fruit, and why?

I do believe it will bear fruit. I think some of those critiques and some of that push-back are situations where I don’t disagree with them, but I don’t know that they have a full understanding of what we are proposing. We are not proposing that all impressions go this manner. Since we are only looking at “C1” through “C7,” there is still day 8-plus and all the other formats that don’t come under this approach will still have all the bells, whistles and capabilities that digital ads have today. We are just talking about being able to measure and monetize — and measure and evaluate — the true video audiences behind some of the content. We believe that what’s going on for the most part is that consumers aren’t cutting their video content down. They are just diversifying the way they get it.

What happens if the networks can’t agree on something new?

There is always the possibility that we can’t come to an agreement. One of the positives that we have this time as opposed to when we did “C3,” is that “C3” was a mathematical change to the marketplace. The new approach we are talking about, which hasn’t really been defined yet, it has to be built. It’s going to be built with the industry and the media companies. It could be we use only those media companies that want to participate. So it won’t have to be an entire industry moving left or right. And I think if they don’t want to do it, it will be more of an a la carte [approach], and we will be able to do it with some. I do believe that the ability to measure the consumer in whatever platform they are in is very, very important to the long-term viability of video.

If you had to predict which screen was going to capture the bulk of Madison Avenue interest in the years ahead, what would you guess it would be?

Perhaps in a couple of years the windshield in our car will be the new TV screen, because we will have driverless cars. We will be able to figure out what movie we are going to see next, or what hotel we want to go to, or what trip we want to take next while we are on the Long Island Expressway.

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