TV Industry Struggles to Agree on Ratings Innovation
When Nielsen announced plans last year to offer Total Content Ratings, an initiative to measure audiences no matter what screen is being watched, Hulu seemed an ideal beneficiary.
The streaming service makes everything from “Empire” to “The Golden Girls” available on every conceivable device, from tablets to smartphones.
But just as Nielsen was preparing in December for an early 2017 launch of the metric, NBCUniversal, which has an ownership stake in Hulu, and other media companies successfully argued for a narrower rollout. Part of their objection was how measurement of shows on Hulu “was significantly incomplete, and therefore would actually offer misguided direction,” says Krishan Bhatia, executive vice president of business operations and strategy for the ad sales division at NBCU. Megan Clarken, president of product leadership at Nielsen, says her employer will be better equipped to capture every set of eyeballs looking at Hulu after the implementation of TCR tracking software, which should be in place by July.
The Voorhes for Variety |
It’s not easy to embrace new ways of doing business after decades of sticking to the same methodology that has been in place since the “The Honeymooners” first flickered on screen. But if the industry can’t come to a consensus on which solution is best to evolve TV’s hopelessly broken measurement system beyond its current reliance solely on Nielsen monitoring of linear TV audiences, it risks losing no small portion of the approximately $44 billion in advertising dollars that ad-buyer Magna Global says was spent on national TV last year.
Getting everyone on the same page “is in [the TV networks’] best interests, as well as mine,” says Amy McNeil, head of digital media for Fiat Chrysler Automobiles, which spent north of $758 million on TV commercials last year, according to Kantar Media. That makes the car manufacturer one of the nation’s biggest TV-ad spenders. If the industry can’t agree, it risks giving rise to a cacophony of ratings systems. “We will come up with partnerships that allow us to force a measuring methodology that’s going to be different than the person who is 30 miles down the road from me,” McNeil says. “That becomes really messy.”
The way rates are set now, TV networks, from CBS to ESPN to Food Network, rely on Nielsen’s count of the number of people between the ages of 18 and 49 who watch TV ads either live or up to three days later — or, in some cases, even a week after the program they accompany debuts. The measure is known as “commercial ratings” plus the given number of days — “C3” or “C7.” With more people viewing in ways that aren’t always easily monetized through advertising, such as more than seven days after the initial airing or streaming on digital platforms, Nielsen totals are shrinking, and the networks wind up seeing money slip away.
The remedy for this has been for media giants like Viacom, Time Warner’s Turner, and NBCUniversal to cobble together new techniques that show how much viewership they can really accumulate as TV fans move from one screen to another. A growing phalanx of data tools — set-top box patterns, shopping behavior, and web tracking — has allowed many of the networks to build proprietary measurement products that let advertisers such as AT&T, Pepsi, and General Motors find pockets of their most likely customers, whether they be high-income technophiles, soda guzzlers, or first-time car buyers. Because each media company has crafted its own yardstick, however, Madison Avenue fears the industry may never work under a unified structure again.
“We have fracturing consumer usage that we know is going from linear TV to ‘over the top,’ to VOD, to mobile — and we don’t have a good way to re-aggregate those audiences that is believable and reliable,” says David Cohen, president of North American operations for Magna, which oversees $17 billion in U.S. ad spending. In other words, there’s no way to compare apples to apples among the congloms’ many conflicting bespoke systems.
There couldn’t be a better time than the present for the industry to unite. TV’s primary siphon of ad dollars — desktop and mobile-display advertising — is expected to surpass linear TV as the world’s largest ad medium this year, according to a forecast by large ad buyer ZenithOptimedia. However, digital spending could be impacted by advertisers’ growing frustrations regarding click fraud and imprecise traffic numbers. There are also concerns about ads that run before shows: Data suggest that such short pre-roll videos don’t make an impression.
“We come up with partnerships that allow us to force a measuring methodology different than the person 30 miles down the road — that becomes really messy.” |
amy mcneil, fiat chrysler |
Facebook in September disclosed that for two years it overestimated the average viewing time for video ads streaming on the social site. And a number of blue-chip marketers including AT&T, General Motors, and Starbucks have recently said they pulled ads from Google’s YouTube after discovering their commercials accompanied offensive videos.
