Filed by Rentrak Corporation
pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Rentrak Corporation
Commission File No.: 000-15159
Date: October 6, 2015
THOMSON REUTERS STREETEVENTS
EDITED TRANSCRIPT
RENT - Rentrak Corp Investor Day
EVENT DATE/TIME: OCTOBER 01, 2015 / 04:30PM GMT
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
CORPORATE PARTICIPANTS
Bill Livek Rentrak - Vice Chairman and CEO
Irwin Gotlieb GroupM - Global Chairman
Serge Matta comScore - President and CEO
Caroline Horner Rentrak - Senior Vice President, Product Innovation
Andrew Appel IRI - President and CEO
Keith Camoosa Magna Global - Executive Vice President, Managing Director, Research and Analytics
John Dempsey Oracle Data Cloud - Senior Director, Mobile
Chris Ryan Scripps Networks - Vice President, Sales Research & Strategy
Dave Boylan Rentrak - Board Member
Steve Lanzano Television Bureau of Advertising - President and Chief Executive Officer
Brent McGoldrick Deep Root Analytics - CEO
Scott Tranter Optimus - Partner and Founder
Derek Turner AMG - Product Development Director
Peter Bouchard Civis Analytics - Director of Media Science
Chris Wilson Rentrak - President - National Television
CONFERENCE CALL PARTICIPANTS
Laura Martin Needham
Alan Gould
Thomas Paulsen
Jason Cohen
Matthew Harrigan Wunderlic
Rich Tullo Albert Fried
James Dix Wedbus
Tom Eagan
Forward-Looking Statements
This communication contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including with respect to the anticipated timing, completion and effects of the proposed merger between comScore, Inc. (comScore) and Rentrak Corporation (Rentrak). These statements are based on managements current expectations and beliefs, and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These forward-looking statements include statements about future financial and operating results; benefits of the transaction to customers, shareholders and employees; potential synergies and cost savings; the ability of the combined company to drive growth and expand customer and partner relationships; and other statements regarding the proposed transaction. Forward-looking statements may contain words such as will be, will, expected, anticipate, continue, or similar expressions, and include the assumptions that underlie such statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: failure of the comScore stockholders or Rentrak shareholders to approve the proposed merger; failure to achieve regulatory approval; the challenges and costs of closing, integrating, restructuring and achieving anticipated synergies; the ability to retain key employees, customers and suppliers; and other factors, including those set forth in the most current Annual Report on Form 10-K, Quarterly Report on Form 10-Q and Current Reports on Form 8-K reports filed by comScore and Rentrak with the U.S. Securities and Exchange Commission (the SEC). All forward-looking statements are based on managements estimates, projections and assumptions as of the date hereof, and comScore and Rentrak are under no obligation (and expressly disclaim any such obligation) to update or revise their forward-looking statements whether as a result of new information, future events, or otherwise.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
No Offer or Solicitation
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval with respect to the proposed merger or otherwise. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Additional Information and Where to Find It
In connection with the proposed merger, comScore intends to file a registration statement on Form S-4, which will include a preliminary prospectus and related materials to register the shares of comScore common stock to be issued in the merger, and comScore and Rentrak intend to file a joint proxy statement/prospectus and other documents concerning the proposed merger with the SEC. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT COMSCORE, RENTRAK, AND THE PROPOSED MERGER. Investors and security holders will be able to obtain free copies of the registration statement and the joint proxy statement/prospectus (when they are available) and any other documents filed by comScore and Rentrak with the SEC at the SECs website at www.sec.gov. They may also be obtained for free by contacting comScore Investor Relations by mail at comScore, Inc., 11950 Democracy Drive, Suite 600, Reston, Virginia 20190, Attention: Investor Relations, by telephone at (310) 279-5980, or by going to comScores Investor Relations page on its corporate web site at www.comscore.com, or by contacting Rentrak Investor Relations by mail at Rentrak Corporation, 7700 N.E. Ambassador Place, Portland, Oregon 97220, Attention: Investor Relations, by telephone at (503) 284-7581, or by going to Rentraks Investor Relations page on its corporate web site at www.rentrak.com. The contents of the websites referenced above are not deemed to be incorporated by reference into the registration statement or the joint proxy statement/prospectus.
Participants in the Solicitation
Each of Rentrak and comScore and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from their respective shareholders or stockholders with respect to the transactions contemplated by the merger agreement. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of comScore or Rentrak security holders in connection with the proposed merger will be set forth in the registration statement and the joint proxy statement/prospectus when filed with the SEC. Information regarding Rentraks executive officers and directors is included in Rentraks Proxy Statement for its 2015 Annual Meeting of Shareholders, filed with the SEC on July 9, 2015, and information regarding comScores executive officers and directors is included in comScore Proxy Statement for its 2015 Annual Meeting of Stockholders, filed with the SEC on June 8, 2015. Copies of the foregoing documents may be obtained as provided above. Certain executive officers and directors of comScore and Rentrak have interests in the transaction that may differ from the interests of comScore stockholders and Rentrak shareholders generally. These interests will be described in the joint proxy statement/prospectus when it becomes available.
PRESENTATION
Bill Livek - Rentrak - Vice Chairman and CEO
Ladies and gentlemen, if youd please grab a seat. You can grab some sweets or food or beverages if you would like. This is an investor day, but its a unique investor day because its absent numbers because of the transaction that we announced this week. We did not want to cancel our Investor Day because we have unbelievable panels which are all special, but we did want to have a panel with one of the foremost industry executives, a trailblazer, and Serge who is the CEO of comScore and myself.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
We will entertain questions on that panel about comScore and Rentrak, obviously, and the merger, but that will be the end of questions on the deal. And we have certain parameters that we can answer with them because the transaction isnt done until it is approved by the government regulators. So we have a lot of respect for our regulatory system and were not going to do anything that would jeopardize the transaction from closing which we believe will happen in early 2016.
Thank you all for coming today to our investor day. Its been an unbelievable year that weve had. Because last year almost to the day, we announced the most significant deal up to that point in Rentraks history. We announced the acquisition of WPPs US-based television assets. We did that for three reasons. We did it for reason number one so our advertising agency customers and the networks could have one product on a national basis. We did it for the second reason because WPP has a group of information companies that are independent with great products. Products by Shopcom, thats a conglomeration of credit and debit card information that we are able to merge that information into Rentrak television viewing.
They are the leader in audience expenditure information, and so much more than that. We were able to cut very profitable deals on a joint sales basis for our customers, which is great.
And the third reason, and I like to say that this may be the most important reason, it allowed Rentrak to be critically evaluated and have as a customer GroupM which is the largest television spender. And those three reasons became a reality last year and Im happy to report one year later that deal is bearing fruit for our customers and our shareholders. But this is the real deal that weve been working on for a long time.
Ive known the founders of comScore early in my career. They were working in Chicago for a company and I started my career at the Arbitron Company and we knew one another. And over the past few years Ive come to know Serge, the CEO of comScore, and this deal is the result of the consumer changing how theyre using television across many screens. And the inflection point that caused this deal to occur is the consumer. Its two great information companies coming together with complementary assets complementary assets on data, products, people, and innovation.
In my years since Ive graduated the university, Ive seen a lot of transactions and been involved in many. Ive never seen a transaction with just such perfect industrial logic and just such perfect people assets. Now, its up to us once the deal is approved to execute. But when youve got great assets and youve got great people and great innovation intuition, this deal, Im all in on, and I hope all of our shareholders are all in on, because we think this deal helps us define the future of measurement.
Were taking our core assets of measuring movies around the globe, and for the first time, we do have a digital asset that we can help the owners of content understand the consumer on the internet around the world. We take our on-demand platform where were measuring 120 million television sets with all the movies that they watch and all the television shows that they watch. Were taking our television product in all 210 local markets that weve built a heck of a market share in a short period of time thats measuring live TV and DVR viewing and our national product merging with the great assets that comScore has, measuring all the activity on someones computer, their mobile device, their tablet devices and over the top. We have assets now that are going to create (future products, and at the same time, the cross selling opportunities are enormous.
We did this deal because our customers wanted us to do it. And we believe that we did not want to wait because waiting would not have profited anyone. And Ive received criticism from some shareholders that said we should have waited. I respectfully disagree.
We act it. We act it at an inflection point where the industry was We act it with a fair deal that all of our parties agree is the right deal, a fair deal, and Im all as I said as many of our employees are all in with bringing this to conclusion, bringing the best products across platform products to the ad agency, the advertiser marketplace. But I would be remiss if I didnt give you a quick recap of all the other things that we accomplished in the last year because theres a ton of them.
In the movie business the movie business grew greatly last year. Year-to-date, were about 28 billion dollars in consumer spend worldwide, thats a six percent increase over last year. As our friends over at Comcast, Brian Roberts, said recently, they wont greenlight a movie unless they see a great deal of the income coming outside of North America. We have a great guest from Fox in a little bit that were going to talk about the domestic and the international box office, but because the industry is so healthy, Rentrak has been layering on more and more analytics to help the content creators build their business more successfully. That business sector of analytics is about a $300 million revenue opportunity.
In the last year, weve harvested two products that weve talked about. PreAct, this is where we take social media information where the consumer is reacting to movie trailers that they may have seen at the Box Office or at the movie theater. They may have seen on their web page or on a television advertising. It relates consumer sentiment. Whether they plan on going, whether they like or dislike. A whole number of variables that allows the content creators to adjust their marketing material. Weve added a great number of customers in the past year
PostTrack, which is a product that asks consumers once they leave a movie theater what they thought about the movie and whether theyre going to recommend it to their friends. Whether theyre going to see it on video on demand when its made available or whether theyre going to tell their friends dont see it. Wait for video on demand. And we all have been there. This allows the movie infrastructure to work a lot more productively.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
We talked in our last quarterly earnings report that we launched electronic box office reporting, we now call that Rentrak Swift. What this essentially does is it allows cash to move faster from the movie theater to the creators of content. Its one thing to have flash information, like Rentrak is producing of quick box office information, but like all tickets there are some of those that people go and return them, therere discounts and the like, cash has to move in a reconciliated kind of way.
Weve created in the last year that infrastructure so that cash can move more quickly with Rentrak Swift. And we signed just recently Sony to our program there and we plan on building that out internationally.
You heard very recently in the past couple of weeks, we cut a deal with Movietickets.com. This gives us the ability, and were in the process of creating two products. We have people demographic information of people who are buying a movie ticket in advance. We can really quick view of who they are so our studio partners and their ad agencies can make faster decisions. They also can do quite a bit of analytics when that information is merged with the Rentrak television viewing information. So this is the first time we are taking pre sales with demographic information by location helping the ecosystem work more efficiently. The ecosystem is healthier but we know theres a passion of all the CEOs and presidents that are out there to get a lot more for a lot less with their marketing dollar. All of our Rentraks tools are designed to do that.
We just recently did a transaction, a small one but we believe its a very productive one, with an analytics group to create two products.
One of them is Jigsaw. And think about studio executives walls. Theyve got the equivalent of many different patchworks of countries, territories, dates, movie releases, and theyre juggling it around manually. And one of the big variables is what Rentrak data said in how they did those types of movies did in the past. And by juggling it around and what theyve been doing since the beginning of the movie industry, they try to become more productive.
Rentrak is automating that with our analytic suite with Gower Street to create Jigsaw that we believe will be increased productivity and profitability for the owners of content.
Were creating an additional product called Fullhouse. Once the decision gets made and the content is on the screens with dates, then as it opens, giving them the analytics to move it from auditorium size, these are the types of products that our movie business is actually launching now to capitalize on that $300 million opportunity.
Lets switch to local TV. Since we were here last year, Rentrak has 35% more television stations. And it wouldnt be an Investor Day if we didnt break some news. We are announcing today at this time that all of the CBS owned and operated stations an additional 15 and 10 markets including New York City with Channel 2, WCBS, have become subscribers.
This now gives us all of the owned and operated groups with the exception of one where we have 50% of their stations in the big cities like New York, Chicago and Los Angeles. Our thanks goes out to a lot of people at CBS including Les Moonves and Peter Dunn who made that possible.
The utility that they see with Rentrak is they sell more advertising when make and model of car is integrated with the precise TV show with stable ratings. They are able to talk with the political candidates consultants to make sure theyre in the right shows, not just in news, priced correctly in news but also in early fringe, late fringe, in all of their content. The big asset with Rentrak on local TV is every time there is a commercial break, the audience is being described. Its stable, and no zero cells as we call it that are anomaly when you have a sample.
Rentrak has made a difference in television, and you see it graphically in local TV. And we have a great panel on local TV.
We did a lot in national TV in the last year. All of the agency holding companies were working with. And as you know, and you may want to ask Irwin a question when he comes up here about all of the ad agency reviews that are going on, a record amount of ad spend is under review.
I dont know why. Ask Irwin. I have a hypothesis, and one hypothesis is the brand owners are seeking more efficiency.
In the agency holding companies that have the best tools about figuring out what show they should be on and what is proper to pay will always lead to profit in the end. Rentrak is paying a central role with all the agency holding companies in that agency review and in the upfront process that just occurred.
You may have seen a press release that went out in the middle of all the press releases that have gone out this week. But this one may have gotten lost in your inbox and its that Rentrak has expanded its relationship with Turner with two of their platforms, called Target Now and Audience Now. Where Turner is making guarantees with a number of categories of advertisers. Think about it, making a guarantee with make and model of a car up against a television show. Making a guarantee with retailers on TV shows. This shows you the marketplace is changing.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
I was on a panel yesterday that someone said theres only one currency. Well we believe that we live in a world where there are a basket of currencies, and change happens when a buyer and seller individually agree that theyre going to make a transaction.
At last years Investor Day, we talked about our strategy of making sure that buyer and seller have the tool to come to an agreement. This has happened in local, and now its happening in national, too.
A couple of weeks ago, we had the honor to present at the Goldman Sachs Communacopia, and there were a number of CEOs of media companies presenting with some phenomenal updates on where they are. I actually enjoyed James Murdoch in particular. And Im going to paraphrase his actual quote thats up on the screen.
He was talking about Empire and that he sees, using Rentrak information, that way more than half of the audience over the course of a month are watching Empire on a delayed basis off their DVR or video on demand or on fox.com. And he also says that after day three, and he said after day seven, he thinks theyre going to be able to monetize that a lot better than theyve been able to monetize live TV in the past. And if you think about it, it makes sense. Today we have the tools that were really invented in a direct marketing age and analog direct marketing age that have been advanced in the digital age. And weve applied them to television where actual individual behavior with time as a demographic in addition to how they live their life sales and the products that they buy, consume and put in their cupboards can now be overlaid on actual television shows.
Ad supported television has never been healthier. Its just the yardstick has been broken.
If we look at the course of 28 days as your measure, a month, and then you look at all of the viewing within a home in that ecosystem, theres actually more minutes of viewing in primetime with about 34 networks. Whats happened, live viewing is absolutely down. And the analysts that are writing articles about the premature death of TV have simply got it wrong.
The consumer because they can has shifted their time. Those of you who love TV, there are more great shows that are being produced and on television than ever before. We dont have enough minutes, but we do have enough minutes when you consider we do have a lot of down time. We just cant watch three shows at once. We can only do one thing at a time when it comes to television viewing. But the access of delayed viewing on all the different platforms. You look at what Rentraks measuring, the ecosystem is roughly the same this year versus last year. When you look at the over the top viewing from fox.com, cbs.com, all the networks dot com, plus the over the top with Hulu, ad supported, you have got more people watching these great shows, theyre just not being monetized well yet. Again, a reinforcing element of why we did the deal with comScore now and we didnt wait. Because the consumer did not wait. The consumer is watching all of these shows. And the content creators in their never-ending quest for individuals who watch their show are producing great television shows out there.
Before I move to the panel, I want to do an Emmy type moment and thank people. Besides thanking my parents who I wouldnt be here without them this deal that we did with comScore never could have been possible if it werent for the people that work at Rentrak today and in the past. The deal could not have been possible if we didnt have the trust of customers that are out there and some of them are here today.
But theres one individual that I want to point out. Rentrak has been through a number of reinventions. And I like to look at it as one of the great entrepreneurial stories in America. Rentrak started out as a company that owned video stores, and then it reinvented itself, sold those stores in a blockbuster age and decided to be in the information business where it could manage transactions when it gave content to retailers for no cash, but they had to measure what each rental was. Rentrak developed a big data business before the craze was invented. And then after that, it moved into the video on demand business. And then after that, into the television business.
There was one investor in Portland, Oregon that believed in the vision the whole way. And he truly is the definition of a long-term investor. I think one of the definitions says someone whos in for 15 minutes. This guy has been in well beyond 15 years.
And I want to call him out here today. Hes not here, but he is listening via the webcast, and thats Andre Isley. He truly has been a trailblazer as those truly from Oregon, but he immigrated to the United States and built a fortune on building different businesses as only we can do in America. So I did want to thank Andre. Hes a heck of an individual and Rentrak would not be here without individuals like Andre that supported the company through thick and thin.
Now on to the future. Id like to call up my panelists after I introduce them. Irwin Gotlieb, who is global chairman, CEO of GroupM. GroupM is the largest ad spender in the world. Irwin is also, I like to believe, one of the smartest guys out there when it comes to the future. And Irwin in the last few years has become a friend of Rentrak, a friend of mine personally. Someone who I respect enormously about his ability to look in the past, look today where we are and where were going in the future.
Another individual who now Im proud to call my friend and my partner, Serge, who is CEO of comScore. And Id like to invite both of these gentlemen up here so we can have a chat. Come on up guys.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Youve got really the three guys up here that have done a lot in their past and we believe have a lot more to do in the future. Irwin is a guy who has done more to redefine how the industry plans and buys television. Hes been doing it for a long time. And hes a guy that has the wisdom of his past looking into the future.
Irwin, youve been the godfather in many ways of encouraging Serge and I to work together. As you look in our merger, how do you think this is going to bode for the industry?
Irwin Gotlieb - GroupM - Global Chairman
I wish youd done it a year ago because then wed be talking about what weve accomplished.
Look, you said it yourself media consumption has changed. If measurement doesnt keep up with the patterns of media consumption, the whole ecosystem is affected. We today, whether we realize it or not, are very much at risk of having that happen. We already have a number of significant inequities that weve been talking about. Martin my boss Martin Sorrell has not wasted an opportunity to mention the fact that measurement is one of the core issues we have today. And the truth of the matter is. Television in aggregate, total viewing levels have grown over the decades. Somewhere around 27 months ago, it plateaued. And then we began to see decreases based on Nielsen reports.
We believe that some small portion, call it 25%, 30% of that decline is a function of the fact that services like (inaudible) changing consumption patterns and people are watching advertisements for a (inaudible). But the remainder, the biggest chunk of the decline is a failure of measurement. And so thats a problem. Its not good for the ecosystem when media consumption is under measurement. From our standpoint, the best way to keep the medium healthy is to make sure the supply side of the equation lives.
The second thing is, as many of the people in this room know and as you the two gentlemen know, more and more of what we do is done at the census level.
