Los Angeles-based Ace Metrix (www.acemetrix.com) launched its software-as-a-service, TV advertising rating service last month, and we spoke with the firm's CEO and co-founder, Steve Goldman, recently to learn more about the firm. In particular, we wanted to hear from Steve about how the firm is applying scientific techniques to what has been more of a creative area--advertising effectiveness. Ace Metrix is venture backed by Hummer Winblad, and Palomar Ventures.
Tell us a bit about your company?
Steve Goldman: Ace Metrix is actually the first, on-demand measurement service of TV advertising effectiveness. We're really revolutionizing TV ad creative. We focus on the creative content of TV advertising, and we've developed a very powerful, scoring algorithm which we call Ace Scores, which rates advertising effectiveness, and deliver that data to our customers--advertisers and agencies--through a software-as-a-service offering.
What's the science behind this - how are you able to tell what people do or don't like in TV ads?
Steve Goldman: Our Ace Scores are an overall score of advertising creative effectiveness. It's actually a combination of two key components--the persuasiveness of the advertising, as well as the watchability of the advertising. Those two components then go into an overall score on the impact and effectiveness of the TV ad. Our customers, the advertisers and agencies, can utilize those scores--delivered within 24-48 hours--to quickly make changes to their ad plans, and optimize their ad spend. What's really key, is for the first time, they can understand what is working, what isn't, and why--so that they can make quick changes, in almost real-time. Also, because the scores are a standardized measure, it gives them the ability to not only compare the scores of their own ads, but gives them visibility to a competitor's advertising, as well. For the first time, it gives them a view of how they're doing compared to their key competitors.
How much human input is needed in this process?
Steve Goldman: Very little. It's very automated. We harvest their ad off the air automatically, and they are put in front of customers via online panels. All the calculations are done automatically, and everything is delivered online, and on-demand for our Ace Analyzer.
What's your background, and how did you get into this?
Steve Goldman: I'm the co-founder and CEO, and I'm an ad guy. I spent almost 20 years at Chiat/Day advertising, and ran major brands such as Apple, Nissan, and Disney, and did new business development. I also worked at BBDO. I always yearned for better metrics to allow our customers to make better decisions. I also wanted to find better analytics, to help agencies sell great work, which is an important part of our offering. Our other co-founder is JuYoung Lee, who has a Ph.D. in social psychology. She was really the inspiration behind our company. She used to test my ads, and I would always say--I know there must be a better way to do this. We can up with the initial idea of a standardized, effectiveness and scoring system--just like a FICO score for credit, or the SAT for college admittance, or the Robert Parker score for wine. So we quit our jobs about two years ago, and invested hundreds of thousands of dollars of our own money, and developed a prototype and started knocking on doors. We met with Walmart, AT&T, and others--and we kept hearing the same thing--why hasn't anybody done this before? We knew we were onto something big, and starting knocking on VC doors because we realized if we wanted to syndicate our data, we needed the investment. Luckily enough, we were able to get the attention of Hummer Winblad, and specifically, Anne Winblad, as well as Jim Gauer at Palomar Ventures. Hummer Winblad, which was an early investor in Omniture, and currently sits on the board of Omniture, saw what we are doing in the offline space with TV ads, in terms of optimizing ad spend, is similar to what Omniture has been doing in online advertising. They saw the natural connection, and we were funding in August with our product, and started marketing in March. We have lots of early, passionate customers using our service.
How accepting are the agencies of what looks like something much more data driven than what they're used to?
Steve Goldman: Ad agencies are loving our product for a couple of reasons. In many cases, it helps them sell great work. Advertisers are loving our product because, for the first time, it gives them some data driven decision making ability, in terms of understanding what is working, and what isn't. On the fly, they can make changes to their media plans, and creative rotations, and optimize their buys.
What's the business model behind the service?
Steve Goldman: We're a subscription-based model, and what we do is we right size our offerings, based on the needs and the budgets of our customers. Our range is in the $100,000 to $500,000 a year in annual subscriptions. One thing which is really unique about our offerings, is we don't ask for customers to call us to rate ads. We are rating new TV ads 24/7, through a syndicated service. We're rating adds in all these industries, such as apparel, auto, beer, and beverages--22 of the key categories, which are the bulk of the $60 billion spent in TV advertising each year.
Do you run your own panels for the rating process?
Steve Goldman: We use outside panel companies. There are large panel companies who have millions of panelists. We want fresh panelists, and don't want a panel of ad experts, we want to have fresh panelists every day. They don't know if they are going to be looking at a survey on aspirin, or in our case, actually rating the ads.
This seems like quite a non-traditional investment for technology investors, how was finding funding for the company?
Steve Goldman: VCs were really sparked by the big idea of this huge, huge market--there's 60 billion plus spent every year in the TV ad space, and it has tremendous inefficiency and waste. Advertisers saw a tremendous need for better analytics, and the fact that they can utilize our scoring system, which we could offer through software-as-a-service, was very exciting for our investors.
Why haven't people done this in the past?
Steve Goldman: That's what people said when we first started knocking on doors. We met with Tony Rogers at Wal-Mart, and at the end of the pitch, he said--why hasn't anybody done this before? I think the main reason, quite frankly, is large research companies have been very successful with their custom, ad-hoc research projects--and they make lots of money on them. It's really hard, to use Clayton Christensen's words--to cram the existing methodology into new technology. The reason we were able to do this, is we started with a clean sheet of paper and changed the rules.