Agreeing upon new ways to measure audiences would help the TV networks push back against their digital rivals. In just a few weeks, the networks will start their annual upfront negotiations with Madison Avenue, during which they’ll try to sell the bulk of their ad inventory — billions of dollars — for the coming season. NBCUniversal alone is aiming to sell more than $6 billion in advertising during its upfront.
Executives at the Comcast-owned media giant say they can’t delay offering their own alternative forms of measurement.
“We don’t have the luxury of waiting for someone to solve all of our problems,” says Bhatia. “We are taking that on ourselves.”
Nielsen’s effort to implement TCR shows how much discord the industry must resolve: To make the measurement work, media companies need to install software code across a wide variety of distribution points — mobile apps, video-on-demand interfaces, and more. But the process varies from TV network to TV network, and depends upon each network’s individual priorities. Perhaps one media company places more emphasis on measuring desktop video-streaming, while another is eager to aggregate viewership from a particular mobile app. Because each network is pursuing a different agenda, the fear is that industry-wide rankings might wind up being incongruous, rather than measuring the same thing in every instance.
Indeed, TV seems poised to enter a post-Nielsen era in which networks use their own methods to arrive at different types of ratings. Nielsen may no longer be a one-stop shop for measurement at a time when the industry is eager to go beyond simple demographics. But such overall ratings likely will remain a key ingredient amid a more diverse mix of metrics that could also mean more influence for measurement rivals like comScore. To keep the mass numbers that big-spending advertisers need, media companies are likely to broaden the set of tools they use to verify audiences scattered across the plethora of screens.
To be sure, Nielsen will remain part of the mix. Without a third-party data check, no one will be able to compare, say, ABC’s performance to Fox’s, or TNT’s to FX’s.
“That’s not a world anybody wants to be in,” says Nielsen’s Clarken, “Our role is to be the referee, to step in the middle, to show the story of how these guys compare to each other.”
What happens, however, when the players on the field are increasingly making up their own rules?
Donna Speciale has long known what advertisers want. Now she has to make sure she can sell it to them.
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Speciale, who oversees ad sales for Time Warner’s Turner unit, brings a unique perspective to her job. She spent more than two decades helping blue-chip marketers like Procter & Gamble, Coca-Cola, and Kraft Foods figure out where to spend millions of dollars on advertising. Among her achievements: lining up ad support for the nascent CW network in 2006 by convincing executives to let P&G buy up an entire commercial break and run a short piece of promotional programming instead of the usual pitches for beauty products and cleaning supplies.
She’s breaking convention again, joining with Viacom and 21st Century Fox’s Fox Networks Group to try to sell ads in a more refined way. More advertisers are pressing for what’s known as “audience buying,” which uses data to find narrower crowds of consumers based on such criteria as income or product preference. And the media companies are eager to deliver.
“We now know how many diet cola drinkers watch ‘Blue Bloods’ on Friday nights,” says David Poltrack, chief research officer at CBS Corp.
Speciale says the three companies are building a system — which they call “Open AP” — at the request of their sponsors. Too often, a marketer seeking, say, someone who wants to buy a car, must strike different agreements on the data they might want to use to define that consumer segment, because each media company has concocted its own data formula. If several media companies agree to define consumer segments with the same methodology, she says, advertisers will have an easier time. Accenture, Nielsen, and comScore have been tapped to assist on the project.
Such an alliance is rare. After all, the three companies work tirelessly to keep ad dollars from going to competitors.
Their convergence might be likened to a scene in the “The Godfather” in which the heads of the rival “families” agree to a critical truce. To be sure, executives from all three congloms say the partnership does not mean Turner, Viacom, or Fox will sell ad packages in tandem with one another — just that they will all do business based on the same standard.
The trio hopes other companies will join, says Bryson Gordon, executive vice president of data strategy at Viacom. He thinks the arrangement could give TV networks and advertisers a sense of stability.
But others are holding off for now, citing their own audience-buying standards.
“We have made our own advances,” says NBCU’s Bhatia, “and are ready for the marketplace with our tools and capabilities.”