Event-level data on the web is all census level. Your stuff is all household level. Our Nielsen data continues to come in, from a panel of 50,000 users, where each respondent is representative of 5,100 hypothetical individuals in the universe. I gotta tell you, for me that just doesnt cut it. It just doesnt. I cant work with it. And so there is a desperate need for this coming together from an industry standpoint.
Bill Livek - Rentrak - Vice Chairman and CEO
Thank you.
Serge, I want to ask you the same question, but before I do, before we got started, a number of Rentrak investors said they really support the deal, they think it makes a lot of sense. But now theyve got to do homework on comScore. For the investors that are here and those that are online, can you share what comScore does in its base business, talk about our vision.
Serge Matta - comScore - President and CEO
Sure. So the way I like to explain it is, go back in time a bit. So weve been in business since 99. We started as a company for the folks who dont know what comScore does and who we are we started as a company with the goal of measuring online via a panel. So we built a panel of two million individuals, opt in, and we measured everything that they did. And by measuring everything, we see what sites they go, if they go to Amazon, if they go to Facebook. If they go to Google, if they go to Twitter. We build a representative opt in panel of 2 million. And then we take that panel, we weight it and we project the total online population. That was back in 99, so the concept of tagging and the concept of mobile a mobile phone didnt exist. Smartphones, tablets, you name it, it didnt exist.
So fast forward, in 2006, 2007, we went public. And weve been public since then on NASDAQ and we then decided well, hold on a second, mobile is starting to appear, we need to make sure we replicate everything that we do in PC to the mobile world. And we did that. We have panels on smartphones and on tablets, and you name it.
But then, the challenge came to us from our clients, kind of the same inflection point that we are at now, where the clients were basically saying, we want you to measure it all on digital. Not just based on the 2 million panel but we want you to measure it every single individual on this planet. Lets take that as a huge challenge. And not just in the US by the way, but global.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Irwin Gotlieb - GroupM - Global Chairman
Are there a lot of people out there?
Serge Matta - comScore - President and CEO
A lot of people. We had a bunch of different choices. Im glad the choice we went with worked out. We could have gone to the operators and tried to get their data. Wed be still here talking about getting their data. We could have gone to the wireless operators. That would have been also quite challenging. But what we decided to do as an independent, we have built a firm stand in the industry as an independent third party measurement service for digital. We went and leveraged our clients. We went to our clients, for example, the NBCs the Comcasts, the Microsofts the AOLs, the Verizons, you name it. We went to our clients and said can you please put some piece of code or software on your website. And not only just on your website, but on your mobile app and on your mobile browsing site. On anywhere you consume content digitally put this code. And guess what, they did. Now why on earth would they do that? They did that for a simple reason, they wanted better measurement, which is kind of the same thing were talking here. The clients are asking, the industry is begging for better measurement. Now instead of digital, independent third party measurement at scale. So they went ahead and put this code, and today we have millions and millions of sites, Bill showed on an earlier slide, that we measure everything. Not only just the content, so the content of, did you go to CNN and actually see the article (inaudible)? Yes, we measure all of that. For everybody in the world that actually visits cnn.com or its properties. But also, all of its mobile, all of its apps, anything that over the top devices, so Hulu Sony Crackle, you name it. We measure it, were able to so on digital we have truly become the digital currency for audience measurement.
Now, its on content and its on advertising. So we cant ignore the advertising piece. If you see an ad, on digital were able to measure it. Were able to measure who actually saw that ad. Its amazing to have a Procter and Gamble, spend millions and millions of dollars on these campaigns, they want to know, first if it was a Tide campaign did you hit that 18 to 34 year old demographic that youre going after. Thats the first question they want to know. And then the second question they want an answer is did that 18 to 34 year old demographic campaign actually review the ad. Its a very simple concept. But in digital, until up to two or three years ago could not have been measured. And now where were taking this, and this is the vision, is creating an independent third party cross platform currency. Thats what were really doing here. For cross platform, we want to create not only just to measure the content but also the advertising. And the way were going to be doing this with Rentrak, were going to leverage all of the data assets that we have. And we have massive data assets. We have all of the Rentrak set top box data and all of the movie data they have, measuring a 120 million or so television sets that they measure. We have 1.8 trillion digital interactions on a monthly basis. Remember those tags that I mentioned, the code that I mentioned? You name it, we tag. We have our 2 million person panel. We still measure that. We have all sorts of different assets that were going to put together and create a scalable, not based on just a panel, but a scalable cross platform service so that when Irwin comes in and talks to us about the 50,000, each one represents 5,000, we dont want to talk about that. We want to talk about a census-based cross platform currency product.
Bill Livek - Rentrak - Vice Chairman and CEO
I hope you from that Readers Digest explanation why we did it. For Rentrak to duplicate it, we wouldnt do it. We spent all of our money and energies and human capital, on building the best measurement inside the home in the United States, in a world-class movie measurement business. (Inaudible) Serge just articulated. Think about integrating the two. That gives our customers such a powerful product
Serge, how many customers do you have? [How many] around the world?
Serge Matta - comScore - President and CEO
Around the world, we have over 2,500 or so clients. We work with all of the different agencies.
You know what? Its kind of weird because you like for example, Publicis and WPP, they act as one client, but they have hundreds of clients that they work with. We treat them as one client. So that number is even not as accurate as it should be. But 2,500 plus clients, our business is 70% in the US and 30% overseas.
Bill Livek - Rentrak - Vice Chairman and CEO
Irwin, you said something a while ago at some conference. And my memory is going with age. But Im going to paraphrase what I believe you said. You said if theres proper measurement, it actually will bring more money into the ecosystem. Was I right and could you elaborate.
Irwin Gotlieb - GroupM - Global Chairman
Im going to come at it from two different ways. The first sort of ties back to my earlier comment that an ecosystem is best supported by accurate measurement because today we miss a lot of the cross device media consumption. We cant really join it up properly. And as a consequence, we are understating (inaudible). And we are
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
penalizing media owners who if they werent being penalized might potentially be investing more in the content that draws audiences in. Part of this is just mitigating the risk of starting a downward spiral for now reason other than weve got a damaged (inaudible). That would just be stupid. Because as it happens, most of us believe that television continues to be an incredibly effective medium. Thats number one.
Number two, our analytics rely on accurate measurement in order for us to do proper allocations across media and across media channels (inaudible). When there are measurement shortcomings I mean, by the way, just to give you a little example. About 18 years ago, when we began using respondent level data from Nielsen for national television, and we began to use optimization tools for reach and frequency and things like that we couldnt get that measurement in the local markets because Nielsen was still doing diary data in those markets they still are today and they wouldnt release respondent level data.
We cut out local broadcast spend by about 40% (back here, because what we couldnt analyze, we couldnt allocate against. So we just took it out.
Television has been damaged. Our entire process, the entire investment chain in marketing has been damaged by the fact that we have a chunk of our business that has moved to census level for [that] scale. And we still have a chunk of our business based on a panel, and the two really cant be brought together except through modeling exercises that, quite frankly, are becoming [few].
Serge Matta - comScore - President and CEO
One thing I wanted to add is, and weve been talking, weve been working with Rentrak on this, and other companies on this is, at the end of the day, to think about it from the advertisers perspective, they want to know great, they want to know if somebody saw their ad either on TV or on digital, but they also want to know at the end of the day, that the person buy the product. And simple as that. Did they buy the product. And what this merger will allow us to do is at scale and weve been doing it, weve been working with Rentrak, we partnered with them in the past and weve worked with folks like Kantar, Shopcom, where we can actually link peoples observations on digital, on set up box, to actual purchase behavior at scale. So did you see the ad, did you see that Tide ad on TV or on digital, and then link it to that person actually going to the store and buying that product. And not 6 to 8 weeks after the fact, but within a week or two, so that if its during the campaign, you can optimize if that campaign is not working, change what youre doing so that you can optimize in near real time, versus waiting 6 to 8 weeks after the end of the campaign and saying we should have done X. Guess what, its too late by then.
Irwin Gotlieb - GroupM - Global Chairman
And its not as simple as last click attribution. Its a much more complex and robust modeling process.
Bill Livek - Rentrak - Vice Chairman and CEO
Irwin, we got great support from the other agency holding companies on our proposed merger . But I have a question that goes to the clients. Do the clients care?
Irwin Gotlieb - GroupM - Global Chairman
Yes, ultimately they care. Clients dont actually pay for these services, I mean television measurement service is not something we pass on to the client. So they kind of leave that to us. Some of our clients have great technical proficiency and have real interest and curiosity about our positions and our points of view.
And quite frankly, we have a number of clients whose perspective is that they make the products that they make, and they hire agencies because they have expertise and they kind of leave that to us.
I frankly wish there were more of the former. We do better with them. There are a number of clients who care deeply.
Bill Livek - Rentrak - Vice Chairman and CEO
So the merger and the products that we have and were going to build. At the end of the day, it makes everyone more accountable. There is, in theory, better buying, better pricing, more efficient pricing, and leads to more accountability in the time that the CEOs, we think, of every company are looking for great efficiencies. Is this going to help with that accountability metric?
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Irwin Gotlieb - GroupM - Global Chairman
I think it goes even beyond that to be frank. Weve been talking about this up now for several years but the bottom line is up until 10 years ago, 5 years ago even, if you and I were having a conversation about what I did for a living, I would have said that we were in the business of creating awareness on behalf of our clients. That was the role of the media agency, we built awareness. We took a message that some creative agency somewhere put together and we made sure that message was delivered to the right people at the right time, and we created a awareness. We created reach and frequency modeling, we did (inaudible), we did decay, we did all of that stuff. And we did it with such precision that we achieved awareness. Maybe we did unaided awareness. But thats as far as our [KPO is concerned].
What is changing in the world is that the granularity of data today supports our decision making and our execution against people in the consideration set because we can identify. We can identify preference, and we can push all the way through the transaction so the role of media going forward will be a multi-level role. By the way, the targeted stuff doesnt displace the broad stuff. Its incremental. And there are enormous growth opportunities for media. I think the golden days are ahead of us, not behind us.
Bill Livek - Rentrak - Vice Chairman and CEO
We obviously agree. I want to give enough time to you to ask questions given that this will be the only time. Please walk to the microphone so the folks online can hear the question.
Laura Martin Needham
So Irwin, I have one for you. So if programmatic slash automated theres general consensus that that needs to come to television and you cant do It with panel, you have to sort of do it with census level data can you talk about what you think now that these companies are together, what you think about sort of the trajectory of programmatic/automated coming to television and how aggressive youll be in your work and how youll be pursing (inaudible).
Irwin Gotlieb - GroupM - Global Chairman
OK. I dont love the term programmatic, youve heard me say that before. I distinguish between real time and programmatic because a lot of our programmatic activity is sourcing impressions that have been previously purchased and reserved transaction, not necessarily in the real time.
But the bottom line here is that television, at least as its been executed at a place like GroupM, by my team, has been highly systemic and has been audience focused as opposed to contextually focused.
We stopped worrying about the specific programs we were in and started focusing on the audiences that we needed to acquire to build a specific reach and frequency profile. And we began to do that back in 1997. And the complexity of the task was such, that you couldnt possibly do it any other way, but systemic.
I think the big change in the trajectory that were looking at now continuation of focus on audience but in addition, television is going to be more and more rated, not on a ratings basis but on buckets of impressions against highly refined target audiences and segments (inaudible). When I talk about the marketing funnel each layer gets a tighter definition and a smaller target audience. And so each of those has to be executed in a very, very different fashion. And the complexity of it is as such that you can only do it systemically or programmatically.
Now there are also extensions to television that we havent even contemplated. So for example were playing with stuff today where you see a general purpose commercial on the big screen and you get a synchronized message on your second screen, your tablet or your iPhone, that is targeted to the individual household. So if theres a car ad up there, the guy gets engine and performance features, and the young mother gets convenience and child safety information, right? That can only be done programmatically. And yes, execution of that is real time.
Serge Matta - comScore - President and CEO
And you cant do that without measurement at the census level.
Bill Livek - Rentrak - Vice Chairman and CEO
So as the world is moving, as Irwin says toward impressions, we think thats immutable that the reason we did this deal Laura was to jump over everyone else, to go where the hockey puck is going, to get there first and we think this does it. We set up two combined infrastructures to give the marketeers what they want.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
As you approach the mic though, would you please, for the crowd and for the listeners on the phone, mention who your name is, please.
Alan Gould
Hi . Ive got two questions for you Irwin. First, over the last day and a half, what kind of responses have you gotten from your largest clients [rep] regarding the deal. And secondly, you said that TV is broken. I dont think anyone is going to argue with that. Once you have some combined cross media measurement, do you see yourself allocating more, a greater percentage to the ad budget to TV than you are today? Or does it just decrease at a less rapid pace.
Irwin Gotlieb - GroupM - Global Chairman
The reaction has been as we expected, very favorable and very straightforward. It has varied I mean the first response I got, I shouldnt say response, I got an email within 20 minutes of the announcement that started with the word, wow. The response has been very favorable [for us].
As to the second part of your question, I think that the term television itself is going to become a little less relevant. Television as we used to know it, is evolving away into a digitally delivered medium that starting now is relying on cross device, census level data. It is at least as effective from a targeting standpoint as digital media has ever been. And I wouldnt let old fashioned definitions get in the way of what the future prospects are. The measurement side of television at the moment is damaged. Television itself is not broken and I think its heading to a very good place.
Thomas Paulsen
I have a similar question to the last. This week Discovery guided for their domestic networks in terms of advertising to be flat for the next three years. A few weeks ago, Steve Burke guided for NBC Universals advertising to be flat going forward. So if you go back to your closing comments Bill, you said that the golden age of television is not now, its in the future. When does that upside arrive with these networks?
Irwin Gotlieb - GroupM - Global Chairman
I said the golden age of media.
Thomas Paulsen
Okay.
Irwin Gotlieb - GroupM - Global Chairman
Not of television. So I think I made this comment just a few minutes ago. I think the definitions that weve used traditionally for the legacy media, are becoming less and less appropriate. When you deliver a television ad via dynamic ad (insertion, or via addressable TV, is that really television in the old sense? Is it a digital impression in the new sense? Its transacted on an impression basis. When you deliver a replacement ad, thats highly targeted, on a tablet device, that is watching linear TV, what is that?
Thomas Paulsen
Thats the reason why I used the word network. And so the reason youre doing this deal, is to provide these networks the opportunity to capture that consumption.
Irwin Gotlieb - GroupM - Global Chairman
The opportunity to capture the consumption and to sell it to me in a more effective way. And when I say in a more effective way, its not just for convenience, its actually a lot of work for us, but in a way that increases my clients return on investment.
Thomas Paulsen
So the question is, when?
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Irwin Gotlieb - GroupM - Global Chairman
I hope its soon, but to your point, were not going to see a massive influx of incremental investment in media tomorrow. It will take a bit of time. But everything starts with better data and better measurement.
Bill Livek - Rentrak - Vice Chairman and CEO
I would like to take your question and ask another question of Irwin. In my experience, ad spend is inextricably related to GDP. We have lousy GDP growth in our economy, how much of the predictions of flat is related to GDP growth in being lousy.
Irwin Gotlieb - GroupM - Global Chairman
Our own predictions, we do we do a set of predictions as you all know. Many of you get this year and next year from us, and we correlate to GDP as systemic approach. It is our view that granularity of data can take us off a GDP correlation, and get us to a layer thats better than that if the data and the technology is there to support those decisions.
The key issue here is that paid media as a percentage of total marketing spend, has been declining significantly over the last few decades. And there is an enormous opportunity for that to go back up as ROI calculations improve.
Bill Livek - Rentrak - Vice Chairman and CEO
That is a poor reason please come to the mic thats a poor reason (inaudible). We think we can break this correlation ad spend to GDP with these data sets. And thats why now and why we didnt wait.
Please another question.
Jason Cohen
The deal is obviously about efficiencies, and efficiencies are going to come. So the question is in terms of your clients, they could spend less and get a higher return, or they could spend more and get an even better return. What does this deal do for potentially giving you more data, more measuring, and the CEO of Tide, of P&G can say we can spend 25% less now that we can get these returns. How are your clients thinking about, and how are they going to think about, the efficiencies?
Irwin Gotlieb - GroupM - Global Chairman
So I touched on this just a few minutes ago when I referred to the different layers of the marketing funnel. You know, its funny, but I was involved in a discussion just the other day where a comment was made that search is the most efficient medium. Its not. Its the most efficient medium if you look at it on a last click basis, but if you havent created awareness for the product, nobody is even going to know the search word, right?
If the first time you see an ad for a Mercedes is when youre 40 years old and can finally afford one, its too late. Marketing has a long term effect which weve known about for ages. And there are components of marketing that have a short term effect, right?
For every product and for every category, you have to find the right allocation, the right balance. What were suggesting here is that the role of media has focused on the top of the funnel only. The targeting that happens at the middle and bottom of the funnel is not in place of - you dont throw the baby out with the bathwater - you add incremental layers that have outstanding return on investment. And they replace other kinds of spending.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Matthew Harrigan - Wunderlic
Matthew Harrigan, Wunderlich. One of the things on the advertising to GDP, you get a lot of rigidities in different markets. Brazil has a much higher percentage relative to Mexico, strikingly so, and I guess there are a lot of legacy effects, but do you think that smooths out over time in some of these economies that are pretty similar in terms of affluence, get more educated, and would you be taking a bigger international push when you have so much wood to chop domestically? I know David has commented on this that international might be less of a priority for Rentrak. Is that going to change for the combined company? And I guess the second question is when you get better measurement impressions as well as efficacy of advertising, do you think youre going to get even more dispersion in terms of what people are willing to pay for different networks and different shows?
Serge Matta - comScore - President and CEO
comScore is a global company. As I mentioned earlier, 30% of our revenue comes from overseas. Earlier in the year as you may have seen, we took an investment from WPP. In return for that investment we got a strategic agreement done with Kantar whereby were going to be able to - Kantar is a $4 billion plus research firm from folks they dont know, they measure TV, theyre really the TV currency at the end of the day outside of United States. And in 44 plus countries, they have TV measurement services. What we did, the deal we did with them is, we are taking all of their data in each of the different countries, and then merging it with all of the digital data that we have in all of the 44 plus countries they have, so again, its all about cross media. This deal that we talked about a couple of days ago, a lot of it is focused on cross media in the United States, but as comScore, as an organization, we think global, obviously from day one, and we actually address the global thing in that respect first before we addressed the United States.
Bill Livek - Rentrak - Vice Chairman and CEO
And remember that Rentrak has been working in several countries with set top box, the biggest being mainland China, and were in discussions in a number of countries that set top box return path is in an early stage. Think about it in a way that the technology that we had five years ago, here in the States is now in Latin America. So we are now developing the capability, merging with comScore, the Rentrak massive and passive approach, will be around the world Matthew.
Matthew Harrigan - Wunderlic
And I guess the question on (inaudible).
Irwin Gotlieb - GroupM - Global Chairman
Ill take that one. Let me first address the question about why certain markets track differently as a ratio to GDP. There are anomalies around the world. They are caused by one of two variables in our view. The first is the stage of development in the market. So there are pockets of markets in Southeast Asia, for example, where market pricing is still very low. And the weight levels that people are running would horrify you if you were watching here.
