Neilsen Ratings and the DVR

TiVo Opportunity: The Changing Ad Landscape (03-24-2006)

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Originally Posted by Media Life

Upfront debate: Rethinking TV ratings

More buyers are looking to pay only for ads

By Kevin Downey
Mar 23, 2006

Each year going into the upfront TV ad selling season, buyers and sellers jockey for dominance in negotiations by arguing for whatever market condition or new wrinkle in ratings or audience measurement will give them an upper hand.

This year it's all about redefining rating points, and the argument is over time-shifted versus minute-by-minute ratings.

The networks led by embracing Nielsen Media Research’s new time-shifted ratings for digital video recorders, advancing the argument that advertisers should be paying an additional cost for audiences that record a show but watch it at a later time. Nielsen now provides data on programs recorded on DVRs and viewed up to seven days later, and this new data is raising network ratings.

Media buyers have responded with a big no, as in no way. They say they'll refuse to pay additionally for DVR audiences during upfront negotiations for next year's primetime shows.

For their part, buyers are favoring an entirely different notion, one that's a radical departure: paying only for the audience that actually watches commercials, based on new minute-by-minute ratings, not for those watching the programming airing between.

Nielsen began issuing minute-by-minute ratings in October, and the sense among buyers is that their eventual use will be raised during this upfront's negotiations but won't become a full-scale point of contention until next year.

That's in part because it will take some time to analyze all the new data and to reprogram agencies' computer systems. Too, there are as yet only relatively few subscribers.

When minute-by-minute ratings do become an issue, they stand to cost the networks plenty. Based on agencies’ initial analyses, these ratings are expected to result in commercial audiences that on average are 2 percent to 10 percent lower than program audiences and in some cases perhaps more than 25 percent lower.

Bruce Goerlich, executive vice president and director of strategic resources at ZenithOptimedia, explains succintly the two sides of the debate, time-shifted versus minute-by-minute.

"What the networks are saying is that television is changing and they should be credited for different venues and different times," says Goerlich.

"We want a scaleable metric that matches these changes in television. Minute-by-minute does that because what we’re looking at is people being exposed to our commercials wherever they are."

Tellingly, none of the broadcast networks have yet subscribed to minute-by-minute ratings. The only cable network to subscribe is the Weather Channel.

But several media buying agencies have signed on, and others are lining up to do so.

Starcom MediaVest Group began receiving minute-by-minute data in December for all its agencies, including Starcom, MediaVest, GM Planworks and Tapestry. And ZenithOptimedia and Saatchi signed on two weeks ago, according to Nielsen.

Lower ratings aren’t likely to be the networks’ only headache with minute-by-minute ratings.

Some agencies are expected to also negotiate prices based on where a commercial falls within a program, or within a commercial break. This is already done, but with the new data it will become dramatically fine-tuned.

John Spiropoulos, vice president and group research director at MediaVest, found in an initial analysis that viewers watch some commercial breaks far more than others.

"What we have learned, taking the Opening Ceremonies in the Olympics as an example, is that we can see where viewers are interested in the content of the program," he says. "What we saw is that people wanted to see the U.S. team enter the stadium. [For] the commercial that preceded that, there was limited tune out. After the U.S. team entered, [NBC] went back to commercials and viewing dropped off."

This type of finding will certainly be raised during upfront negotiations.

And they will take place, says Liz Janneman, senior vice president of cable advertising sales at the Weather Channel.

"At the end of the day an advertiser wants to make sure their commercials are being seen and then remembered," she says. "This data is now holding the community to a higher level of accountability. I think it’s the currency of the future."

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Report: TV ads are fast losing their zip

On eve of upfront, marketers raise new beefs

By Heidi Dawley
Mar 23, 2006

After a flat broadcast upfront last year, the feeling has been that things would perk up this spring, with some media analysts forecasting a 3 percent bump in network ad spending.

But a new report, released just as the upfront season begins, suggests the broadcast networks could face a far tougher sell to the nation's advertisers, for this upfront and the next and the next.

