Data seems tied to almost every media conversations today, but the devil is in the detail without strong analytics. Standard Media Index (SMI) provides that for TV networks to hedge funds based on aggregated spending data from agencies. For Episode 16 of Insider InSites, MediaVillage Managing Editor, E.B. Moss, and data/research reporter, Charlene Weisler, spoke with Global Chief Executive Officer, James Fennessy, about SMI's process and its projections for TV and digital advertising. Weisler-Fennessy.jpg" alt="E.B. Moss, Charlene Weisler, James Fennessy" width="602" height="451">The transcript below has been edited for clarity and length.

E.B. Moss: How is SMI unique?

James Fennessy: Standard Media Index started in Australia nine years ago, founded by Sue Fennessy, who ran marketing agencies, and Jane Schulze, former media editor for News Corp Australia. They saw a great opportunity to create a “give to get” data consortium. Agencies were having trouble getting at their own data and thus reporting problems with clients. So, the idea was for SMI to work with their data to normalize it, standardize it, and structure it, so they could report faster and more accurately...and then get access to that aggregated data….

Charlene Weisler: How do you get your data?

Fennessy: We get data every week from the agencies via an AWS environment and take automated extracts from all of their invoices across TV, digital, radio, print, and out-of-home.

Moss: What companies work with SMI?

Fennessy: Partners include big holding groups like Omnicom, Publicis, Dentsu Aegis Network, Havas, Horizon…and leading independents like MDC Partners, RPA and others, and organizations in the marketing effectiveness and measurement space, like Accenture and McKinsey & Co...

Weisler:  Does your data also help Wall Street?

Fennessy:  We have about 15 hedge fund clients in the US – particularly those who invest directly in media stocks -- because they get to see the advertising revenue of major media companies, which could be a Google, a Facebook, a Snap… before those companies report. They have successfully modeled our data for a competitive edge around how those companies are going to perform in their next earnings period.

Moss: Let’s talk about trust...

Fennessy: We've got very strict privacy protocols. We never see the agency clients’ spend: we take it at the category level.

Weisler: How do others work with SMI?

Fennessy: Our big relationships are with the national TV networks ... across the pricing/planning/inventory management and can help them size the entire marketplace and understand their position and the flow of dollars.... We just launched a major ROI research piece with Fox Network Group. There are very good services -- the Kantars, the iSpots -- but unfortunately cost data has been 50, or 60 percent off. We fixed that problem.

Weisler: What percentage of the US and the world's advertising spending do you track?

Fennessy: We have about two-thirds of all U.S. national TV market invoices...about 50 percent of all premium digital invoices (excluding Google search part)… about a third of the market in print and out-of-home, and about 40% of national radio. In other markets around the world, we have between 50 and 60 percent of ad spend.

Weisler: What trends are driving the advertising market? 

Fennessy:  Cable news continues to be on fire. In the first couple of months 2018 it was up 13 percent. We continue to see real strength in sports; the Super Bowl was up 3.4 percentage points....The Winter Olympics were up more than 10 percent over the 2014 Games. The NFL regular season was down about 6 percent, but the playoffs were up about 1.5 percent. We've also seen real strength in tentpole events like the Grammys.

Weisler: What areas are not really doing that well?

Fennessy:  Late night programming on broadcast is down 15 percent for the year, but late-night comedy on cable is doing much better.

Weisler: When does the drop in TV ratings impact pricing?

Fennessy: The ROI studies show national TV in particular is [still] a powerhouse for return on ad expenditure. The massive problems that digital is having [with brand safety and security] is playing right into the hands of TV networks. So, we expect a strong Upfront.

Weisler: SMI reported digital grew double digits last year, but there’s been a lot of talk about pulling back data...

Fennessy: ...Digital has probably been overbought. As advertisers have taken more money out of TV and put it into digital, their market share has actually dropped. Now they're starting to… put it back into national TV and there’s a direct correlation to an increase in sales…. But I think you do have to have the right mix. The ARF says an ideal mix is about 82 percent TV and 18 percent digital ...and they work well in tandem, reinforcing each other.

Weisler: What are the biggest trends in digital and TV for the next couple of years? 

Fennessy:  In digital it has to be around privacy and security. …On the TV side we’ll continue to see innovation… less ads, but much more expensive ads; advanced targeting; different types of creative like the 6 second ad; high-quality drama programming and a real focus on live events.