And then there are markets like the one you mentioned, Brazil for example and even Mexico to some extent where there are very, very dominant, near monopolistic positions by one or two media owners, so Global, for example, and theyre able to, because of their strength in the market, hold pricing at a different level, which forces a different level of investment relative to GDP. So thats number one.
Number two, its very, very hard to know just to what extent certain properties are going to become premium as a consequence of our understanding of their underlying characteristics. Its been our experience up until now that the higher the rating in the program, as you might imagine when you have a very high rating program, it attracts everybody. And so it doesnt skew to any specific sector or behavior or anything else. And the highest indexing shows up in lower rated niche programs. Some of those niche programs could turn out to be quite valuable. I think some of them are already getting premiums because weve identified them. I dont think its going to be the programs that people just automatically assume are going to be the premium shows.
Bill Livek - Rentrak - Vice Chairman and CEO
Two more questions from two more individuals standing. Well run a little bit over but this obviously why you came.
Rich Tullo - Albert Fried
Congratulations on the deal. Its going to be great, terrific. The questions not for you guys cause I think the deal is going to be great. The question is for Irwin. 15 years ago the newspaper and radio was going through the same set of challenges, maybe for a little bit different reasons. They introduced, new measurement, right?
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Scarborough, ABC (inaudible). That was the catalyst for measurement, in my view, to make people understand about how much people werent reading newspapers anymore. How is today not different? And how is TV, as it even exists, really video, or digital video, and wouldnt it be more constructive to get rid of the term and think of it as digital video?
Irwin Gotlieb - GroupM - Global Chairman
Well were almost at that point now, because Laura was it you who did the analysis, that indicated if you looked at monetization of web video, more than half of the money returns to the legacy television players because its their content thats being monetized in the digital domain. There is something there. By the way, radio I think, enjoying a bit of a comeback. It has opportunity for some reinvention. Newspapers perhaps not so much. And the issue with newspapers is that they had a terribly outdated delivery mechanism. I mean think about it. News today gets distributed instantly. You cant wait until tomorrow morning to get it on your doorstep. Never mind the carbon footprint of that process. I think youve got to look at each one of them
Rich Tullo - Albert Fried
(inaudible)
Irwin Gotlieb - GroupM - Global Chairman
Delivery mechanism? Its real time. I mean, look, Ive been involved in lots of arguments. Im happy to take this off line because I dont think the whole room wants to hear it, but there are debates about whether [quam] is going to remain more efficient than IP delivery, right, and just a year ago there was a study done both in the US and the EU that showed that IP delivery costs 20x what [quam] delivery does. So is nonlinear streaming a better experience? Only if the infrastructure can support it. If you sit there and have to wait for buffering maybe [quam] is better. So thats a whole separate debate.
Bill Livek - Rentrak - Vice Chairman and CEO
One more question please.
James Dix - Wedbus
Thanks Bill. James Dix from Wedbush. Let me see if I can sneak in two because you guys are that smart (inaudible). First, are there important sources of video viewing that you guys do not measure right now, whether its on TV or on the web and how important is it to bring that into your measurement and whats the path forward there. And then second, are there markets around the world which either have or have tried to have two currencies for television and is that something you envision in the US or globally going forward. Thank you.
Bill Livek - Rentrak - Vice Chairman and CEO
The two currencies, Irwin and I spar on all the time. Clearly as a buyer you have to have a navigational tool. A GPS if you would. Two GPSs and you didnt know which one to follow. Youre in a world of hurt, right? But the competitive marketplace forms an incredible amount of innovation. And that innovation always wins out as the buyer can become more efficient. Then the seller grabs that currency so they can price correctly. And I dont believe it happens on any one particular day. It happens when a particular buyer and a particular seller come to a deal. And over time it develops. Now it doesnt have to be years, it can be a series of months that it happens. But it only happens when theres innovation and an inflection point. I think were there both. Theres innovation and inflection point at the same time. And thats what comScore and Rentrak did this deal.
Irwin, thank you so much. Serge, thank you so much.
Now were going to go to the movies, right? (technical difficulties)
Now we have Caroline Horner, who is going to show you a presentation before we segue into a great panel. (technical difficulties)
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14
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Caroline Horner - Rentrak - Senior Vice President, Product Innovation
For those of you who dont know, I used to work with Mike at GroupM, so we definitely have some of the battle scars from being early innovators in the addressable marketing realm.
Chris if you want to start off.
Chris Wilson - Rentrak - President - National Television
While were waiting for the chairs, let me just introduce everyone just really quickly. Right here this is Andrew Appel. Andrews the chief executive officer IRI. Next to Andrew is Chris Ryan, he is the VP of sales research and strategy for Scripps Networks. Next is Keith Camoosa, Managing Director of research and analytics from Magna Global. Following Keith is John Dempsey, Senior Director of mobile at Oracle Data Cloud, and last but not least is Michael Bologna, president of Modi Media.
Today we wanted to talk a little about cross platform and kind of get these guys opinion. Weve got some great folks here as far as their expertise in the space. Theyve obviously been exposed to all of the changes that have taken place over the handful of years.
I guess first and foremost, you guys had a chance to what Caroline was presenting and talking about. Kind of our view of where the world is going and the role that Rentrak and comScore play. Any thoughts on the presentation or any areas you agree with or disagree with as it relates to what you saw there?
Unidentified Company Representative
I do. Caroline did a beautiful job of articulating some of the really important components of our business right now. As an ad guy, I couldnt agree more that advertisers are thinking far beyond broad demography. They want to reach audiences that have purchased soup. They want to reach audiences that in the market for a particular car. They want to reach audiences that dont have a credit card that have the money to pay the bill. And they want to reach them on television and any other screen. And our ability to measure all those screen accurately, de-dupe the audience, manage the frequency and really optimize the allocation accordingly. If we do that right, than the answer to the gentlemans question to Irwin before, does all this shift increase or decrease the ad budget, it absolutely does increase it. One hundred percent. Advertisers will spend more if we get this stuff right. But it has to drop the silos and I think thats what were here to talk about.
Andrew Appel - IRI - President and CEO
I would add Chris, I think the opportunity is extraordinary. I think we at IRI have been working, mostly with comScore and Rentrak, to link the data together across. We were thrilled when the firms came together and also then to link it to purchase data, purchase behavior, at scale. And I think all of the work that weve done - first its incredibly difficult to put all these data sets together, so I think between what Rentrak and comScore are going to have put together, and some of the work were doing with you guys from a technology standpoint to integrate it, once its put together I think its going to be extraordinary because there really is no scale sets of information about cross platform viewership, and so that platform by itself will create a huge opportunity.
We do a lot of work just looking at the impact on the other side. On the one hand its cross platform viewership, and then on the other side is what result you actually get from the advertiser. The work weve done with you guys for the last year and a half to two years, just shows theres a huge amount of variation in the actual targeting going on today. So where there is variation, there is opportunity. Its very messy to do programmatic television. Theres the programmatic tablet, theres the programmatic digital. And then even if you do it, when we look at it, getting to those audiences that are actually inclined to purchase the product there are still huge variations. Its almost a random distribution. Pulling the data together, being able to optimize and target based on cross platform and then to actually be able to link it to purchase behavior, theres two to three hundred percent in opportunity. Its going to be a huge transformation. This point of who (inaudible). If you can actually get granular data on exposure and link it to granular data on impact you can for the first time execute against that.
Unidentified Company Representative
I would just throw in the fact that the targeting thing, and I think that television is finally starting to figure it out, its the attribution piece that we really havent figured out all that well at least from a syndicatable (inaudible) way. You know there isnt a request that comes in that somebody is not asking for us to prove it. We can put them in all the right shows that make the most sense for the client but now theyre asking for us to show that when the ads received that the next step is purchase. Prior history, we need to close the loop big time.
Chris Wilson - Rentrak - President - National Television
So on that point, is that coming from the agency marketplace or is that coming from the advertisers direct. Where do you really see this request coming from?
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Unidentified Company Representative
Its coming from both. I mean theres still a lot of confusion as to what is really available. I mean I wanted to come a bit earlier today so that I could find out more about the big announcement. Its really exciting. Obviously its really a game changer from a measurement standpoint. Rentrak has been an incredible partner from the get go. I think we were one of the first media companies to sign up. So, theyve done a beautiful job of getting measurement moving forward. Obviously the currency people have not really changed much. Somebody is finally pushing them and somebody is actually going to leapfrog them and measure everything.
John Dempsey - Oracle Data Cloud - Senior Director, Mobile
Chris, Ill take partial blame for that. At Oracle Data Cloud (inaudible) weve done a pretty good job of getting the big brands comfortable with measuring all of their digital media. Theyre used to getting it on Facebook and Google and Twitter, and their broader digital campaigns, so now theyre asking questions of well can I do it on TV. Thats where Im spending the bulk of my dollars and seeing higher CPMs, I deserve that attribution too. And it is coming with Rentrak.
Caroline Horner - Rentrak - Senior Vice President, Product Innovation
Digital attribution is a practice that people are still arguing is (inaudible) about where to acknowledge that (inaudible). One of the things with targeting, I want to share, because some of you understand, youre so used to targeting. But targeting isnt just a definition of what the profile is of the household. It is the same methodology for putting in the actual transaction. So the same methods and the loops. As soon as we get everybody comfortable with it, it is a transaction, so the systems that were building together will actually provide the answers as they go forward.
Unidentified Company Representative
My sense is theres three steps in the process. But you need to get some kind of data together at scale to figure out who should see what, right at scale, across platform. And, then we now have to shift an entire industry thats used to not buying TV that way, and my sense is that there is a lot of legacy behavior than just the buying of TV inventory. We look at the chart, I mean 83% is still effectively bought the old way. Its almost like a reengineering. We grew up with digital with kind of a programmatic ability. There are huge amounts of opportunity with data and attribution (inaudible) because we still see a wide variation in terms of purchasing. Were going to have to transform the whole buying process. And the third is to create the real time ecosystem to see am I getting the right target audience, so I tried to buy this, did I get it? Which is all the measurement (inaudible). And then, did it actually have the impact that youre looking for. And then theres actually a whole world on impact which is is it a sales lift? Or is it brand lift? I always joke, 80% of the people say its sale lift and 80% of the people say its brand lift. And theyre both right. But the stuff were building, and I think Datalogix has a lot of this too, is sales lift. That is only a sub component of lift. Then theres brand lift. The trick is to get that whole end to end process at scale. Panels are important, but over time (inaudible), I think the folks on this panel want to do it at scale. [50] million household level. You guys are building your ID clouds to match it all. But its all three of those steps. (inaudible), execution and actual impact.
Unidentified Company Representative
The good news actually is that attribution scales better than the targeting does. Right, so you have somebody like Rentrak thats collecting all this data off of linear TV. Linear TV sold by the networks is not changing any time soon. Right all of the addressable you guys are doing is still on local avails?
Unidentified Company Representative
Absolutely.
Unidentified Company Representative
Im dating myself here because (inaudible) its still pretty much the same market. But when I can still take linear addressable TV, know at a one to one level who saw that ad, and tie that all the way back to a household, to a loyalty card, I can actually do attribution on that.
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16
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Unidentified Company Representative
And that then helps us get to the next step of what we just mentioned over there about fixing the big problem with television. Even though the household addressability is limited to 40% of the country with a local 2 minutes per hour, the byproduct of an addressable campaign, is how a scheduled delivery against specific content directed to a specific segment. That information then helps that advertiser understand how to rebuild and reallocate their national television campaign. So its one step toward the other, but again its $70 billion is traded towards television in a fairly archaic way and in order to really go from where we are now, to where I think we all want to be, could require a five minute step back to then take two steps forward and thats not easy to do.
Unidentified Company Representative
Systems for setting pricing, for setting scheduling, theyre not set up for programmatic.
Unidentified Company Representative
Theyre not. Theyre not. I mean broadcast television networks cant even send a proper bill. They send us an invoice thats 15% higher than what we actually want to pay. They cant get net and gross right. The last time an agency got 15%, I was six. It just doesnt happen anymore. So theres a lot of logistical infrastructure that challenges that but it doesnt mean the advertisers dont want it and it doesnt mean theyre not willing to pay for it. Caroline mentioned before about understanding the premiums of targeting and waste reduction. They are starting to get that and they are accepting those premiums if they were properly processed.
Unidentified Company Representative
And the opportunity is so big. The work we do just looking at the Rentrak data versus the purchase behavior, the audiences, theres a 20 - I was just looking at it yesterday. Theres about 35 different brands in CPG and theres a 26% inefficiency - if you just basically optimized and got the shows to the people who are likely to buy the product, whether its soup, [colas], soda. So youre talking on $70 billion its a $14 billion optimization. Just in CPG.
Chris Wilson - Rentrak - President - National Television
Whats interesting in listening to you guys talk, right, is that clearly the media marketplace, I dont even want to call it the TV marketplace, is evolving. And the tools and the techniques that have been used primarily in a direct marketing mentality, whether that be digital or anything else, are kind of making themselves available or important across the entire ecosystem. Its really about managing touchpoints with those consumers. I think whats interesting in listening to you guys talk is that theres no question that the television marketplace is going to have to evolve to keep up with that. And it sounds like the tools that have been historically used to try to deal with that just arent going to be satisfactory in the future. One of the things I wanted to ask Keith about was theyve been doing some really interesting work with a system they call Amp, which Ill let him explain what that is and share what hes comfortable sharing, where theyve been doing some work for some time now with comScore and Rentrak data within that system, more on a proprietary basis. It would be interesting to kind of hear your perspective Keith on how thats worked and how thats kind of a new evolved tool for looking at media and how thats helped you guys with your clients in the business youve recently won, Coke and CVS, for example.
Keith Camoosa - Magna Global - Executive Vice President, Managing Director, Research and Analytics
Yeah, sure. Three or four years ago when we had the shocking revelation that all of the tools in the industry were insufficient, to do the things that we wanted to do to target more precisely to measure ROI more precisely. So working with firms like Rentrak and comScore, what we started to do was to build out our own data set where we get raw data feeds coming in, respondent level, panelist level, the most granular data possible from as many premium partners that we can find and we sort of built our own stack, so with Rentrak and Rentraks operator partners for TV. We later on, comScore for digital. We add sales data either from the clients CRM or from industry providers for automotive and for CPG.
Its been challenging and exciting. And what we have found is that we actually need to start building software, build UIs, so we could handle all this data. So its super exciting for the industry to have more useful tools come out to the marketplace, so that we dont have to continue to build our own tool, and we dont really want to be in a tool business. We want to be in a advertising planning, buying and optimization business.
But certainly, Rentrak has allowed us to sort of build our own tools and get much more precise than what we could find from off-the-shelf solutions.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Chris Wilson - Rentrak - President - National Television
Thats an interesting points, so just to follow on. So you dont want to be in the tool-building business, yet, you find yourselves building tools.
Keith Camoosa - Magna Global - Executive Vice President, Managing Director, Research and Analytics
And were not very good at it.
Chris Wilson - Rentrak - President - National Television
And the reason I asked that question is whats the decisioning around that? Is it simply that they just didnt exist that youre like, okay, were going to go do this?
Keith Camoosa - Magna Global - Executive Vice President, Managing Director, Research and Analytics
Yes, yes.
Chris Wilson - Rentrak - President - National Television
Or is it because you wanted to do that to have more control over what you were doing?
Keith Camoosa - Magna Global - Executive Vice President, Managing Director, Research and Analytics
A little bit of both. At the most sort of pragmatic level, it was literally impossible to plan cross-platform across a common audience. So identifying that targeted audience that we think are going to be the most responsive, have the highest value for the clients long term. It was nearly impossible to plan TV, mobile, online, print, et cetera. Against that same set of people. Planning was traditionally done in silos, so your digital TV, digital prints, and in visual. And maybe you get some random overlap and you can measure it on the back end to learn that cross-platform works better than single channel. But we didnt have a way to deliberately plan for that, which is where tools come into play because everything is centered around tools. The industry resolves around tools.
Chris Wilson - Rentrak - President - National Television
And one of the things I think that along the tool idea, right, theres when you think about cross-platform and I think sometimes it kind of mashes together. Theres really I guess two different types of tools that are out there on the broad base. One, which is measurement of content viewing/ consumption. And then secondly, its more targeting buying and measurement, right?
It was interesting when we started the conversation, a lot of it was really around that second piece, the targeting, buying and measurement versus, hey, I need to understand how many people are watching a particular program from CBS across all these platforms? Extremely important, right? For Chris business, you got to understand your entire viewing ecosystem as it is the buy side.
But theres whole other set also thats really about, how do I select the right audience, my advanced demographics that really age and sex just isnt cutting it anymore because I cant get my lift. How do I buy it across all that media? How do I measure the result for that?
When you look at that, is this kind of a function of those two things work together to be able to solve the problem, or you see one being then the completely separate opinion on your business, depends on what tool you use? Do they work in tandem? Or do they work separate or apart?
Unidentified Company Representative
Yes, I mean its separate right now, frustrating really separate, unfortunately. The reality is theres nothing right now that I can say I know for sure that you take Chopped on the Food Network, I know what the TV rating is, I know what the VOD rating is, I know various impression levels across all the potential platforms on Netflix but I cant give that one number, right?
And I sure cant give a number for an advertiser to say, I can give an estimated reach number, but I certainly cannot share with them simply because the ability is not there right now. What a campaign across all of our touch points are again, is delivered for them is frustrating. Its disappointing, though, it seems like maybe, right, maybe were finally there with what Rentrak and comScore are trying to do.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
At the very least, at some of the stuff that the currency company is doing I try not to mention any names they, at the very least are maybe starting to sort of wake up and smell the coffee about what needs to be done to push everything forward.
The reality is, TV guys, the sort of like traditional TV guys like us, we want to move forward, right? I mean we dont want anybody buying adults 25 to 54 anymore because were not getting paid for the audience that were really delivering. Have the audience falls out of that. And we have brands with unbelievably passionate people who spend a crackle of the money and they are were not getting paid for it. And were not measuring those people.
And just to go back, its very frustrating, but finally for the first time, as maybe yesterday, I actually see light at the end of the tunnel because I go back to and we talked about attribution. Its not really there yet because we cant afford the current models that are in place to prove attribution because everything is custom right now. To prove attribution, theres no syndicated attribution model out there. So I cant offer that to everybody.
I have to pay a lot of money per client to prove that it worked, that all this advanced targeting that we worked really hard to develop and to share that it worked, its just, its not scalable right now, its not when its syndicated, then thats a game changer.
For me, right now, doing these one offs are there are a bunch of case studies that are helpful, but and Im rambling a little bit. But its
Unidentified Company Representative
No, its very true. We have the same problem on the buy side. I mean in order to pull off a stunt like (inaudible) audience, thats in the market to buy a specific vehicle and manage the frequency just to that audience, pay for the delivery, ignore the waste and then tie it back to car sales. Theres a lot of hands in that pocket, data is expensive. Theres tools and tech that needs to be implemented. Theres research on the backend. Theres bodies involved. And organizing all of that together and adding it all up once everybody gets paid, the price tag is high. And its not always possible or feasible for and thats not the kind of cost that can be directly passed to an advertiser, right? Sometimes, it can. But many cases, it cant. It cant all be the burden of the agency or the media owner.
