The news about some big media television networks and advertisers putting together a consortium to challenge the Nielsen ratings system raises a lot of questions.
What's really behind this? Does it really have much to do with measurement? Or is it more about a business landscape that's changing at an ever accelerating pace? The TV networks believe more people are watching their shows than wind up getting counted by the current Nielsen measurements because they only capture television viewing and not online viewing.
The advertisers want as much data as possible to make their ad buys, but also don't want to pay for things like DVR viewing since most people fast-forward through most of the ads most of the time.
What do you do when you're a scared as hell TV network? You spin and spin and then get together with all the other scared as hell TV networks to form a consortium that points a finger at the current measurement system.
Nielsen is not perfect or blameless here. But its biggest sin is probably that it's too good of a sales organization. Good sales organizations don't tell their biggest customers (the networks), "Look, you don't really have a measurement issue, you have an issue with a changing business landscape. That's really not our deal. We'll measure whatever you want if you're willing to pay for it, but if advertisers don't want to pay for DVR viewers, that's your problem, not ours."
Online viewing measurement is being held up as an issue by the networks, even if it currently represents only a tiny fraction of viewing. But it's growing and some networks, like CBS, are even looking to online video to save them from DVR viewers.
But if online viewing measurement was an easy thing to solve, the networks would just do it themselves. The networks track exactly what is viewed and for how long. What they can't track very well though is what the advertisers need: the demographic information about who was watching. The complexity is likely the reason that Nielsen doesn't plan on rolling out data from its convergence (TV and online viewing) panel until 2011.
Capitalism being what it is, you'll find upstart competitors to Nielsen who will certainly do their best to enable the networks' denial. But unless the consortium is willing to spend a boatload (I'm sure it isn't!) I don't see much happening as a result of it. Except perhaps that Nielsen will try to move faster with its convergence panel.
It's obviously not just about online data, or the consortium wouldn't be looking to buy set top box data -- data with its own set of issues that are not easily solved. I don't think there's any measurement issue that can't be solved, it just takes time and money. Unfortunately nobody wants to wait or pay.
Having more data might be very useful, even if it mostly appears to be throwing spaghetti at the wall and hoping some sticks. But with or without Nielsen, more data doesn't solve the bigger problems. Networks and advertisers aren't in agreement about how to charge for ads in the new world. Unfortunately, the networks' position currently seems untenable, even in a perfectly measured world.
If 25 million watch Grey's Anatomy, even if 7 million are some combination of DVR and online viewing, the network wants to make as much as it could make if all 25 million were watching live. Today, it can't. Changes to measurement won't change that, and hoping that it will is folly.
Nielsen tried to broker an uneasy truce between networks and advertisers with the C3 ratings. But it looks like that didn't work out for the networks because too many people fast forward too much of the time. Those aren't ad dollars you can recover through better measurement.
The advertisers do want better measurement of commercial viewing than what Nielsen gives them. They want ratings for each and every commercial spot, but Nielsen only gives them average commercial viewing for the whole show. I don't blame advertisers for wanting this, but I don't think the networks really want it for TV. This is an area where online and set-top box data can do a better job than Nielsen, but I can't get my head around how such measurement is beneficial to the networks. And even if it is...
Jeff Zucker was famously quoted for not wanting to trade analog dollars for digital pennies. None of the networks do. Not even if they are nickles, dimes and quarters. But even if you can measure online perfectly and sell it for more than television, if four million 18-49 year olds watch Grey's Anatomy on their DVRs, the advertisers still aren't going to want to pay for them. And no amount of measurement will make that go down like a spoonful of sugar.
So CBS will tell you how DVRs will be extinct soon, and everyone will watch online, and hey, if the data doesn't necessarily support that today you can always form a consortium and shoot the measure-er.
Update: some additional insights on the consortium from The New York Time's Media Decoder.
good 3am read
Ha, yes, nice to come home from District 9 to.
Everything you said is pretty plainly obvious (as long as you aren’t an anti-Nielsen conspiracy theorist) so what exactly is the consortium supposed to accomplish? I mean, what are they telling themselves they will gain from this? The people running the networks aren’t complete idiots, so is this all just some sort of PR stunt?
The only thing I can think of is that this is a ploy to discredit Nielsen. The desire to do so may have spurred the lawsuits this past year. Perhaps there is a larger plan to actually create a new audience measurement company — perhaps funded by the networks, and perhaps not all that impartial — and discrediting Nielsen will be a big step towards getting advertisers to accept a new source of ratings.
Ok, tinhat off now.
I doubt the networks would have any problems with pretty tables in the overnight reports, so that might be good!