Advertisers, it seems, are fast losing confidence in TV advertising. And the 30-second spot, long endangered, is suddenly looking even more endangered. That's according to a report from the Association of National Advertisers (ANA) and Forrester Research that was presented yesterday before the Association of National Advertisers TV Ad Forum.

A chief finding: Some 78 percent of advertisers feel that traditional TV advertising has become less effective over the last two years.

“Television networks continue to publish research that traditional TV advertising is potent as ever," writes Josh Bernoff, vice president of Forrester Research, in a release of the study's findings. "But national advertisers aren’t buying it and are seeking alternatives to enhance their budgets and move them beyond the customary 30-second spot.”

Less clear from the study is just how soon this dissatisfaction will express itself in upfront ad sales. Will it be this year, or next, or the year after? But the sense is sooner rather than later, certainly by 2007.

The report, which will be issued in full by Forrester in a few weeks, was based on a survey of 133 national advertisers representing some $20 billion worth of advertising. Charles Schwab, Johnson & Johnson, Mattel, Pfizer and Verizon, among others, were questioned about their attitudes toward TV advertising.

Key to the survey were questions about what impact new technologies like digital video recorders and video-on-demand will have on their TV ad budgets.

A big impact, came back the reply. Some 70 percent of advertisers reported that DVRs and VOD will ultimately reduce or destroy the effectiveness of traditional 30-second TV commercials.

In fact, when DVRs have spread to 30 million homes, nearly 60 percent of advertisers say that they will spend less on conventional TV advertising. Of those, 24 percent will chop TV budgets by at least a quarter.

With DVRs currently in 10 million households in the U.S., that day is not yet here. However, Forrester predicts that in three years the number of households with this technology will hit the 30 million figure.

The survey also found that, while 55 percent of companies report that top executives are watching the changes in TV advertising, most advertisers have yet to jump in and experiment with advertising possibilities on DVRs (49 percent) or VOD (44 percent).

Not surprisingly, the internet looks set to benefit from the shifting of ad dollars. Some 80 percent of advertisers say they will spend more of their advertising budget on web advertising, and 68 percent of advertisers will look to search engine marketing.

But if the lure of the 30-second spot is diminishing, television is likely to remain an attractive advertising vehicle, with advertisers looking to find other ways to get their message across.

For instance advertisers said they intended to spend more of their advertising budgets on branded entertainment within TV programs (61 percent), TV program sponsorship (55 percent), interactive advertisements during TV programs (48 percent) and product placement (44 percent).

Some 45 percent also said they were looking at online video ads.

As the industry changes, advertisers believe the way TV is measured will also need to change. Some 97 percent of advertisers believe that reach and frequency will not be enough. Effective measurement of TV advertising will require new audience metrics to report commercial ratings, not just program ratings.

However while this survey may not paint a rosy picture for the TV industry, many expect the TV industry to be pushing to innovate in such a way that TV remains a large part of the marketing mix.

“As new and traditional media alternatives compete more aggressively for a share of the media pie, and marketers look to improve consumer targeting, reduce costs and enhance accountability, television is aggressively responding," writes Bob Liodice, president and CEO of the ANA, in a release.

“With technology-based advances in addressability, enhanced television options, internet convergence (IPTV), and branded entertainment opportunities, television is likely to continue as the dominant part of the marketing mix."

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Originally Posted by HDTiVo

TiVo, to my knowledge, is the only company with potential solutions to this "advertising dilema." Their solutions include statistics on how the commercials are viewed, as well as technology to get the viewer's attention in different ways - ways that let the viewer self select more, yielding "better" ad viewers.

TiVo's solutions are basically not about forcing ad viewership, but getting the remaining ad viewers to be better measured and better targeted.

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Originally Posted by HDTiVo (08-21-2006)

Is Fighting TiVo a Good Idea?

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Embrace these media practices by providing content on demand, providing the ability to search (such as in TiVo's new product-search function), and recognizing these folks are the ones in control (not us advertisers) and that working with them instead of against them is how to get their attention.