So we struggle a lot with sorting that. Like were playing, were learning a lot with these household level addressable tests and attribution in the local to minutes per hour in 40% of the country. But in order to make this big, in order to fix this $70 billion problem, how we manage all these cost and how they get absorbed and thats a real issue. And then back to what was said just before that, part of its on the advertisers advertisers, youll still look at some major advertisers who spend hundreds of millions of dollars and youll ask them who they want to reach and theyll look you straight in the eye and say, theyll say adults 18 to 49. It makes your stomach turn.
So part of this is helping them understand the value of audience targeting and if we cant do that with attribution because of the cost, then we need to find another path. But its definitely the time to do it.
Unidentified Company Representative
Yes, I think, Chris, I actually your original question was how do we see the ecosystem working? I think its relatively straightforward what comScore, Rentrak and, well, IRI are trying to do, right? So you have the process from insights to planning, to targeting, to activating, to measure, to optimizing. Thats how we go we think about it.
And I think what were going to do is build a single platform that covers everything except the buying engine. So were going to merge all of the data sets of comScore and Rentrak to get cross-platform viewership. Were going to take all the purchase data sets of IRI and our partners and create attributed lift measurement. And that will, in a syndicated way, at scale, and so I see that as the vision, right? The insight platform that allows you to see cross-platform viewership attributed to who actually saw it and then what impact did it have on buying.
And I think wed like to come up with a long-term brand measurement. Weve got a couple of things in the R&D lab. Thats going to feed you the audience selection that will then basically go into the buying process. And I see the buying process at least in the short-term until we build the buying engine. As thats where the break happens, right? It goes into the buying processes of the ad agencies for [TV] and digital?
But then it comes back out in real-time measurement, right? Real-time measurement falls from a viewership. Did I hit the audiences I want? And real-time measurement from an impact standpoint. Did it actually have the lift associated with it? And then to answer your question, Im not sure its going to be cheaper because thats obviously not business were in to make it cheaper because we have to make a living for all this.
But by syndicating it, I think it will move from a bespoke kind of PowerPoint-based end of process exercise, it feeds a planning exercise to an on-demand process. And it should be an on-demand process so that you can see the viewer every week, you can see the audience or who sold what, what was my plan? Did it capture the actual
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
viewers? Did it hit it, right, using Rentrak comScore viewership? And then what was the impact? Did it drive the business lift by geography, by creative, by campaign, by segment? And then how do I change the behavior next week to basically improve the ROI associated with what I did last week? I mean thats our vision. Thats what Bill, Serge and I have been talking about for a while, right? An on-demand vision and on a single platform.
Chris Wilson - Rentrak - President - National Television
So that makes a lot of sense and one of the things I wanted to bring back to a little bit is, so the role of the other screens in the process, right, so you see we saw a slide earlier that talked about the still the majority of viewings taking place on traditional television will be for a very, very, very long time in my opinion. I dont see that changing. But you do see that there is more viewing taking place and that actually overall view is up when you look at it across screen, right?
So its clearly an important component because there are people that would believe that television viewing is down, which is not. Its not right.
Unidentified Company Representative
Its not true.
Chris Wilson - Rentrak - President - National Television
So that being said, how important is it and maybe this is kind of a silly question. How important is it to really be able to bring all those screens together to understand that, number one. And number two, when that happens, does that put us in a position where we start to move away from traditional metrics of GRPs and start to move into impressions, right? Especially in the media and overall basis.
Unidentified Company Representative
Everybody always sort of begs that question away from GRPs, away from GRPs. And theres plenty of advertisers that are gravitating towards moving towards an impression basis. I mean the GRP is just math, right? Its just impressions of our audience. So as we get more granular with our segments, right, the GRP can still be there, just the mathematical equation to define the GRP just becomes a little bit different.
But part of what we struggle with with advertisers and what agency struggle with was what Bill and Irwin started talking about earlier, was feeding that funnel, helping maybe the platform youre talking about fix this force, but its helping the advertisers identify how much to put up the broad audience versus how much to put to the single box versus in between and getting to that information definitely moves us forward. But we struggle with that.
Unidentified Company Representative
I think thats right. The funnel is a basic concept, but incredibly important. Most mass marketers dont have an understanding of how many people are actually in market shopping at a given point in time. So, for example, automotive, hundreds of millions of dollars that massive reach and frequently, but in reality, theres a couple of hundred thousand people at any given time who may be looking for a new car.
So the granular data combined with an understanding of purchase process or funnel sizing, allows us to make smarter decisions and not have to rely on GRPs. And using Rentrak data and some of their automotive partners so that they can hold purchase data and find it, has allowed us to go to TV networks and asked them to work with us in a new and different way.
So traditionally, some networks dont break their bundles. Weve been able to go to them and show them within your bundle programming, heres what we want to cherry pick and heres why. And weve had a lot of success there.
Caroline Horner - Rentrak - Senior Vice President, Product Innovation
We had a bit of lively conversation last night, the night before before in preparation. It was about impression-based buying, network perspective versus the advertiser perspective. I wonder if I can start on this side and you represent the advertising and run across with the network side.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Unidentified Company Representative
Yes. I mean weve done lots of conversations with advertisers about that. And once theyre sold on a segment, more granular than the broad demography theyre currently buying on, theyre definitely more open to an impression-based model. The issue that were struggling with and this is just a continuous buy versus sell issue is data that were collecting from the set top box or that wherever were collecting from, that will absolutely help networks extract more value out of some of their longer-tail inventory. Well absolutely suggest that we should be buying more of or pay more for specific pieces of content and theyre 100% right and most of the major television networks are coming to market with this right now. Like weve already said, follow the data, do what it says, its the right thing to do.
The flip side to that is when that same data suggests that the top rated programs that theyre just raking in the money for isnt doing so well against those high value segments, not always as flexible and willing to adjust the prices there. So the constant debate comes, do we continue to trade on the broad demography and then do our own analysis on the buy side and the sell side, and start the negotiation there, or do we work with one or the other?
The data is kind of the same. Its the analytics that behind the data that generates the value. And everybody wants to win, right? The advertiser wants all the value. The buyer wants the value. The seller wants the value. So I think thats part of what were struggling with in moving to an impression-based model. But I will say that a large portion of the advertisers that we talk to every day are very open to it because they know that if you want to get to a specific audience one way or another, you have to start breaking up that unit.
Unidentified Company Representative
And I think breaking up that unit (inaudible), if its truly one to one VOD addressable you have no problem, its a single stream, you insert your ad, you make a decision at that point. If its linear addressable, and youre selling Lexus buyers I only want to hit people $100,000 a year or more. Ive carved out that audience. I now have to charge a really high CPM to sort of cover my inventory cost. And then I got to sell the rest to somebody else.
Unidentified Company Representative
But if planned properly, that high CPM is worth every penny. And thats on the agency to articulate. A smart targeted media planner will know what he or she should pay per segment. Even if thats $100, thats fine. Now yes the media owner does have 85% to sell off, but that $100 per thousand might have covered 50% of that unit, and then they have to do it a few more times. But in the end you do this right, everybody wins.
Unidentified Company Representative
I saw two (inaudible) agencies come in with a bundle of advertisers that were all complementary to each other to all run at the same time to make any of this stuff work.
Unidentified Company Representative
And thats definitely not easy to do.
Unidentified Company Representative
(inaudible) a micro economist from decades ago, you know an economically rational model says that if you make the buying and selling more efficient by creating more target, more alignment of interest, then both people benefit over time, right? More trading occurs and theres more economic rents
Unidentified Company Representative
^ If theres enough liquidity in the market.
Unidentified Company Representative
If theres enough liquidity. Theres assumptions behind capitalism which is capitalism and free markets and liquidity which dont exist. But the logic of linking viewer to purchase, to behavior and then optimizing around behavior, which is what I was going to say ultimately, the more you get accuracy of impact, the more youll optimize around impact and not around viewership. And then whether it [held to] trading, thats what I said earlier, the stickiness of the legacy models is whats actually going to be the hardest thing to overcome.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
I think were getting close. The process panel over the next especially with the comStore, Rentrak data thats coming together, to be able to have the infrastructure of information to go end to end, and then well have the tools and the applications to basically facilitate the process. And then the last piece is going to be the people because it always is the people, right? The people whove been doing things the same way.
I mean, weve been out together with clients for the last two years talking about ways to optimize your TV planning. And then it runs right up to the people who basically have been doing it the same way for 10 years and they dont want to stay an extra hour to deal with all the extra work that comes with making a more sophisticated buying plan, so.
Unidentified Company Representative
So thats a good point because youre right. I sit in an agency and theres a lot of people like that. But theres two other factors with that. Yes, for some of these guys, they want to leave at 5 oclock and not spend the extra four hours to do it right, sometimes. Sometimes the advertiser themselves are saying no way, we dont want to do it that way. We liked the way we did it yesterday.
Unidentified Company Representative
No, I [approve] that one, guys.
Unidentified Company Representative
And even if we do stay an extra 12 hours, hire 30 more people to do it the right way, does that mean the advertiser is going to actually pay us for that? Or do they expect us to do more for the same amount of money? So there is that problem of doing all of this the way we want to do it can take a lot more manpower and that manpower does [go I think]
Unidentified Company Representative
I said hopefully the point about once you can actually demonstrate ROI through kind of impact data at scale, then itll become easier to sell it. Its one thing to say I did a better job getting to the audiences that I think were the ones you wanted because you did this like segmentation and then you bought something and you got a 20% improvement of the type of people you wanted to see something. Im hoping that its pretty dramatic different when you say you changed what you did dramatically and here is, literally, the ROI that we can provide it to in real-time or semi real-time. Then it becomes worth the effort, right?
Unidentified Company Representative
Agreed.
Unidentified Company Representative
Then youre looking at someone saying well, spend $100 million, you used to not have any idea what the impact is, youre now getting $300 million of sales lift at in this combination of TV digital with bundle. If you do this you get $400 million and then three months later you got the $400 million and now its like well now theyll pay you. Hopefully theyll pay you half that benefit.
Unidentified Company Representative
You have [referred to] 20% of that.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Unidentified Company Representative
You know what I mean.
Unidentified Company Representative
I know what you mean and I agree 100%.
Unidentified Company Representative
Im talking about hard facts in real-time.
Unidentified Company Representative
Yes. I agree 100%.
Chris Wilson - Rentrak - President - National Television
One of the things that I think is interesting in listening to the conversation is that a lot of the tools that would drive this are just now being created, right? And they havent existed in the past and theyre starting to exist today, especially with organizations like comScore and Rentrak coming together.
I guess two parts of the question. One is, is the reason they havent existed in the past is because you cant do it without large amounts of data and information, right? You cant do it based on survey research alone. Theres just not enough duplication between the different areas. Meaning, I know someone watched this on linear television, I know this is what theyre watching on Video on Demand, I know this is what theyre watching on their tablet. And I need to understand, right, if their I cant just bump those numbers up against each other and look at it and say heres my total number. I need to know, yes, they watched Chopped on these days on television, then they watched this on their tablet or on their PC. To put all this together is number one.
And number two, to be able to measure the effective ad exposure, because [television] is not about content exposure when youre doing this kind of work. Its about being able to say I saw that television ad. Because without it, you cant measure the attribution level.
So along those lines, how important is it to be able to understand, literally, the viewing from a duplication standpoint on cross-platform, number one. And number two, when you look at it, is a big part of this problem not being solved in the past because there just hasnt been enough information or data to be able to put together to answer the question.
Unidentified Company Representative
Well take a little bit of and if I may, Ill just make a comment on the impressions versus the GRPs.
Chris Wilson - Rentrak - President - National Television
Sure.
Unidentified Company Representative
I think theres a lot of nuance. And advertising has always been a [have-to-have summer bolt], so precise targeting but mass media as well. But were not necessarily in the direct marketing industry, so if we want to find 10 people who are going to buy (inaudible). But we also have to put as in contextually relevant places where people are paying attention, create value, experiences, having lots of use cases. In addition to driving sales, investors need to see the ads, employees need to see the ads. Its (inaudible) through advertising.
The ads have to work and they want to measure even better. But you need to have some balance between the sort of direct marketing stream sort of the old way of just putting ads everywhere, holding up their work, youve got to find some balance.
I think Chris to your question, absolutely, we havent been able to stand against the same audience before because the data just wasnt there.
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23
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Chris Wilson - Rentrak - President - National Television
Right.
Unidentified Company Representative
And when it was there, it was so thin that as soon as you cut it, [they] disappeared.
John Dempsey - Oracle Data Cloud - Senior Director, Mobile
Yes. The technology is just becoming available. Oracle has this thing called the ID Graph and what that is is our ability to stitch everything to a universal profile, to a universal ID, so these login data to get cookies, mobile in-app IDs. And then we have links into the guys like Facebook and Twitter and Google and Pandora. And now were starting to do it with the cable operators or Rentrak as well. And finally, people are getting comfortable with the idea of stitching everything together to get that single person and to be able to target universally and measure universally against it.
Chris Wilson - Rentrak - President - National Television
How important is that, I guess is my question. So its great that we are able to do it, but as an advertiser, an agency, the [nick] of that is that if this is really important or its nice to know or its critical for the way were going to be able to look at media in the future.
Unidentified Company Representative
Same thing. Do you think its just nice to have? I mean, people are saying its mandatory going forward.
Chris Wilson - Rentrak - President - National Television
Yes, right.
Unidentified Company Representative
Its not plugged in to all the systems today.
Unidentified Company Representative
I mean, to your original question of why hasnt it already happened if its such a brilliant idea, right, which was kind of
Chris Wilson - Rentrak - President - National Television
Right.
Unidentified Company Representative
your starting point. In some sense, the measurement or the data industry has always been a lag reality, right, because its hard to predict, like Internet of Things, right. Should we be going out and collecting Internet of Things data to integrate with their ID Graph to build an app scale exposure on your refrigerator, right. I probably want to wait until theres more refrigerators telling me what to buy before I or air conditioners that are telling you its hot, so go get some blankets or something or cold or whatever.
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24
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
So I think data and measurement science will always lag reality because thats our job, is to build the infrastructure to model reality. And so its natural that in the explosion of mobile and digital, which is a three-year-old or four-year-old or five-year-old phenomenon that were all catching up in terms of ID grabs and then data.
So that would be my answer, which is I think the time is effectively now, right. With the coming together of the two firms and the beginning to basically map the IDs and the technology, I think were at that point, right. It was a logical time four or five years after this revolution of data that the scale is in place now to merge all the datasets together, to get the behavior on the viewing or and by the way, its just not viewing. Its going to include email promotions, direct mail. Its all going to come together, right? Its all going to be at scale.
And then youre going to then link it to the behavioral data, whether its auto or purchase. And thats going to provide the ecosystem to transform how the ad world exists, I think. And I think the timing is probably now, right, the confluence of the datasets, frankly, the technology and the analytic models. And some of the stuff is pretty complicated even analytically. I sometimes will often say that the analytic science is behind the data aggregation process, right. The AI and machine-learning it takes to figure out what to do with weve put together TV, digital, social with our partnership with Oracle, weather, gas, fuels, supply, econometric with 150,000 stores.
Unidentified Company Representative
But just having everything.
Unidentified Company Representative
Seventy million people in loyalty databases fused with the ID Graph. And then youre like, crap, what do I do with this? Like, this is an end dimensional problem, right, if I want to with email campaigns. And so were building AI machine-learning tools with someone called Mu Sigma to sit on top of this whole ecosystem because all the visualization in the world, the human brain cant possibly look at this 14 dimensional problem and find it and say now you need the science. And I think the science is in some ways, in the next step.
Caroline Horner - Rentrak - Senior Vice President, Product Innovation
Certainly the data mining is the next frontier. Getting all the data to relate to each other, making it simple enough for buyers and sellers to transact without all that complexity I think is the [one will be] elegant.
But I want to thank all of you for your participation. You
Bill Livek - Rentrak - Vice Chairman and CEO
But before we thank all the
Caroline Horner - Rentrak - Senior Vice President, Product Innovation
Okay. Okay.
Bill Livek - Rentrak - Vice Chairman and CEO
Ill just (inaudible) that are in the back. But we should give some time to our audience for any questions they have, [for a twist].
Laura Martin Needham
Id like to go back to something that was part of [really] I am interested, Michael, of course in your view, but on [pat] agencies under review, brands without agency and record numbers, Im interested in why you think that is. And secondly, of the people who fire their historical ad agency, what do you think the number one reason was for changing those agencies?
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25
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Bill Livek - Rentrak - Vice Chairman and CEO
Loaded question. Who wants that?
Unidentified Company Representative
I think so. I think [more here] is hear panels like this and many others and in meetings and theres a general sense the industry has changed and theyre not quite sure what they should be doing. But theyre pretty sure that what they do with their current agency is sort of not what they should do in the future. Compounding with issues around transparency and programmatic and procurement departments trying to drive their fees has created this environment where marketers are looking for change.
Unidentified Company Representative
So I think thats definitely a piece of it. But the other piece of it, and it was said by Sir Martin Sorrell the other day so I dont have an issue repeating this, a lot of it is purely procurement. A lot of these reviews, some of these brands, theyre not unhappy with their existing agency. Theyre not unhappy one bit.
Its their procurement officer thats walking in there and says put the business in review and see if the next sucker will do it for cheaper. And if we continue to undercut each other, theyre going to continue to do it. So, yes, transparency, trust, big issues, better insights, more creative thinking, better strategic execution, all that is a major component of a review.
But theres also that financial component to it. And that really plays a role in a lot of these reviews. And the reason where you can kind of justify that is if you look at some of the reviews, you see the same advertisers putting the business in review every 18 months, every 24 months. And we cant be unhappy with everybody every two years. So there is that factor in addition to everything that were saying.
Bill Livek - Rentrak - Vice Chairman and CEO
Please.
Unidentified Audience Member
Yes, thank you. A question availability for targeting, you said that you were limited to just getting the local [avails]. So there is perhaps a quick pro quo where somebody like Scripps would make more local available if theyre getting cut. So is Scripps doing that?
Chris Ryan - Scripps Networks - Vice President, Sales Research & Strategy
Not yet.
Unidentified Company Representative
We thought its so tightly tied to the carrier arrangements that they have for distributing
Unidentified Company Representative
Yes, theres something
Unidentified Audience Member
in the first place that its probably not going to happen. Where you will see more target where you already see a lot more targeting today is kind of what these guys have been doing, which is instead of trying to do it on a one-on-one basis, lets just look at people who are Diet Coke buyers and go out and find the shows that over index. And thats a form of targeting that doesnt create all these problems that could be done across the US today.
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26
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Unidentified Company Representative
You know what though? You mentioned the carriage agreements. The next round of carriage agreements, right, when that happens, everything that this is going to be part of it, that broadcasters and media owners are going to want their stuff to be made addressable. They cannot be made addressable without the operators cooperation. This will be
Unidentified Company Representative
And this is now going
Unidentified Company Representative
^ Yes.
