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.