I don’t make the assumption that people, even very smart people, always act rationally. Especially under duress. Clearly the networks are under duress, particularly the broadcast nets, and they are struggling to hold on the revenue models of yesteryear. Nielsen becomes an easy target. Don’t get me wrong, I do think there is a lot of room for improved measurement and there are benefits to be gained. But they won’t bring back the good old days.
People, even smart people, struggle to cope with change. Mostly, I see the consortium as a coping mechanism.
Group therapy. That’s a good explanation.
As I see things from across the pond where we’re generally more tolerant towards ratings, even though it’s quite common for shows to run on well past their sell by date, if good programmes from Stateside get cancelled just because of the Nielsen ratings then any change to prevent that (e.g. Firefly) has to be positive, doesn’t it?
In England, we have to wait months for shows to be picked up, e.g. Castle is not on the schedule for the foreseeable, How I Met Your Mother was forgotten after Season 2, and they didn’t show the first episode of House’s last season until after it finished in North America. This is why so many people in England watch shows online. For example, one of my friends is into “Life” and he was very sad when I told him it had been cancelled. And you would not believe the number of people in England who are upset that My Name Is Earl got cancelled on that “cliffhanger” (the smart money’s on Nescobar A-lop-lop). This is why so many people here are pleased that CBS is guaranteeing Big Bang Theory another two years. Brits not only get the show but love the show too.
My point is simply, does it always have to be about the money/advertising revenue? Can’t good television be about quality shows? Or am I, like other people from England, simply spoiled because we have channels like the BBC who do not show any advertising at all during programmes?
Robert: Of all the articles that I have read on the “ratings issue”, this by far, is the best. I hope this little piece of journalism becomes the standard for intelligent discussion on a issue that is unfortunately not going to go away anytime soon. My only comment is that if the networks think on-line viewing is going to be their savior, they are wearing rose colored glasses. DVRs will continue to play a key role in viewership, simply because of their convenience. I do not see the future of unlimited, on demand viewing being part of any networks’ lineup in the near future: until it is, DVR’s, (Disc Recorders and VCRs) will remain the preferred alternative to ‘live’ network viewing. On-line viewing will continue to increase but I do not see it as the dominant choice for all things TV, for quite some time – at least the numbers I have seen don’t
show the trend as being staggeringly significant.
“The advertisers want as much data as possible to make their ad buys, but also don’t want to pay for things like DVR viewing since most people fast-forward through most of the ads most of the time.”
They already found a way to combat this that worked for me. 2 actually.
1. (the one that worked on me) Fringe did it for sure, I can’t recall the others off the top of my head (TSCC? Prison Break?) … before each commercial announce that ‘Fringe will return in 60 seconds.’ Knowing my break was only a minute long, I never really saw the need to fast forward. I could grab a drink, go to the restroom, all without pausing my show to do so (and all of which is in hearing range of the commercials).
2. Didn’t KFC have a commercial that gave a special deal only to people who saw it while fast forwarding?
Oh and for the record, if it came down to quality programming or the ability to fast forward through commercials on my DVR software… I’d choose quality programming.
I don’t (always) DVR things so that I can skip commercials (i definitely do for things like 24!), I do it so that I can watch the show on my own timetable.
I’d support DVR’s having some lockdown so that I can fast forward through the show, but not commercials (like Hulu has…)
My point is simply, does it always have to be about the money/advertising revenue?
Yes.
Like it or not, TV is a business. The cameras, sets, costumes, editing equipment, lots, buildings with heat and cooling, lighting, electricity, location settings, etc. all cost money. The actors, writers, directors, set designers, builders, electricians, hair and make-up people, and the rest of the crew all want to get paid for their time and skill. The studios that invest millions into producing shows aren’t charitable organizations for the arts, they are businesses that want to see a return on their money. Viewers either pay for content directly through subscription fees (like HBO), paying $2/episode on iTunes, or buying the DVDs, or indirectly through watching advertising. As long as we don’t want to pay subscription fees for each and every network, advertising will be necessary and those advertiser will want ratings measurements.
Since BBC is funded by tax dollars, you pay for all the content whether you want to or not. The studio and everyone involved gets paid regardless of how many people are or aren’t watching. We do have a tax supported network here in the states, PBS, but the government doesn’t cover all the costs, so it still needs donations to stay on the air.
I understand wanting to get demographic data for online viewing, but the nets aren’t going to try to combine the two numbers are they? If 10 million people watch live and 2 million watch online, they aren’t going to try to charge TV advertisers for 12 million viewers…right? (Not that the advertisers would be keen on that, but the nets are trying to get them to pay for people fast forwarding through the commercials on DVR so.)