Unidentified Company Representative
to homes to distribute things on apps over the top and move away from these carriage agreements and
Caroline Horner - Rentrak - Senior Vice President, Product Innovation
Just a point on the linear addressable. The technology is capable today to do it.
Unidentified Company Representative
Yes, 100%.
Unidentified Audience Member
So its just really about the deals.
Unidentified Company Representative
Its purely a business
Unidentified Audience Member
Okay. So this is probably relating to the second question which is Im curious whether the non-Rentrak people can answer the question. So the Nielsen the audience, their SDKs they got out to most of the networks but the hang up, as far as I understand it, is the distributors [dont unload] the SDK software. So is this tied in again to what we just people were asking us, theres some [cutness] that they want thats limiting the growth of better addressability and better all access.
Unidentified Company Representative
I mean, it just it goes back
Unidentified Audience Member
Its a pointed question huh?
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27
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Unidentified Company Representative
No, its a really good question and its a fair question. But a lot of the truth to these questions are it goes back to money and business arrangements. Almost everything were talking about what we want to do is technically possible. But everybody cant line the [back-ups]. Somebody has to get more than the other and thats a continuous battle. Everything that you want to do is possible today, right now. But somebody makes more than the other to make it happen. And that some person on the losing end doesnt like it.
Unidentified Audience Member
Thank you.
Bill Livek - Rentrak - Vice Chairman and CEO
One last question.
Matthew Harrigan - Wunderlic
Matt Harrigan again. This may be the 90th question of the day. But if all of this really takes off and youre in early innings, you get a lot of addressable and all that, ROIs explode and (inaudible) the opportunity explodes. And you dont have the elasticity of budgets, does it make sense to really take down the ad loads at some point in time and maybe in the distant future? So just for purposes of recall and everything is just getting the math to work in terms of the large the overall businesses? I know [that thats a] crazy question but I thought Id ask it anyway.
Unidentified Company Representative
I can start that. I mean, I would say particularly relevant to digital like if youve been to any websites thats cluttered, the user experience is horrible. So a better user experience could be monetized better with a better ad experience sold at a premium. Particularly clear on the digital side.
Unidentified Company Representative
Lower ad loans mean higher CPMs, higher CPMs wont be tolerated without the targeting that were talking about here. So it goes back into it.
Unidentified Company Representative
You can make the math work to make a better experience for consumers and [regulators].
Unidentified Company Representative
You can make the math work but its a separate equation for every advertiser, for every segment, for every network, for every campaign. Its a lot of math.
Unidentified Company Representative
I mean, you could.
Unidentified Company Representative
But its possible.
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28
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Unidentified Company Representative
You could make the Im taking it more from an economic point of view. The more valuable something is, presumably the more likely youre going to increase quantity and not decrease. But thats just a pure these guys are in the ad world kind of data integration [with the inside world]. But it does seem to me now the argument about digital getting cluttered and maybe there is, in some sense, the supply of ads and demand, right, if the value is up, you would lean towards supply.
Caroline Horner - Rentrak - Senior Vice President, Product Innovation
There are some perfect datasets that studied these things, that dynamic ad insertion in the VOD, the ad loads that are in there. They are studying to see where the drop off where people drop off. Its been done in digital as well. So I think well see this expand and contract as people get more familiar with it.
I recall working with Mike and somebody asked well, what if we just sponsored an entire show took out the ads and just say at the beginning and the end and pursue that?
Unidentified Company Representative
I mean, youre seeing these native adverts that were back to kind of advertising episodes in
Caroline Horner - Rentrak - Senior Vice President, Product Innovation
A lot of these dynamics are going on and its really exciting to be in the middle of these intellectual conversations when you have the data. So the data shows the answer and you just have to follow what, [we see].
Bill Livek - Rentrak - Vice Chairman and CEO
Well, the panel was audiences anywhere, but I think it could have been called the people who are in the middle of changing the world. And I really do think that you all are in the middle of magnificent change thats reflective of an economy that is getting a lot more productive.
And with that, I heard Diet Coke and cookies up here. We have all that in the back. Lets take a 20-minute break and well be back. Thank you.
(break)
Bill Livek - Rentrak - Vice Chairman and CEO
All right. Those of you in the back, could you please grab a seat, please? Thank you. Thank you very much. This next section is about local. And as one politician once said all politics are local all advertising is local too. Rentrak, seven years ago, made a big bet in local TV for a couple of reasons. One, we know how the marketing mind works, that all products have regional skews. As a country, we may all aspire to own a BMW, but convertibles sell better where its sunny all year long. And four-wheel drive, BMWs as an example, sell really well where theres ice and snow. Ergo, the simple need for local advertising to support and drive sales, because every consumption area is different.
Now, since we were here last year, we announced that Rentrak had about 364 television stations. And as today, when announced CBS, our total increased to almost 500, a 35% increase. And in that last year period of time, we gathered a great deal of momentum with the owned and operated television station groups and a great deal of the independent groups.
How our processes always worked and we dont see a changing into the future with our merger. As you can see, we usually start with one or several stations within a group. ABC is an example. We started out with one television station, with Sinclair the largest television station group. We started out with seven on our initial deal.
Now, as you know, we have all of the ABC stations, all the CBS, all the Fox, half of the NBCs, all the Raycom and on down the list. But we still only have a fraction of Sinclair, Media General, and Tegna, and a great number of other groups.
Now, as you can see with the shades, those that are complete and a potential. That potential doesnt stop with the merger. It continues. What starts with the merger is the increased digitalization of local. Right now, the local television stations really have no measurement for their video content that they have on the web. And virtually, every television station that has a local news department, has their videos there and its not integrated.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
So when we look at the integration, once the deal was approved, we see it as a local integration and national, because local is very different. And the opportunity of tagging all of those videos that are there, integrating them with our local product, extends the lifecycle of the television stations revenue. And only Rentrak is approaching the measurement system in all 210 markets this way. It is unique and special. The local ad agencies are driving this.
And in the last year, we now have a total count of about 114 local ad agencies. These are big agencies that are using us in a lot of different categories. But there is a common thread. One of them is in the auto category. Because of that, about 40% of those ad agencies use us as their only service when theyre evaluating television.
All politics are local, as I said. And television stations obviously are.
If we look as an example in the midterm election, over the course of the US footprint, TV advertising, as it relates to politics on average was about 6%. But averages are very misleading, sort of like putting one hand in the freezer and one on top of the stove. On average, youre about right. But clearly, this is an extreme situation. The extreme situations here in TV are in the swing states, some of the television stations had half of the revenue coming from the political category. So you can see why politics are so important at Rentrak. And to do it right. And weve become the standard there because people do get elected because their media spend goes a lot farther.
The second local piece that weve become really good at is in auto. Because of our massive database in the local market, it allows us to merge, make, and model. And thats the secret sauce there. And the car dealers see that when they utilize Rentrak, to pick the right TV shows, they do see a pick-up in sales versus buying just on an age demography, [25, 54]. It does move the dial with increased sales. And its a big local category. Again, an average, which can be misleading, about 25% of a television stations revenue comes from this category.
Now Id like to turn it over to Dave to run our panel. Dave Boylan is a board member of Rentrak and has been for a few years. Dave has had a great career in television. He started out with the NBC organization and ultimately rose to be a general sales manager at one of their owned and operated. He then migrated into the Fox organization that, as they were expanding, got promoted ultimately to run their Los Angeles owned and operated TV station. And he bought one, an additional station that integrated into a duopoly.
He wanted to move east and join the Post-Newsweek organization and was there for a lot of years, running the Post-Newsweek, ABC affiliate. In there, he was chairman of the affiliate board. Dave became a passionate change agent in the station business, seeing that the economics of TV stations would be doomed unless there was proper measurement.
Our next guest joining Dave is Steve Lanzano who runs the Television Advertising Bureau, who does a great job and is a change agent in that arena. And he also has a great deal of experience having run an ad agency.
So Im going to turn this next panel over to Dave and Steve. Take it away.
Dave Boylan - Rentrak - Board Member
All right. Thank you. I appreciate that, thank you.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Thanks, Bill.
Dave Boylan - Rentrak - Board Member
Thank you, sir. I hope you can hear me.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Hello.
Dave Boylan - Rentrak - Board Member
Thank you.
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30
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Everybody got sugar in their system?
Dave Boylan - Rentrak - Board Member
There we go.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
And energy drinks?
Dave Boylan - Rentrak - Board Member
A little caffeine.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
a little loco in your system and we are ready to go.
Dave Boylan - Rentrak - Board Member
Compared to the last panel, this is a core panel. This is [on the labs] here.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
[Final panel].
Dave Boylan - Rentrak - Board Member
So well be much shorter. But thank you very much for the time to talk about local television. I want to just Steve, youre with the television bureau of advertising, you represent I think 700
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Seven hundred a little over 700 stations.
Dave Boylan - Rentrak - Board Member
Seven hundred out of how many are stations]?
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
About 1,100 stations. But then that incorporates also some of the public stations [as of] like PBS, et cetera, which are not members of the TV [base].
Dave Boylan - Rentrak - Board Member
And youve been doing this for six years?
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31
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Six years.
Dave Boylan - Rentrak - Board Member
And prior to that, an advertising agency background. So you understand the pulse of whats going on.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Yes.
Dave Boylan - Rentrak - Board Member
And on my side I ran the stations that Bill talked about, I ran stations at Miami. And the one thing that people have been saying is that local television is not the media of the future. Local television is not a growing media. This is something thats not exciting.
But I must tell you that when I ran stations at Greensboro and in Tampa and in Los Angeles, I developed a lot of friends. When I talk to them, theyre selling a lot of cards. Retailers are doing very well with those local television stations, the commercials. What do you see about the effectiveness and the vibrance of local television?
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Number one is I was on the agency side of the business for 31 years, mostly at GroupM agencies. And when I first took this job, some people said are you crazy? What are you doing? Local broadcast TV. And I said bottom line is television does one thing and Ive learned this at any category, in any campaign I ever did. So as soon as I put a local television campaign on so I can turn down the faucet, people came into the door.
Ill give you a couple of facts about
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
about broadcast TV, just to kind of set this up. Number one, do you know Google spends 55% on their advertising dollars over $300 million on broadcast television?
Dave Boylan - Rentrak - Board Member
Great.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
So this is Google.
Dave Boylan - Rentrak - Board Member
Right.
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32
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
What are they doing in broadcast TV, right? Theyre the digital guys, okay?
Secondly is, one thing about broadcast TV and automotive and political are theyre the best case studies ever in terms of advertising. And why is that? A local dealership, he runs advertising. He doesnt care about the CPM. He doesnt care about the price hes paying. What he cares about is, I ran an ad and all these people came in the door and I converted them. Its really that simple. They are really the purest of ROI over time.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
The second purest of ROI is political. Why do 85% of the local television dollars and over 60% of all the advertising dollars or marketing dollars, actually, for political go to local broadcast TV? Its very simple. They win elections.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
And political is my favorite because if you have a 49% market share, you lose, right? You either win or you lose. And obviously, there are a lot of digital competitors out there. Cable is out there. They are hitting the street in Washington, DC. But the bottom line is, and I go see consultants, I go see the agencies in Washington, DC and the bottom line is this, there won 1,000 GRP. You can do whatever you want in cable and digital and earn 1,000 GRPs and I will beat you by nine points every time.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
To me, those are case studies and whatever when I was on the agency side, whenever Im doing a new business pitch, what did every client want? Whats your case study? How did you move a business forward? Well to me, using local TV as, say, you were pitching it, okay, thats kind of the best case
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
study you could ever have.
Dave Boylan - Rentrak - Board Member
There used to be a joke that they said that when revolutionaries take over a country, they dont run in and take over the billboards, they took over the television stations.
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33
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
The stations, thats right.
Dave Boylan - Rentrak - Board Member
Thats what they want to do. And I think thats still true today. So television is working. Are television ratings being understated right now?
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Well, precisely theyre being understated. I mean, its very simple. We cannot monetize all of the content thats going across devices.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
I mean, thats a problem. Very simply, when someone asks me what do you want for measurement?
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
What do you want? And I keep it very simple. I want stability. I want accuracy. I want projectability. And I want the ability to measure my content across every device. You do that, you win.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Its really that simple. So were leaving a lot of money on the table. And its not only across devices. Were leaving a lot of money on the table in terms of people who are outside their home watching TV, who are, in some cases like in sports, 20% of the audience.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Okay, if you actually measured it, and there have been some measurement being done by it. If you look at it, 20% of the audience, theyre not getting paid for. The advertisers are getting it for free because people are watching in somebody elses house, theyre watching in a mall.
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34
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Theyre watching at a party, et cetera.
Dave Boylan - Rentrak - Board Member
Out of home.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
So were losing out of home viewership. Were losing a ton of money right now not losing a ton of money, we are not monetizing a ton of money.
Dave Boylan - Rentrak - Board Member
So a more precise measurement company
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Would be lovely.
Dave Boylan - Rentrak - Board Member
Would be lovely. And I will say that as a satisfied customer, each day when I was running Los Angeles and Miami, in particular, very complicated markets and I would see the ratings vary from day to day, I would see audiences coming and going, I would say wow, I didnt do anything yesterday. Today and even yesterday was kind of nuts. And thats why when Rentrak came along and I became a client, it became a passion that we needed to get granular measurements because a small sample is very, very challenging. And I think its like that.
But along with that, we talked about advanced demographics. Bill mentioned that you can take car dealership registration and match it against viewership. You can take voter registration. How important is that to a local TV station?
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Gold.
Dave Boylan - Rentrak - Board Member
Gold.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Gold. You go to a client, Well use automotive as an example. You go out to a client and you tell them and theyre, say, a Ford dealership.
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35
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
And you tell them listen, Ive got a database thats going to show you that these Ford SUV owners whose leases are on their fifth year, so theyre coming up
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
okay, that they watch my news.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
They dont care about anything. They dont care whether its an adult 25 to 64.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
They dont care what your age is. They dont care what your sex is. They dont care about any of that. They care about this is a person who is most likely and potentially going to buy a car.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
I want that. And what we do is people say talk about digital and by the way, you should be doing digital. Anybody that says you shouldnt do digital is wrong. But its not an or. Its an and.
Dave Boylan - Rentrak - Board Member
Right.
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36
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
And you need to reach people at scale. Thats the bottom line. And what we provide is a packet of those people that you can buy at one time versus trying to reach somebody one at a time. I dont know any especially big marketers, especially big national marketers that would be able to run their business and be successful trying to do it one person at a time.
Dave Boylan - Rentrak - Board Member
Right. We talked about programmatic advertising, sometimes called automated. How will that impact local television?
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Im a big proponent of programmatic. And Ill tell you why. Im going to put my age and my old agency hat back. And if Mike Bolognas still here, hell laugh at this. But the bottom line is this we are very hard to buy for a national advertiser. Really hard and really expensive, okay? But every agency that I speak to says, if you could make it easier to get access to your inventory, we will buy it because you provide me with daypart and reach that I cant get nationally.
Dave Boylan - Rentrak - Board Member
Yes.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Right? Local news, fringe, et cetera. So the bottom line is that when I cant put my fingers close enough together to show you what the margins are for an agency. I mean, theyre non-existent. And if we can provide access to our inventory, very easily and Im talking about from the RFP process to the traffic process, to the invoice process, to the post buy process. If were able to automate that, for me, that
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
I call it programmatic 1.0. Thats 90% of the battle. And then a few years down the road, well get in to these advanced big data sets.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Well be able to find some of these kind of I call hidden audiences, where you might say, gee, I didnt know on this show that there were all of these people that were buying SUVs. And then I could start working my pricing in terms of possibly getting a premium for that. But that is so far down the road for me for us. If we could just automate that process, thered be a lot of dollars that would migrate back from national to local. Our biggest issue is national advertisers moving their dollars to basically national cable.
Dave Boylan - Rentrak - Board Member
And so
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Because its cheaper.
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37
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Dave Boylan - Rentrak - Board Member
automated buying really makes local TV more like internet, in terms of easy to buy.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Well, I dont know if its more like its more like the internet.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Thats correct. It makes it much easier to buy. And if we make the process that much easier, theres a pot of gold out there
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
that we get access to, that right now, we dont have access to.
Dave Boylan - Rentrak - Board Member
When I was running the Miami ABC affiliate, we had 600 to the sample. Rentrak has a 0.5 million and in that market that every day you get information from those 0.5 million. As I understand it, programmatic automated really has to run on those kind of census numbers to be able to do what they need to do.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Well, I mean, ultimately, we would go away from ratings
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
and go and clusters points and go to impressions and CPMs. Thats the only way that works.
Dave Boylan - Rentrak - Board Member
Right.
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38
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
And obviously, therell be different business structures in terms of guarantees versus non-guarantee. Preemptable versus non preemptable. And so it sets up a whole different game. It gets us closer to what the, quite frankly, what the national model is in terms of transacting business. And if we can do that
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Theres a big opportunity.
Dave Boylan - Rentrak - Board Member
Earlier, Irwin Gotlieb had indicated that everything begins with better data. And advanced demographics are really going to add better data, so youre not able just to see who is watching I mean, how many are watching but whos watching. How is that going to impact revenue when it shifts from age and gender, as it is now, to advanced demographics?
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
I guess if we get to a time and place where were able to do biographics, game on.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
I will win every time.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
I would guarantee ROI in terms of running spots on our programming and actually seeing a result of those spots.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
I would take anybody on.
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39
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Dave Boylan - Rentrak - Board Member
Right. Is there a room in this industry of local televisions for more than one currency or rating service?
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Well, thats a loaded questions. Yes and no.
Dave Boylan - Rentrak - Board Member
Why?
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
And Ill tell you why. Yes, obviously, which whenever you decide to transact your business on, between the buyer and seller, if the buyer and seller want to transact business on the Steve Lanzano, anyway, just made up in numbers but were comfortable doing business on that, then we do it.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Okay? Whether its stupid or not, they would do it. So in the past, there have been obviously different sources in terms of measurement and currency of which business has been transacted. So yes, it can happen.
The difficult part is it becomes complex. And Ill tell you why. Your agency X and youre using resource service Y. Im the seller and Im using resource service W.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
How do we do business?
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
And if I have to do that across multiple different types of or different agencies and its mixed up in different in our case, in different group broadcast to the station, groups or reps, it doesnt make for an efficient marketplace.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
So, do I think it can work? Yes.
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40
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
But having to do that in an electronic marketplace and everybody working off the same stream of data, that could get, number one, complex and, number two, expensive.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
If I have to two services, that can be very expensive.
Dave Boylan - Rentrak - Board Member
Right. Im going to ask one final question before I turn it over for any other questions from the audience. How are stations looking to monetize their digital assets? As Bill mentioned, more and more people go to a website to find their news. They go to the local TV stations website, they see video. Tell me the importance of that through the local broadcast.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Well, they need to do a better job.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
I mean, quite frankly, its probably on average, the local station and local [even] group broadcast. And theres some good one out there. LIN Digital does a great job. But its less than 10% of there revenue. That has to change.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
They have to, number one, decide, do I sell it separately? So I have a separate group that sells it. Or do I use my current account executives to sell it and has obviously at a training and education and trying to stay up on it. I think [Corel] did a study that said that those that had a separate group to do digital, had a four to one advantage versus those who just used their current salesman to try to sell.
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41
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Well, number one, we need first, you need better measurements so you can measure it and you can do it. Secondly, we have to be more aggressive in terms of getting out there and selling it. And it comes down to I guess the word is motivation. That you really have to motivate the sales staff and theyre going to have to be compensated properly in order for them to say were going to focus on this digital side and not just trying to sell these spots. And by the way, every average local advertiser out there, they want to do digital.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Now, the advantage we have is they dont know what to do. I mean, in some cases, we do their SEO, their SEM, their reputation management. We do their websites, we create their apps. So the opportunity for a local broadcaster is to become basically their (agency their trusted adviser. I mean, they cant keep up with that, theyre trying to move business every day.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
They know they have to do it and they should be doing it. I mean, we can play a big role to that. I think we need to be much more aggressive about doing that.
Dave Boylan - Rentrak - Board Member
Thats great. I dont know if broadcasters are the only ones that would like to have more candidates in the Republican and Democratic race. If youre
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Actually
Dave Boylan - Rentrak - Board Member
Are you still looking forward to that?
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
I will tell you thats yes and no. And Ill tell you why. In the Republican and the Romney last Presidential Romney when Romney became a candidate is really a precursor to what happens with the money. Heres what happens you got so many Republican candidates out there, right? And theyre all kind of breaking up the pie.
Dave Boylan - Rentrak - Board Member
Right.
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42
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
And theyre going in to the primary and theyre spending money in quite frankly small markets, like New Hampshire. Theres only as you know
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
theres only so much inventory you can make unless
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
you decide to go 24/7 news. Theres only so those are so small markets with not a lot of money. As that plays out, youre playing in basically in one individual market field with a bunch of different candidates. It would be in the interest of our industry for the Republicans to pick somebody rather quickly, because then its game on.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
With basically the incumbent, non-incumbent Hilary Clinton. And now, youre talking about advertising across 10 to 12 competitive states.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Thats big money. And then, you get the super pacs in and theyre paying no not the lowest unit rate, theyre paying a higher unit rate. And now, youre talking about big, big money. That could add if the Republicans were actually to pick a candidate, by March or April, that could add probably another 10% to 15% to the money to the television marketplace.
Dave Boylan - Rentrak - Board Member
Thats such a big market, yes. I know we have a discussion in political and how Rentrak has used advanced demographics and well find those target course.
It brings us to the point where if theres some questions, were happy to take those. Yes.
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43
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
QUESTION AND ANSWER
Alan Gould
Hi, Alan Gould.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Hi, Alan.
Alan Gould
Question for Steve. TV that should be, auto has always been and I think, far way the largest category for TV.
Dave Boylan - Rentrak - Board Member
Right.
Alan Gould
For local TV. And auto sales are now running about north to 17 million units at an annual pace. But local TV advertising, national TV advertising hasnt been that great this year. Whats the reason? Is it going elsewhere? Is it going to digital? Is it measurement? Whats the reason for that?
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Thats a great question. Its concerning. We used to run and mimic, basically, the growth in terms of new vehicle sales. So if new vehicles sales are up six, we were up six, right? And it has been the past six months where theres been a gap in terms of vehicle sales versus our percent increase in terms of automotive, which essentially has been flat, if we look at across the three tiers tier 1, tier 2 and tier 3.
We get about 85%, almost 90% of the tier 2 dollars. The problem is those tier 2 dollars are drying up a little bit. I think a lot of you know that Hyundai basically dropped their tier 2 program, which was a lot of money in the marketplace. So a lot of the hit we took from automotive has been in tier 2.
Tier 1 has been relatively flat. Tier 1 has been down little, tier 1 has been relatively flat. But first quarter was a bad quarter. A lot of the if were talking about the weather, et cetera, its same always, it is what it is. But first quarter was really a bad quarter. The pacing have been better, but it hasnt caught up yet.
The concern was more, are the dollars going somewhere else? Are they really going to digital? Yes, there are more dollars going to digital but thats not the reason why theres been at that big of a change in terms of that gap, which we know are increasingly increasing in terms of unit sales. A lot of its been more because of tier 2. So if the tier 2 dollars ultimately come back, we shall see, then well do better.
For us, quite frankly, better if that 17 curve and I know the NEDA say that this is going to be about [17465] this year. If that will start to flatten out, and I actually think one day it is going to flatten. I dont think of it going higher. I mean, people had nine-year loans which just boggles the imagination. And all of them cost for 11 years. So I think
Dave Boylan - Rentrak - Board Member
Like mortgage on a house.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Yes, exactly.
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44
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Alan Gould
When you say tier 2, you mean tier 1 market size two through market size three?
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
No, no. Tier 1 is manufactures. Tier 2 is the dealer advertising groups. So thats like the Toyota Dealers Association. And tier 3, the actual dollars coming from a dealership. So thats how we break it out.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Im sorry, I lost my train of thought.
Dave Boylan - Rentrak - Board Member
No, regarding the loss of that particular category and the impact of it, but why are those lines running?
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
So for us, if that and I think it will flatten. I dont know, it could get to 18 million. I said I think JD Powers is going to get to 18 million. I have a hard time really believing that. When that starts to flatten out and it goes back to probably somewhere between 16.7 and 17.1
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
It becomes a share war in the market. We need a share war in the market. We need dealers fighting each other for dollars. Because right now, theyre moving 10, without even doing a lot of advertising.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Because people are coming to that. So were kind of in a different place here now. And I think, weve reached that equilibrium where basically, were not keeping up in terms of the percent increase in sales with the percent increase in terms our advertising dollars because of that. So when that starts to flatten out and goes back a little bit, and now, youre starting to get obviously, incentives and rebates in the marketplace, well then, thats going to be very good for us.
Unidentified Audience Member
Do you think the dealer groups are just spending less money as opposed to the money going out?
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45
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Yes, theyre spending less money.
Dave Boylan - Rentrak - Board Member
Right.
Unidentified Audience Member
Thank you, sir.
Unidentified Audience Member
Thanks a lot. Just first question, the local broadcasters, what percentage of the ad dollars are from local businesses versus national right now?
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Great question. Im going to say about 8 or 10 years ago, it was probably 65, 35, national, local.
Unidentified Audience Member
65% of being national.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
National. And 35 being local.
Unidentified Audience Member
Gong back in time.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Going back 10 years ago. Its flip-flop. Its probably, in some its probably more like 70% local, 30% national.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
And of course, as you get to (inaudible) its a national observation in the top 25, top 3 market. As you go out in the smaller markets, youre taking 90% of the dollars are probably local.
Dave Boylan - Rentrak - Board Member
Right.
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46
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Unidentified Audience Member
Right. So its that when we hear that 40% of the local markets use Rentrak as the exclusive or the primary currency. Is it because theyre dealing mostly with local customers? And like, whats the next step, I guess? Your view on Rentraks opportunity.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
I have to be very careful.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Obviously, being in a trade association. I cant cross the line, otherwise I will be wearing an orange tie next time you see me.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
I think the opportunity for Rentrak is with their sample size in smaller markets which creates stability and projectability. And the ability to merge that data with whatever database that you have. Whatever sales database, like segmentation database and bring that to a client. Thats a very, very powerful message.
Dave Boylan - Rentrak - Board Member
Right.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Really powerful message. In fact, Ill give you a quick story. Really powerful message. In fact, Ill give you a story a quick story. I went see I wont say what it is, but a big eyeglass and eyewear makerAnd he said to me, if you can come back to me and show me, people because I need people, every year, they should come back in and get their eyes checked and get new lenses and whatever might be. If you can come in and show me where those watch TV, Id buy you. And I said, great. Give me your database. And so we did a little test. And he went crazy. So why is it? This is gold. This is what we need to be doing more of. As more and more we get to do that, theres a bigger opportunity.
Dave Boylan - Rentrak - Board Member
Right. One thing I will say as a broadcaster is that many of the things who work with local television stations says they love the fact that Rentrak gives them ratings 365 days a year. The sample currency is February, May, July and November. So what that means to a broadcaster, 8 months a year you are working dark.
If you have a sporting events that occurs in August, for example, pre-season football, you got to make up a number, we go out to local broadcasters that are outside of the many market state, they really need to move something up ratings. And thats why the local agencies like it because they can validate it in 365 days a year.
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47
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Unidentified Audience Member
Good question, thanks. If you are to adopt an impressions-based system, and so if that were to run in tandem with a system on GRPs, how long would you feel comfortable before you are to get rid of the GRP system and just use impression-based system.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Its a great question. I did just survey membership about if we move there I mean, number one, would you move there? And number two, can you move there? And I would say, more than three-quarters basis and not only can we, we do it immediately. And its where they can thats the only way theyre going to be able to provide an integrated program with their televisions relative digital operations in terms of selling on an impression basis.
The biggest issue with that quite frankly with some of the bigger agencies, its very hard from media planner who knows, I want X number of GRPs to get X number of reach and frequency, right? How many impressions do I need in the market X to get that kind of reach and frequency? So thats one of the things that theres got to be an education part on the agency side of things I grappled on my agency side is thats all well and good, but media planners dont know how to do that. I mean theyre based upon and theyre basing the GRP is based upon a certain level of reach and frequency theyre going to get. And doing that using an impression is a very different way of doing business. And thats going to take some time.
Unidentified Audience Member
But does that the beginning of the process takes longer or does that mean that the choice of one over the other is longer?
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
I dont think either is longer. I think its probably going to whats going to happen is the agencies will, through their planning on GRPs and just convert to impressions and when the buyers are done that we base upon impressions. I mean that would be the easiest way of doing it.
Unidentified Audience Member
Thanks.
Steve Lanzano - Television Bureau of Advertising - President and Chief Executive Officer
Sure.
Bill Livek - Rentrak - Vice Chairman and CEO
If we could have the Convene person come up and put some chairs up here, please. While we do that, Chris, come on up. Chris Wilson, as you know, runs our national television business. And Chris was a true believer, a number of years ago, in the power of what we could do in political. And it wasnt just because of what we had. He also sensed the SEA change that was going on.
And its because what the politicians are able to do, they attract the best, the brightest individuals who come together as a team and work with candidates and take some of the great technology. Its just unbelievable. And Chris was absolutely right and he built a team of folks at Rentrak to be able to put together a wonderful sales organization.
And with that, Chris, as the chairs come up here, Ill let you come up and start introducing the panel. (technical difficulty).
Chris Wilson - Rentrak - President - National Television
So come on up, guys. Well grab a seat and well get rolling. We just need two more. Thank you. Okay, great. Thank you all. Let me just do a quick introduction of the folks that I have here with me. So to my left is Brent McGoldrick. Brent is the CEO of Deep Root Analytics. Next to Brent is Derek Turner. Hes a Product Development Director at AMG. Next is Peter Bouchard who is the Director of Media Science for Civis Analytics. And last but not the least, Scott Tranter who is the partner and founder of Optimus.
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48
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
So the panel we have today (inaudible) good. The panel we have today is a combination of both parties. Everyone up here is doing a tremendous amount of work in the presidential cycle or election coming up in a variety of different areas. And as we learned in 2012 and we saw in the midterms of 2014, targeting is very important component as it relates to how political advertising is purchased.
So I thought it would be great to kind of hear from these guys because one of the things I think is important to understand is that these guys have been really the frontrunners as it relates to a lot of thinking behind what were seeing to start to occur today more on the brand of corporate side. This kind of microtargeting on the political front has been going on for many, many years. So these guys have a lot of expertise in that area. I think well provide a lot of insights into the future of how this is going to continue to evolve.
So with that in mind, one of the things I wanted to ask if you just Ill just throw this out, starting out is, how do you guys think the political media buy-in has changed since 2012 to 2016 presidential cycle?
Brent McGoldrick - Deep Root Analytics - CEO
Ill take that first. Since I was involved in 2012 and down to 2016, I think on the Republican side, I think that what were seeing is a lot of the old sort of nits and rules of thumb (inaudible). So I think in the political side for years, there was this notion that you had to be on local news in heavy amounts and you had to do a thousand GRPs per creative per week, which gets pretty expensive quickly.
And youre primarily targeting off of Nielsen data, 35 plus, right? And thats essentially how its worked for 40, 50 years particularly on the political side. And traditionally, I think, on the political side, weve been sort of slow to change. I think on the right after 2012, there were pockets of innovation and development but I think as a sort of broad lesson learned in terms of some of the work that [Decaro] and the Obama folks were doing is we have more adoption to that on the right.
And really, what you have is the much more audience-centric view of TV [MiND]. And one of the great advantages, I think, that politics has over other verticals is that we do sort of audience intimacy and segmentation really well, right? So swing voters, base voters, we take voter files, we chop them up, we segment on them, we model on them. We have done that for decades. TV was sort of the last frontier to be able to do that.
And I think if you look at where politics has kind of an incubator for this, you look at other verticals where there are sort of similar theres a large install base or theres a direct response or direct marketing heritage and youve got people who are sitting on first party files, its really a matter of taking that data, modeling it and then matching it up to data.
So I think that, first of all, the usage of those first party files in terms of targeting has increased. I think, secondly, the currency around audience ratings is changing. And the stat we like to throw out there is that if you look on the Republican side, if you look at the primaries up until April 1st so through March. 70% of those is probably about 145 [DMAs] in those early primary states, 70% of those media markets. You were just to look at Nielson ratings, our Nielsen diary-only markets, which means were relying on bad penmanship and bad recall and socially desirable responses at the end of the week. On the political side and just given the amount of money thats insane.
So I think movement towards currencies like Rentrak, getting away from the thousand GRPs per creative per week, youve seen a lot of these myths fall by wing side and the political side.
Unidentified Company Representative
Id just expound on that from Brents point of view. I started looking at TV in early 2013, actually, having written articles about these guys on the stage. And so our point of view in MiND television kind of is different from what I read. I havent experienced it. But TV buying starts with a voter file, a segment, a target where that I believe it stared before with the Nielsen book (inaudible) specific and I order this 1.8 million registered voters. Theres about 0.5 million Republican voters. And on average, in the last two caucuses between 125,000 and 135,000 people showed up.
So by placing the television buy, which by the way, 60% of the spend of the campaign, therefore I should care about it a lot because its 60% of the spend, I dont want to talk to 1.9 million people. Nielsen was two in two. Nielsen is designed to sell to big consumer companies that they can go sell for the 1.9 million, actually more than that.
My job is to figure out who those 125,000 to 135,000 people are and make sure 60% of the spend is getting on those folks. So it really starts with a voter file, a consumer file, a list, quite a bit of modeling so I can understand that that person is going to show up and not that person. And then after that, segmentation even more.
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49
OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Think of it this way, you might have an ad that really appeals to national security voters versus conservative voters. You can get that segmented even inside of a [48 game park] TV now that we have 100 plus channels. So you have your various segments and then you do your match and then you can buy. We all are very familiar with the DMA, the way theyre going to find your real efficiency is in the cable [soft cells] especially among the frequency. Think of it this way, the average Republican voter has a per capita income of north to $60,000. They happen to be over the age of 55, so why get it broadcast as the primary medium. And people I want to talk to happen to have Direct TV, happen to have satellite, they got two cars, they have this (inaudible) income. So the people Im going after are a whole lot different.
And so thats why those buyers come out a whole lot differently. All those points that I talk about whether it be modeling, the segmentation, the philosophy upon the buy, that is how we get efficiency on it. Thats why we like seeing I love seeing on old school Nickelodeon where that 5:30 in the morning, they have Andy Griffith, $3 a rotator, thats great. But you know what, all my voters are watching that. I will buy that all day long and I will let everyone else buy 8 oclock NBC [capsule] at $3,000 a piece (inaudible).
Thats really where its changed. When I talk to buyers weve been doing this for probably longer than Ive been alive, they always say, okay, well, that sounded really fancy. And that doesnt sound my Nielsen votes (inaudible) for the last 20 years. And Nielsen is the gold standard, covered in platinum and this is how it works. This is how Taco Bell buys it.
Politics is different. Im not trying to sell a product of two-thirds of America. Im trying to actually get, in a roomful of 10 people, only seven of them are eligible voters, five will vote, three of them I care about and only one of them I can persuade. Nielsen wants to talk to the 10 or measure the 10. I want to measure the one.
Thats pretty much how it changed the landscape. And from the TV buy standpoint, we work for Senator Rubio. He did $20 million of reservations starting in June. You can imagine and he announced in April. And you can imagine what our April to June look like if I have to fit all of that inside of two months. So it really changes the preparation process as well.
Chris Wilson - Rentrak - President - National Television
Well, I mean thats an interesting point. So the estimation is theres going to be $4.4 billion spend in this upcoming presidential cycle, right? And its targeted at roughly 10% of the population within 14 states, roughly, right, 15, 13, whatever that may be. So when you look at that and everyone talks about the fact that this is so targeted. Yet, TV still with all that moneys being spent, does that I mean the optimization or targeting, is that a real reason why that kind of money continues to be poured against the, number one, the influence it has. And number two, thats why tools like us are so important as it relates to how that money is being spent. Its so targeted at a small percentage of the population.
Unidentified Company Representative
And theres too much money in politics, right? So when I started in politics, the average targeted congressional rate was $1 million, right? So all of a sudden, the average targeted congressional rate is $4 million. Thats real money, right? Businesses then become starting to be efficient until there was real money in it. Once you start putting $10 million, $20 million, $30 million into a media budget, the donors start asking smart questions like, should I be buying? This isnt so rounding there, right?
Like more money brings more accountability because people start thinking that this is in a rounding area. Yes, efficiency is I think a function of too much money and theres too much money in politics. Theres more money in politics.
Chris Wilson - Rentrak - President - National Television
So Peter and Derek, you guys worked for the (inaudible) campaign which is the Obama for America campaign where a lot of work was done as it relates to this kind of targeting. I guess my questions is, you worked on that campaign in 2012, we get winter to midterms of 2014. Now, were going on 2016. So how have you seen the process evolve from what was done in 2012 to where we stand at 2016 coming over the next presidential cycle?
Peter Bouchard - Civis Analytics - Director of Media Science
So I think that we learned a whole lot from 2012. [Karen and I worked] shoulder to shoulder building out the first one. But I think that the biggest things are, is that, number one, we built on top of the best software that like we built out the software itself for the buyer to start using themselves. But its also the speed up which stuff on the ground changes, we go from whole to survey data to now a target, new target. That has to happen within like a very short window. And so you dont have the technology to actually do that type of work then you might have not done the poll and not going to be paying attention to the right people anymore.
So like we spent a tremendous amount of time between 12 and now to build that apparatus and its only going to get above the ground for 16 now. So its great.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Derek Turner - AMG - Product Development Director
I would say that each cycle has been sort of an iteration where were thinking of new features and trying to add new capabilities. And in 2016, I think, well be thinking a lot more about how to extend reach and not just be thinking about total GRPs.
Chris Wilson - Rentrak - President - National Television
Right.
Derek Turner - AMG - Product Development Director
And I also think that in 2012, a lot of us I mean Peter being an exception where its sort of outsider to the media industry. (Inaudible).
Chris Wilson - Rentrak - President - National Television
Yes, yes.