Dave-Since our networks don’t get handouts in the form of license-fee money, they have to be self-supporting and look at the bottom line. If a show can’t make a reasonable profit, it’s gone. I think too many viewers here look at things from an emotional standpoint, that programs they personally like should have some divine right to stay on the air no matter what (which leads to that annoying whine of “It’s soooo unfaaaair!” when a show with four million viewers gets cancelled).
Looking at shows from a business standpoint, most cancellations not only make perfect sense, at times I wonder how a particular low-rated show that finally got the ax had managed to survive to that point.
You may not have to watch commercials in England, but you also get far fewer networks, much less variety and far fewer episodes per year of most of your top-rated shows than we do in the US. Which way is preferable? I think both sides have their advantages, but on the whole, I’m pretty good with the current US system.
Maybe what needs to happen is to make online viewing show a similar amount of commercials. online viewing isn’t about less commercials its about the ability to catch a show at any time. Broadcasters need to realize that. And maybe offer viewing to the world and not just North America. If you can get 10 million more souls watching a show, then why not. the internet is global and can accomidate these things. TV broadcasters are stuck in ther countries and timezones. Business people in these industries need make money and if you have a few billion who cant watch your missing potentially huge market. Maybe bring gloabal invesotors in. if you can selll her why not over there. Look at google it has made advertising an art form, online networks should use similar methods.
@ Eric, it was Fringe and that show that everyone ends up talking about in every forum: Dollhouse.
While it would be nice to see some legitimate competition for Nielsen, I don’t see how this tackles the real issue of how to use ad revenue to monetize digital content.
Holly, if product placement is within the show the networks could mention the combined ratings number to that specific sponsor to show the value of continued sponsorship. So the male and female leads would each continue to drive cars from the same manufacturer or somesuch. That’s the only circumstance I can imagine where the total online/offline/DVR viewing number would be useful though.
More competition in measuring audiences will help so I applaud this move. It’s ridiculous that such a gigantic industry relies on this one company so much. Even if one doesn’t blame Neilsen for problems, it’s easy to see that they have too much of a monopoly on critical data.
I think this was an absolute great article. Like always, you are quite articulate with yuor statements.
The only thing I would contest with, from my years working for a FOX affiliate, is that there is at least a good argument against Nielsen. Their numbers ARE very inaccurate; they don’t report the full picture; a lot of markets are diary only, so WAY more women are represented (hence all the female skewing shows on TV; etc. Nielsen is a greatly flawed system that has thrived in the monopoly it has created. I can give you some examples of its issues that make its numbers bogus, which is why the affiliate corp I worked for didn’t subscribe to it.
However, that said, the companies who are trying to come up with their own measuring is a bad idea. It isn’t to measure more acurately, but to measure more FAVORABLY to the networks. I doubt this new venture will last long, as there HAS to be FCC laws against this.
But who know. With oil companies getting away with collusion for decades, maybe the big media can buy off their watchdogs too.
1. (the one that worked on me) Fringe did it for sure, I can’t recall the others off the top of my head (TSCC? Prison Break?) … before each commercial announce that ‘Fringe will return in 60 seconds.’ Knowing my break was only a minute long, I never really saw the need to fast forward. I could grab a drink, go to the restroom, all without pausing my show to do so (and all of which is in hearing range of the commercials).
This actually makes it easier to fast forward. Most remotes have a button to skip forward by 30 seconds (or you can program it if yours doesn’t do that) so you know how many times to hit that one. I mean, you are watching on a DVR. If you need a drink or to pee, you press pause.
And maybe offer viewing to the world and not just North America.
Broadcasters would LOVE to be able to do this. More people can watch it legally, and they can then charge advertisers for their eyeballs. The problem is there are distribution issues with that. Each country (or area of countries, sometimes) get to have their own distributor, who gets to charge (and collect) the money themselves. That will probably never change, unless the TV world changes to the point where each network has affiliates in every city in the world and primetime is seen at approximately the same time across the globe. And I don’t see that happening anytime soon.
^That, and advertisers won’t want to pay for all the foreign viewers. If AT&T isn’t available in Germany, they don’t care how many Germans watch the ad. The nets could work on country-specific advertising, but that would require more work and more money.
nkinsey, Nielsen knows how inaccurate diaries are and are already getting rid of them in the larger markets. LPMs have been or are planned to be deployed in the top 25 markets, with plans for most of the top 60 markets to be deployed by 2012. (If you know how to navigate the TVB.org website, you can see the roll out plans under research central>ratings track>local ratings report)
The national ratings are already limited to meters, though not exclusively People Meters, I believe, though People Meters are the goal. Of course, the national ratings only rely on the top 56 (I think, it’s been too long since I had to know this for a test) markets. Whether Nielsen plans to get rid of diaries in every local market is not something I know, but they are certainly making an effort to get rid of them for most of the country. (It may not be the majority of markets, but it is the majority of the population.)