Derek Turner - AMG - Product Development Director
Many of the other people involved in optimization in 12 and since then have been technologists decisions. You dont have the same influence with media industry (inaudible). And so I think theres been, in the past four years, more about a convergence between media buyer culture and their norms in terms of [art] and in the sort of outsiders who are trying to serve them better with new data sources and new tools.
Peter Bouchard - Civis Analytics - Director of Media Science
Yes. And thats a great point because I mean we do certainly some work outside politics. And like the first question that (inaudible) my brand is in presidential election. Its the same exact value proposition. Youre filling out like its the same exact thing. You have a more difficult job when the consumer is voting every single day to whether or not your brand meets their needs or not.
And the entire like idea of the funnel when you go from like voter recognition to volunteer, to donator, to actual vote, its the same thing as awareness, intent, to actual buying. The funnel there are nearly (inaudible) we were speaking two different languages. And when it comes to the media buyers themselves, I think you asked that question originally. I think they are more adept now to embrace the science of everything that we do on this stage and now are reliant on it both of like for targeting, for identifying how you create most value, but then also for budgeting purposes.
So if we can remove this idea of points, which I know you guys all aim, if we can actually put a brand thats against it, then you are in way more accountable and you need more data to be able to do that because otherwise, youre just everything else is [a win].
Brent McGoldrick - Deep Root Analytics - CEO
Yes, I mean its interesting. Just picking up on that point, I mean one of the things that I guess we suffer from in politics as a vertical, but I think presents an opportunity particularly in this cycle is we dont really have sort of backend sales or conversion to be able to tie this to, right? I mean you do, but then the election is over, right? We can go look at it afterward and look at whether or not somebody voted. So we need really good sort of intermediate metrics to the point around the funnel. That can be based on polling. That can be based on site visits, donations and other things like that.
But I think if you think about 2016 from an innovation standpoint, its going to be around taking that targeting and I think doing a couple of things. Number one, better integrating it across media around the definition of target impressions as opposed to targeted GRPs. And number two, really getting into the reach in frequency, optimization and being able to say, all right, heres a heavy consumer of TV, I need to maybe dial back the digital or dial back the number of mail pieces that hit him or by having that sort of global view of the target consumer. And so really what you have is a lot one of the reasons I think politics in this the vertical of politics leads and some of the others that youre seeing in terms of using Rentrak data and targeted TV is because theres so much more time, money, energy, resources that get put into the upfront targeting as opposed to the continual optimization from here to eternity.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
I mean nothing against any brand, but I mean really doesnt matter. Outside of their product launch, we can optimize forever.
Chris Wilson - Rentrak - President - National Television
In this response model, theoretically figure next plan. Yes, right, you dont have that opportunity in politics, right? So youre right. Theres a lot more effort. And like one of the things I wanted to ask you is that when you the only one Im not sure of with Scott, his Optimus, but I know the recipes organization were not even exist prior to 2012, right?
So there was this kind of after 2012 election and it was this either increasing importance or a lot of these elements I dont want to call it an analytic agency, right? But this whole new layer of participation in the ecosystem in a lot of these elections just didnt exist before, right? They kind of squeeze between the campaign and the agency for the [super fast] agency to really kind of manage the efficiency of their spend.
So how is that historically, the presidential campaigns would do all that stuff internally, right? How is that that this new kinds of organizations that you all run have changed that interaction with the campaigns? How do they view that and how do they interact and especially on the right, theres more candidates than there are companies, right? So the question is, how do you manage that kind of a situation too? Is that not a fair question?
Brent McGoldrick - Deep Root Analytics - CEO
Yes, that is totally fair. I mean, yes, the individuals existed in 2012, obviously. But the organizations didnt. On Deep Root, we were essentially incubated on 2012. We have what we would call sort of an alpha version of what we do now. We paid for it, we developed it, we never used it, which is another story. And really, we developed 2013, 2014. And so on the Republican side, 2014 was really our proving ground on the right for agencies to say, okay, theres something here.
Youre right from an organizational design and organizational structure standpoint. I think there are only three or four Scott can correct me if Im wrong or there were three campaigns that actually had like a chief analytics officer on the right. Thats a role you never, prior to this year, you did not have on presidential campaigns.
So presidential campaigns can afford to bring that talent in-house, right? But the brand manager leaves on November 6, right? After the election, thats over. So really, I think the growth of analytics companies particularly on the right for just speaking for the right has really been more about whats the institutional layer given the fact that the media buying agencies on the political side are not vast, sort of horizontally integrated functions, right? There are like 10, 15 person shops that arent going to have these.
So were basically an outsourcing analytics function to the media agencies on the political side. And the campaigns obviously dont exist to be able to bring it in-house unless youre a really well-funded presidential campaign. So thats sort of the evolution of where we can sit between those things. I think we served the purpose of both advising and educating the candidate side, the campaign side as well as on the agency side. And like anything else, you have some agencies that have embraced this. And you have some that say, we dont really like these guys because theyre too transparent or theyre making us too accountable. But its like any other
Chris Wilson - Rentrak - President - National Television
If it doesnt one little feature, or one little thing
Brent McGoldrick - Deep Root Analytics - CEO
Right. Thats right. Thats right.
Chris Wilson - Rentrak - President - National Television
But you have before. So also, I mean with the formation of companies like yours, youre right, a lot of it was done internally with the campaigns. But now, you have organizations that leverage the learnings that come out of politics that are now also available to corporate advertisers, right? And probably for the most part, majority of the folks up here have said, most of their time at least with the organizations were in now in the political space.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
But more and more advertisers are coming. More brands are coming to you guys directly to try to leverage that leverage your expertise to be able to help them attract that 10% or 15% of the population, the most profitable customers.
How does that work? And how do you interact with their agency, right, which may be more traditional media buying agency or you guys placed in the media for those customers, how does that what does that process look like?
Peter Bouchard - Civis Analytics - Director of Media Science
Its very delicate conversation. So (inaudible) like we dont
Chris Wilson - Rentrak - President - National Television
Big growth, right?
Peter Bouchard - Civis Analytics - Director of Media Science
Sort of because (inaudible) already been charged, but Im sure it hasnt. But for us, its just a nice conversation. We just set the tone with the agencies. We like, we dont buy media. Like this is your job. Our job is to provide you intelligence and the software behind it all. That allows you to scale it. And a lot of questions are really similar, its like, how do you digital? How do you do television? How do you do out of home? How do you do print?
And typically, we have a user flow for all of that. And then theyre like, okay, that makes sense, that makes sense. Just as long as like they know where the baton has to be passed, theyre pretty comfortable with us. But usually, its difficult first meeting, but after that, were good.
Now, on the advertiser, typically, youre (inaudible). Both, to be honest. Because I think its just like the campaign style of the approach, right? Its very bottom up. Its very much like, I dont care about people that are 25, 54, I just care about if you can find the right acquisition target for me. We typically say, we can find that person for you.
And theyre actually pretty surprised at how easy it is to both on our trusted services to their existing workflows, right? Like we dont ask our advertiser clients or agencies, tear down everything that theyve done before because a lot of them have done very, very good work. Its just they just need to look at it in a different angle. So thats what we provide.
Unidentified Company Representative
As we say, integration is probably easier too because the campaigns I think campaigns like your $15 million organization that has been male, guy and a digital guy, TV guy, its like the guy for every mode of communication. And again, if youre a brand with a $50 million budget, you have the agency that outsources that. Thats probably more logical solution with campaigns, the economics behind that campaign.
Our structure doesnt allow for that. So integration is key. Yes. The media mix, right? Like media mix is such a dirty word in political campaign, but its common sense in the brand world.
Brent McGoldrick - Deep Root Analytics - CEO
I find one of the things that initially surprise us on the corporate side is when youre talking directly to an advertiser, and a lot of them sort of find the sex appeal of politics like, yes, we want to run this like a campaign. We want to do what you folks are doing. And then we okay, you dont want to run it like a campaign. Everyone will be here until midnight.
But when we ask the question, okay, what would be great is that we can start with a file. What are you talking about file? Name, address, your customers. We dont have that. Right. Do you have like an idea of who the and lot of them are very insight poor. Forget about even having the list. They dont even you cant even describe their core customer. Now, some are really good. Like I talked about large install bases, financial services really good, automotive really good, but there are a lot of industries that just dont have that.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
And even when you start the discussion around, all right, do you have do you mail anyone anything, to Scotts point? Oh yes, yes, yes, we have awards members. Okay, right, lets start with that. And so in a lot of this corporate engagements, we actually start with lets develop lets have a conversation about who your target is and develop a model to go out and find those people to begin with before we can get to the issue of matching in Rentrak data.
But its surprising in how, to my earlier point about customer intimacy, how on the political side, were a lot more intimate with
Unidentified Company Representative
(Inaudible) really good data science department inside the organization. And its either you (inaudible) beginning. And then theyre like, oh, we work with you guys. Can you help us (inaudible) organization and then we can help them kind of make that internal discussion on the marketing side of (inaudible) theyre super happy about that.
Chris Wilson - Rentrak - President - National Television
So its more of a function of where you guys, what makes you different (inaudible) where you start in that process?
Unidentified Company Representative
All the time.
Chris Wilson - Rentrak - President - National Television
Speaking about, what is it were trying to do, right? It sounds like what Im hearing is its very important concept in politics not to know exactly who the 452,000 and how or they care about. If you have that list, right, and then its like, okay, well, thats my group. Now, I need to figure out how to reach those people. And I think what Im hearing you saying is a lot of them (inaudible) and are trying to ID to identify that or they havent. They dont think about that way.
Now, are there certain brands, certain articles that you have this tendency to gravitate towards these types of solutions and is it more mixed brand? Is it broad brands of certain verticals like packaged foods or entertainment or whatever that you typically see that are probably a little more open to this kind of thinking?
Brent McGoldrick - Deep Root Analytics - CEO
Id say there are probably three categories. I mean one is anyone with a, lets call it a footprint under 50 markets across the country, right? So (inaudible) conversation about local. Anyone is not just automatically buying on a national basis because weve got a retail footprint or something like that. Theres a direct response heritage in the company. We got 50 million customers. We could chop that thing up where its [best]. Or based on verticals, its going to be heavily financial services, I think automotive. Surprisingly, entertainment.
I dont know if you guys find this as well. I mean entertainment, I mean actually like TV networks. You would think they know how to do this. But a lot of the interest will go from TV networks versus tell us about these customers that we have, these viewers that we have. Because they create programming thats not based on a demographic, right? When youre in the TV world and youre creating a program, youre trying to reach some audience. Youre not necessarily trying to reach 18 to 34 just to sell advertising to them.
So thats sort of the three categories Id think about it.
Scott Tranter - Optimus - Partner and Founder
Add on to that, its kind of like Moneyball, right? It seems that most organizations look at data analytics as a luxury and which gives them a larger competitive advantage, right? Like the myth of Moneyball is the funny thing is the Oakland As only had $30 million to spend. So they couldnt grab [the] expensive players and use analytics to augment their smaller budget. Yet you dont see very many $30 million, $50 million market cap companies using this. You see a lot of publicly traded ones using it because thats the next big thing. Everyones asking for it. And you know what, whats another $50 million to answer for my $2 billion ad budget. Thats a rounding error.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
And so, its interesting how they look at it, which is kind of funny. We have this thing in politics, right. At a presidential level, this is parity. Our presidential candidates must do this otherwise we will be behind. But we always say man, if we could use this, if youre republicans, if you could use this in the [kinetic] and state legislature which is a super minority for us and the average rates cost $30,000, that would be a difference maker for that state because you take these tools and you put it down as something smaller.
And thats where I think some of the consumers find this you get meetings all day long with companies with $20 billion budgets or $500 million budgets but very few with $20 million, $30 million, $40 million, $50 million budgets who would probably benefit from more because theyre sitting there trying to do the strategy that the $2 billion company is doing.
Chris Wilson - Rentrak - President - National Television
Right. So its interesting. So in certain respects, maybe some of the advertisers who are gravitating toward these more advanced techniques first are mid to small advertisers in that, whatever, $20 million to $50 million range that are looking to optimize their budget. And part of that optimization is geography-based, right, because you guys are [actually] local market.
Scott Tranter - Optimus - Partner and Founder
Yes.
Chris Wilson - Rentrak - President - National Television
Which leads me to my next question in that is everyone says that politics is all about local market, which historically has been the case. But theres been a lot of conversation about the fact that more national advertising might be bought in 2016 just because of the cost efficiencies. Is that something you guys are seeing?
Brent McGoldrick - Deep Root Analytics - CEO
Yes. And Ive been seeing it actually ahead of 2016. I mean if you look at the advertising that ran ahead of the Iran deal, so there were probably six or seven advertisers covering about half of the country. In many cases, they were buying programming at the local level when they wouldve been much more cost-effective to buy national level programming.
And thats not even in a presidential year with the rates being bid off and limited inventory. Thats already so I would expect to see more of that in 2016 where advertisers say, particularly in general, say you know what, lets look at what that cost curve looks like and actually advertise with a national buy.
Chris Wilson - Rentrak - President - National Television
Go ahead, Derek.
Derek Turner - AMG - Product Development Director
I would say it depends entirely what the map looks like. Like deciding on how many kind of states should be competitive, it could be really advantageous to go national or not. I know Obama did some national ads. I dont know [how many] did in 2012. My guess is if the map will be as big, if not bigger, and so I expect national to be even bigger.
Chris Wilson - Rentrak - President - National Television
Now, when youre looking at the national buy, evaluating its value, are you segmenting out just those states or youre weighting down a pretty less value on the states you dont care about and thats when you decide the cost efficiency of that national buy?
Derek Turner - AMG - Product Development Director
I think you generally would say non-competitive states are worth zero. Completely irrelevant.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Chris Wilson - Rentrak - President - National Television
Okay. I see you put a lot of heavy weight on those competitive states and then thats how you evaluate whether or not what that reach is.
So lets move over to cross-platform, targeted TV. When you look at 2016 compared to even 2014 with the midterms, theres a lot more inventory to be purchased, right? And when I say inventory, I mean whether the addressable TV advertising, there was some of that in the midterms, there was virtually none of it in 2012, right? Youve got dynamic ad insertion with Video on Demand. You have programmatic television buy and the audience base buy [into TV] which you guys are experts and do a lot of, if you will, at least from an audience base volume standpoint.
What role do you see a lot of that targeted television advertising playing in 2016? Is it a significant role? Is it this is going to be a year where were going to see how it really works or [election], well see how it really works, play a bigger role in the future? Where is it in that lifecycle?
Peter Bouchard - Civis Analytics - Director of Media Science
So our guys love it for straight up testing for messages, like thats a big piece of it. But I would hope that whoever is running the campaigns are looking across their budgets and looking at their national targeted CPM, their local targeted CPMs and then the addressable or like across the board, right, and then how many you can actually scale with it.
Its definitely going to be part of it. Im just generally weary of the cost to do that, because its not always going to come down to that. Because if youre not talking to one household, youre sacrificing five others just to do addressable, whatever it [makes] out to be, so.
Scott Tranter - Optimus - Partner and Founder
Yes. Im going to say the testing is the understated thing. And I think none of us will get into that super deep because
Peter Bouchard - Civis Analytics - Director of Media Science
Right.
Scott Tranter - Optimus - Partner and Founder
thats the competitive advantage. But the addressable was always interesting. When it first came out with like satellite, I remember we did a match and theyre like oh, this is cool. You can get this many targets and its this cost per CPM. And then I realized it was like, well, I can guess where that voter is going to watch TV cheaper than theyre charging me to deliver it to him.
Peter Bouchard - Civis Analytics - Director of Media Science
Exactly.
Scott Tranter - Optimus - Partner and Founder
And like you explain that to the salespeople and theyre like, they dont get it. And then theyre like, you get on with an engineer and someone finally gets it and then they adjust it down to be like equal. And then theyre like, okay, were on paper. If you can guarantee me this, its good. Thats where the guarantee is run, right?
Peter Bouchard - Civis Analytics - Director of Media Science
Right.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Scott Tranter - Optimus - Partner and Founder
So think about all the technology that delivers this. Its a cable box that hasnt been replaced in 10 years or its an HD DVR that hasnt in politics, deliverability is key. And switching out your [favorite] is key, right? Like if we get money back after the election and my guy loses by a point, I mean, there are people without jobs in my industry who do that. And so if someones going to tell me yes, I think Ill deliver between one and five ads, and they only deliver three, all of a sudden thats the reason why. So thats what kind of scares people on stuff like this.
Also inventory, when you get into it really deep, right, so watching like a Video on Demand like The Office, and all of a sudden Im like Video On Demand, therell be no commercial, all of a sudden, theres a commercial in there. And I was like, oh, okay, I wonder how much this costs.
And so thats the piece of inventory, right? Thats part of the deliverable and then theres another kind of inventory where its (inaudible - technical difficulty) the one question Im sure you guys get it too. I was asking like, okay, what kind of frequency can you get me? And I have yet to get a straight answer in a year and a half of asking, much less a believable one, but a frequency one.
So on paper, its where TV is going to be 10 or 15 years from now, for those of them still watching. But its one of those things like the technology needs to catch up with the marketing.
Brent McGoldrick - Deep Root Analytics - CEO
Yes, thats exactly right. I think theres also a hopefully what we see in 2016, particularly on the right, is a with these increased platforms, the target, I think, differentiation in terms of creative, I think theres a philosophy broadly on the right which is fewer creatives, a more singular message.
In 2012, among my many roles, I was sort of the in-house kind of criminologist looking at what the Obama people were doing and I would come into meetings and I would say look at all the creative that theyre running. And some of our guys god, well lets just democrats do that, right? Because theyre a coalition
Peter Bouchard - Civis Analytics - Director of Media Science
Exactly, yes.
Brent McGoldrick - Deep Root Analytics - CEO
Theyre a coalition of special interests. You got to do one ad for women and then youve got to do but Im like, yes, but the creative is actually selling across a bunch of different audiences. But the ability to addressability I think, hopefully then, whether its addressability or target TV spurs on a differentiation in terms of creativity to be able to say all right, I want a different message and has a different look and feel based on where Im trying to go with it, whether its digital, wherever.
Peter Bouchard - Civis Analytics - Director of Media Science
Yes. And theres just still basic questions that have to get answered, like what does being exposed for an ad, what does it actually do? What does that mean? Whats the halo effect of that ad? Because thatll affect budgeting, that affects frequency. Like, why does the digital do that? So theres just basic questions that still have to be answered.
Like there still isnt a good commissioned research study thats public about the effect of political ads outside of the study that were carried in 2006. And thats a Rick Perry study.
Brent McGoldrick - Deep Root Analytics - CEO
So I want to add just to that point. I mean, one of the differences between politics and other verticals is that obviously marketers are obsessed with can this drive sales, can this drive sales. And to my point earlier, we have other intermediate metrics we have to look at.
But particularly at the presidential level, TV advertising should be about really telling a story, right, and trying to drive a dialog, not pummeling people into submission six months out from a campaign. And so, being able to tell that story through TV ads, I mean one of the things we saw in 2012 was that one of the biggest effects of TV advertising the advertising that we were doing was (inaudible - create different forms) TV as an emotional medium to be able to do that. Theres obviously a heavy science behind it for who youre trying to target. But I think that gets lost on the political side very easily.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Chris Wilson - Rentrak - President - National Television
And part of this is just intellectual curiosity. So weve talked a lot about how the television advertising is bought and sold of different (inaudible) differently in evaluating than it has in the past. The polling, right, which is your metric between when you started to raise campaign and decided whos going to win or lose, is still pretty much what its been in the past, correct? Or are you seeing new techniques or new services or approaches out there that may leverage social media or online or things to that effect that help you get a better pulse or signal on how that exposure is actually affecting the voters that youre interested in?
Scott Tranter - Optimus - Partner and Founder
I mean, I speak for
Peter Bouchard - Civis Analytics - Director of Media Science
Social sentiment you mean, right? [Memories] and things like that?
Chris Wilson - Rentrak - President - National Television
Im not trying to stir a conversation with anyone directly.
Peter Bouchard - Civis Analytics - Director of Media Science
No
Chris Wilson - Rentrak - President - National Television
Im saying that typically, when you think of polling, you pick up the phone, youre making phone calls and boom, here it is and the survey was down and this is it says this is the person in the lead, this is the person at the end of the [trail]. Is there more and more advanced techniques that are being developed to because theres been a lot of criticism about how effective polls are.
Scott Tranter - Optimus - Partner and Founder
Sure.
Chris Wilson - Rentrak - President - National Television
How effective surveys are in the United States.
Scott Tranter - Optimus - Partner and Founder
Yes. I was going to say I think, yes, because everyone thinks of polling as phone but polling is statistical sampling. And you get sample from anything. I mean, your primary product were talking about today is a sample. And it will certainly be different 15 or 20 years from now if I think all of these products every one [of us] will probably be developing our own things and whoever comes up with that will dominate how we interpret public opinion going forward.
But I think its easy to say interpreting a sample is not just on the phones. Theres observed sample, theres [property] sample, for instance. Rentrak data is observed sample. I know that you watched the rerun of Kardashians last night and not Bill OReilly. So maybe that says something about you. Maybe I can interpret something that just like when I call you on the phone and ask you who youre going to vote for and you tell me that, thats a piece of sample thats prompted.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
So if you think about polling or at least opinion measurement in those facets, look around you and say okay, well as a receipt data, sample that I can use to interpret is whether or not someone buys something or does something or doesnt do something. All of this can be interpreted.
Its kind of funny, like I remember reading a story. I cant remember if it was the 14 or 12 election. Someone had figured out how to run a poll, an [FX] slide and they had figured out after the fact that they can tune it in a way that they can predict the election. And thats basically a stats nerd way of saying, yes, I can take the data and if I tune it enough, I can get the answer I want. Its kind of like I can take tofu and if I cook it the right way, I can make it taste like the best steak in the world. It may take me a while, take a lot of skill and I may spend 10 years in culinary school to do it, but the same thing with samples.
And I think thats where polling is going to go is if you look at sample as a generic thing not just over the phones and then if youre able to tune it to get the answer, thats kind of where its going.
Peter Bouchard - Civis Analytics - Director of Media Science
Yes, theres definitely new methodologies. And to your point, its always going to boil down to the people that youre sampling and then the weighting of those people. Its dangerous.
Scott Tranter - Optimus - Partner and Founder
Yes.
Peter Bouchard - Civis Analytics - Director of Media Science
I mean, if youre wrong, youre very, very wrong. And then all the great work that were doing about using it to extrapolate to a national level then use all those Rentrak data, like if youre wrong in that stuff
Scott Tranter - Optimus - Partner and Founder
Its over.
Peter Bouchard - Civis Analytics - Director of Media Science
Yes.
Scott Tranter - Optimus - Partner and Founder
Youre done.
Peter Bouchard - Civis Analytics - Director of Media Science
Like youre telling
Scott Tranter - Optimus - Partner and Founder
You better
Peter Bouchard - Civis Analytics - Director of Media Science
Youre telling your candidate that youre winning when youre losing by five points.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Scott Tranter - Optimus - Partner and Founder
Yes. Yes. And thats how you not get a job next time, yes.
Peter Bouchard - Civis Analytics - Director of Media Science
And so now, I mean we think like media buyers were more difficult in 12. Now its working with pollsters because like same kind of issues, right? Like we did this chart Im trying to think. But on average, we were like I think less than half a percentage point away from the optional results in 2012. And we have this awesome validation chart looking at all public polling, particularly with Gallup, right, where Gallup had [run me up] by like two or three points going into election day, something like that.
And its just like the pollsters themselves now are like oh, this has been really helpful. Can you tell me exactly the phones I should be calling or the exact people I should yes, we can help with that. But, yes, if youre wrong at the very beginning, your entire apparatus could just generally fall apart.
Derek Turner - AMG - Product Development Director
I would add that, yes, I think the polling methodologies are advancing a lot. But theres still a lot of pollsters that do a terrible job with it. So its a really uneven field. Sort of to your point, Scott, I think that if I took response rate, this is like the biggest
Scott Tranter - Optimus - Partner and Founder
Yes.
Derek Turner - AMG - Product Development Director
driver of that. And older white women are like dramatically more likely to answer a phone call than young Latino men or are much easier to get on the phone. So you have to really oversample the young Latino men if you want to get a good prediction. But most pollsters dont do that properly.
Peter Bouchard - Civis Analytics - Director of Media Science
Yes. We did this piece a couple of weeks ago just about those facts. If you want to read about it we have a brilliant guy named [Masso] working for us. Hes a survey methodologist and some of these guys on the stage have met him before. But we were out talking about who exactly is saying that theyre going to be ruling for Donald Trump. And net of the story was that actually the support was way more inflated still higher than everybody else but is way more inflated than people give him credit for. And now its like four or five weeks later and thats coming to bear because his sampling methodologies were way better than what other people were doing in the public and like conflating what the actual reality was.
Chris Wilson - Rentrak - President - National Television
Yes, where I was going with that also is that so that information obviously is critical to understand how your exposure is performing, as Brent had said earlier. Have any of you really taken and looked at exposure to certain ads by segment with Rentrak and then compared that against contractive against polling members to kind of understand how that exposure is affecting the election?
Scott Tranter - Optimus - Partner and Founder
If I said yes (inaudible).
Chris Wilson - Rentrak - President - National Television
The answer I suppose
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Scott Tranter - Optimus - Partner and Founder
One thing I will say it was interesting, so early on we were fooling around with Rentrak stuff. One of the pushback you get from a lot of buyers is recall and recognition. Like they want to know did they really see this, right. And thats like the obsession of all media placement folks. Thats why theres competitiveness, thats why theres creative tracking, thats why they have this and that.
And so, someone came up and my stat teacher would kill me for this but we did it anyway theyre like, well, look, Ive been doing this for 20 years. I want you to do a 700-person poll against the universe and I want you to ask them a recall question. And if the recall comes back 65% like Ive seen for the last 20 years when Ive been doing TV advice, it means that you did it.
And I was like well and they showed me the question and I would have failed my survey design class and all that. It was a horrible way of measurement. But okay, well go ahead and do it. And so, what we did is it was funny, the buyer we were using Rentrak and one [DMA] and not another. And it was great, so what we did is we paid to double the sample. And so then we did a sample inside of the target universe that was using Rentrak and then a sample outside of it, and asked the exact same question between the two. Actually, we tripled the sample because we wanted a lower margin of error because that seems to be the sexy thing it actually doesnt mean anything, but they like a lower margin of error.
And in any case, what came back was inside the Rentrak universe was north of 70% on the recall recognition questions and inside of the non-Rentrak part of the universe was right around 50%. And they didnt believe it, so we did it again. Repeated it again for multiple weeks. And again, used their survey methodology. Actually, they had a pollster repeat it, so all of that until from a recall recognition standpoint, it proves I disagree really with the methodology but using their methodology proved what they thought to be untrue true.
And I think that moment for us was interesting because you are wondering like, okay, I guess Im putting that commercial on at 3.30 instead of 4.30. Is it that big of a deal? But, yes, in aggregate, over millions of dollars makes a difference.
Brent McGoldrick - Deep Root Analytics - CEO
And I would say, so, yes to your question, were doing that. And I think wed be doing more of it. The Rentrak data really allows us to do a lot of things around probabilistic exposure and looking at what is our audience watching, where are we going to target it, and then ingesting ad occurrence data to say, okay, we know with a reasonable degree of certainty that this audience is exposed to it, what does that treatment do.
The problem I think as we go through a presidential election, with recall as a metric, is unlike any other vertical or any other advertising, there is a ton of earned media out there. So asking somebody whether they saw the 15th Hillary Clinton ad is going to be really difficult.
Chris Wilson - Rentrak - President - National Television
Right.
Brent McGoldrick - Deep Root Analytics - CEO
And we got to move beyond just ad recall which pollsters will sort of slap this question on and its October in election year and were asking people whether or not theyve actually seen an ad. One of the things we did in 2012 is, to prove this out, we were actually surveying around specific pieces of creative that the Obama campaign as well as a [part of USA] ran in markets where they have never advertised it at all, just to be able to demonstrate the lift that is improvised around earned media. And you have like 60% recall. So its like
Chris Wilson - Rentrak - President - National Television
So 60% saw an ad but it didnt [launch].
Brent McGoldrick - Deep Root Analytics - CEO
Or they thought they did or they didnt know
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Chris Wilson - Rentrak - President - National Television
Right.
Brent McGoldrick - Deep Root Analytics - CEO
To my earlier point around these other metrics other than recall, recall is critically important, no question about it. But we have to look at other things and be able to fuse different datasets and look at whats going on in terms of social media and visits, and what have you.
And its really for the benefit of advertisers to sort of broaden this out beyond just did this advertisement do this at the very end. And thats ultimately the question. But in politics, we got to do a lot more around the linkages on that conversion chain.
Chris Wilson - Rentrak - President - National Television
So going in 2016, do you guys see more coordination between television and digital than in the past? Because it seems that historically, they have kind of been in silos of things (inaudible) before you got a guy for this, a guy for this, and a guy for this. Is it more of an integrated marketing plan in 2016 than in the past? Or is it just really TV, digital, those are the two pillars on the ground to make sure we get those right?
Derek Turner - AMG - Product Development Director
At least in the context of the Obama campaign, digital persuasion was very much coordinated with TV persuasion. And so, digital persuasion was mostly pre-roll video. And that was usually like a 15-second cut-down of the 30-second spot that wed be running on TV. And so it would be driven by the same sort of messaging shop in the production selection process for both of them.
And then there was a distinction between digital persuasion and digital fund raising, party-building grassroots, volunteer-gathering, those kinds of things. So those had separate budgets and the fund raising aspect was completely uncoordinated with the persuasion aspect.
Chris Wilson - Rentrak - President - National Television
So I guess one last question since everybody here is obviously highly interested in television. Whats the [overrun] around the 4.4 billion?
Derek Turner - AMG - Product Development Director
Id take the over.
Chris Wilson - Rentrak - President - National Television
Over.
Derek Turner - AMG - Product Development Director
Definitely over. Definitely.
Unidentified Company Representative
Yes, probably over.
Derek Turner - AMG - Product Development Director
I think I would as well.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Peter Bouchard - Civis Analytics - Director of Media Science
So were going to come out with an estimate, $4.8 billion, just so that were the experts now.
Bill Livek - Rentrak - Vice Chairman and CEO
Right. So we actually have one more question, though. Whos going to be the republican nominee?
Whos going to be the democratic nominee?
Chris Wilson - Rentrak - President - National Television
Hang on a second, Bill. So this is why you deal with me and not him. I would never ask you that question.
Bill Livek - Rentrak - Vice Chairman and CEO
With that, are there any questions from the floor? [Laura], please.
Laura Martin Needham
So we still have a ton of time on the next 18 months, but given how much is changing, I would love to hear your vision on 2020 and what will be different then. And within that, Im very interested in your view on the mix of money spent in 2020 on TV versus digital because TV is getting better, its getting more targetable. But does that make it, on an impressions basis, more substitutable with digital so that we start tilting money towards digital as TV gets sort of better and more impressions-based?
Peter Bouchard - Civis Analytics - Director of Media Science
So from my perspective, the over the topness of networks is going to be determine all of that. Like if more networks actually build a over the top product that can be measured and then you can insert ads into it, that will be a game-changer, I think, and also connected television. You saw the releases from Verizon earlier in the week and everything like that. I mean, whoever can get that sort of wired house television environment together in ones place, then I think thats where 2020 is going to be.
Brent McGoldrick - Deep Root Analytics - CEO
I would agree. I would also add a sort of fact to the political calendar which is 2020, the odds are you will have an incumbent running for reelection. But youre right, they might not run. Something like
Bill Livek - Rentrak - Vice Chairman and CEO
I think Im [good] but
Brent McGoldrick - Deep Root Analytics - CEO
But historically speaking, [Im going to say down there]. But what that means if you look at 2012, if you look at 2004 on our side, is that that probably means about a year and a half where the incumbent party has significant amount of money, significant amount of testing that takes place. So I think that given the complexity of the media environment which are having more over the top [sold], I think theres possibility for greater advantage on the technology and targeting side for whoever wins this particular election. Yes, and I think a lot of that is going to rebound to the benefit of [OTT] and directly address them.
Bill Livek - Rentrak - Vice Chairman and CEO
Yes, [Tom].
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
Tom Eagan
Great. I guess this is for Chris or for Bill, which is looking back to 2012, how much did political [bin], how much did that help Rentrak? And as we look at 2016, what should we expect?
Bill Livek - Rentrak - Vice Chairman and CEO
Yes, let me take that and Ill let Chris add or tell me that Im full of hot air. We always looked at the business very simply. Its a lot of verticals. And if you do really well helping the vertical, conduct business better, it helps us as a business. And political absolutely helped Rentrak. And its because a lot of these great folks who work in campaigns win elections, help people, their reputation then moves on. Some of the great folks that weve worked with moved into the other sectors of the economy and they bring the techniques.
So, political helped us a great deal, as has the auto vertical, the consumer packaged good vertical, the retail vertical because of credit cards. So we look at the very complicated business not at you approach it this way, you approach it this way [slippered at time].
Chris Wilson - Rentrak - President - National Television
The only thing I would add that makes political ads a little bit different for us is that as these guys kind of alluded to, politicals are one-day sale, right? So once thats over with, then everyone goes off and says what we learned from the campaign, how do we get better at it. Its a area that people have a lot of interest. So they talk about what worked and what didnt work, right.
So who are going to brand customer. And lets say consumer packaged goods advertiser packs, and they find something that really works well, theyre not telling anybody, right? So theyre keeping that a secret. They dont want the competitor to know. And their competitor is going to be their competitor tomorrow.
In politics, afterwards, it is like, okay, just like these guys have talked about Brent mentioned hey, we learned a lot from what OFA was doing, what Obama was doing. So for us, its been very beneficial because I think its helped really push forward that thinking around how do we effectively start to use television in a more targeted fashion to generate results.
It had some real life case studies that prefer can refer to and then point to and say yes, look, these guys get a 30% lift in efficiency or 40% lift in efficiency and [why it] should not be doing the same thing, which is why today you see a lot of these advertisers we talked about in the earlier panel say you know what, these advertisers hear about this stuff and they want to know what the agency is doing about it.
Bill Livek - Rentrak - Vice Chairman and CEO
Right, thanks. Thank you. And more of Ill bet you in 2012 well be up here and we will be talking about how digital and television are no longer TV. Its all digital.
Laura Martin Needham
I wanted to ask a question about your business models. So you guys all sort of run full out until November 6 and then you have these companies and everybody sort of takes a week and sleeps. And then what happens? Do you guys stay on the political thing or do you suddenly go for a year or two somewhere else before the politics come back? And how do you run a business around something that only happens every two years and in a big, big way, every four years? Im interested in how you thrive.
Scott Tranter - Optimus - Partner and Founder
Yes. I think you identify where theres no publicly-traded political consulting team. Seriously, you think about it this way. I mean, it is difficult. I know everyone up here has corporate work and things like that. But youve identified an interesting aspect of the industry. And I think theres really like the amount of money in politics has grown exponentially over the last 15 years. Its pretty normal 15 years ago. We are now getting enough money in politics.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
I started my business in early 2013 coming out of the Scott Brown campaign and having done this. And the question me and my founders had was we know this is going to be affordable, like theres going to be enough money in politics, but do we pick a cycle too early or do we pick a cycle too late, right? So, 15 years from now, were not going to be too expensive or this is going to be the norm.
The question is, as it ramps up, does it go bigger. And I think youve identified. Its [big and big] and cyclical. But theres a lot more money in politics and people are starting to spend money a little bit smarter. And they realize that I can spend two-thirds as much or one-third less if I spend it 12 months earlier, because analytics is a lot and they see that, oh okay, well, [change the voters mind] in June of 2015 than it is in June of 2016, those types of things.
Peter Bouchard - Civis Analytics - Director of Media Science
Yes. I mean, our business model is services software and Software as a Service. So I think our balance sheet looks a little bit different because its an election cycle. But I mean, our roster is built up of companies from non-profits to corporations to political organizations, so weve really diversified since 2012. And I think us building out a business and having the pressure of a board thats pretty high profile [from these cities] makes us drive to build out the business that is sustainable, thats not relying on a business cycle.
The week off that you mentioned, like Civis wont take that off. Civis will just be business as usual, like next client, come on in.
Brent McGoldrick - Deep Root Analytics - CEO
Yes, I would echo that. I mean, the revenue cycles are very lumpy. We are focused on advocacy as well. So you could view it as sort of in between political and consumer. And particularly, again, we are going to have a new president, so pretty safe saying that. Those tend to be the first six to eight months of that, of a new presidents term tend to be when the agenda is shaped and when you get a lot of dollars come off the sidelines trying to shape that agenda. So advocacy will be big in 2017.
And then of course on the corporate and consumer side, to the point that we made and the reason were up here is there is about this vertical, theres a certain sort of sizzle about political that people, they like the sense of urgency, they like the sort of targeting mindset. There are a lot of companies that engage us because they want that same sense of urgency. All of our people are used to working on crazy timelines and we turn things around for companies. So theres a heavy amount of diversification.
And I also think that if you look at [Christy] earlier point, if you look at people knock on politics all the time, right, and say its all negative ads. But actually, if you look at the most competitive markets, and which is the market share battle, those ads and that creative kind of looks like politics. You see like State Farm and Allstate will kind of take shots at each other. So one of my lifes missions is to make every vertical as contentious as politically.
Bill Livek - Rentrak - Vice Chairman and CEO
Well, thank you, folks, and thank you, Chris, for running a heck of a panel. You guys have been great and youre an example of how the industry functions incredibly well. Thank you and thank you all for attending this investor day that is very special. We talked about the merger with comScore. We talked about multiplatform. We discussed local. We discussed how all of these verticals work well together.
I guarantee one thing, too, like we will have a new president, we will be here next year with a combined company talking about our vision for the future. Thank you all and thank you for trusting us.
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OCTOBER 01, 2015 / 04:30PM GMT, RENT - Rentrak Corp Investor Day
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