The new deals — and systems of measurement — may seem more complex, but advertisers want them, Speciale says, because traditional methods aren’t as useful as they once were. “It’s very hard to get to these consumer segments looking at things on an adults 18-to-49 [basis],” she says. “We have to be able to get to a measure that’s based on the audience segments advertisers want.”
But in so doing, TV networks and advertisers are likely to wind up using multiple data sources to judge advertising effectiveness. “This is not going to be one size fits all,” adds Speciale. “It’s not going to be like that anymore.”
If anyone can shake an industry that has historically been slow to innovate, it’s Lyle Schwartz.
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About a decade ago, Schwartz, president of implementation for GroupM in North America, and his colleague, Rino Scanzoni, set out to change the economic foundation of the TV business. Americans were turning in droves to the time-delayed, ad-skipping viewing enabled by the DVR, and Madison Avenue was in the midst of a collective freak-out. Some marketers were even trying to tuck hidden messages and codes for prizes into their commercials so that DVR users would rethink their fast-forwarding.
To solve the problem, GroupM made an eyebrow-raising proposition: Rather than judge TV shows by their Nielsen program ratings, why not rely on a new Nielsen measure that examined the average viewership of commercial breaks, and accounted for three days’ of time-shifted viewing? The process took the better part of two years to implement, but GroupM, one of the nation’s biggest media-buying companies, which oversees $30 billion in ad spending in the U.S. and Canada, made the change stick.
Now the media-buying firm wants to tear up the playbook again.
Under a new plan making its way to ad-sales chiefs and research gurus at a number of U.S. media companies, GroupM is devising a way to account for views of commercials across multiple screens. The plan would require a certain number of commercial breaks built with the same “ad load” to appear across television sets, desktop computers, and mobile devices. That means that if an ad break contains spots for Corn Flakes, Samsung, and Kohl’s during an hour of, say, “NCIS,” then the same break would have to appear in streaming-video transmissions of the same episode. With that fixed order in place, viewership of the commercial interruption could be tracked, says Schwartz, and TV networks would presumably gain back some of the mass viewership they’ve lost as audiences splinter.
“What happens when a few of the players move in this direction?” posits Schwartz. “You’re going to see that the ratings go up.” Networks that disagree with the idea may come around to it once executives see rivals’ viewership numbers on the rise, he adds.
Not everyone shares Schwartz’s optimism. Several executives worry that the system forces digital-video outlets, including Hulu, to run the same commercial breaks that people like to fast forward past or otherwise avoid when they watch traditional TV. Others are concerned the system cuts their flexibility at a time when more advertisers are trying to tailor their pitches to the consumer’s exact experience in which video is being consumed.
“There’s nuance in how users interact with different screens, whether it’s a big TV or a little mobile device,” says John Swift, chief executive of North American investment at Omnicom Media Group, where he oversees how approximately $29 billion in ad spending is allocated in the U.S. and Canada. “Let’s look at the size of the screen. Let’s look at the content there. Each platform needs to deliver the best consumer experience. I’d rather have better measurement of each individual platform so that we can work within each to deliver the best experience rather than jamming it all together.”
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NBCU’s Bhatia agrees. “Why would I force a legacy advertising model onto new platforms that don’t lend themselves to that?” he asks. NBCU runs fewer commercials in its video-on-demand selections, on Hulu, and in other digital venues, he says, than it does on linear TV. “We believe that’s essential to the success of those platforms.”
Many executives recognize the GroupM effort is meant to spark the industry to tackle the issue together. And, indeed, there is room for change. To accommodate digital venues that feature reduced commercials, Schwartz proposes leaving room for ad breaks that don’t have to exactly match the TV model.
Ultimately, Madison Avenue and the TV networks need to construct something new to keep the ad dollars flowing. But they also need to be careful in their methods, because they may end up building a modern-day Tower of Babel, where everyone has something to offer, but few can understand what it is that anyone is trying to sell.
Schwartz, too, believes that the industry must embrace something new, and soon. He’d like a new system to be in place in time for the 2018 upfront, and he’s open to using data from Nielsen, comScore, or Symphony Advanced Media, among others, to make it palatable.
“This is an evolution of the marketplace,” says Schwartz. “I think vendors who don’t want to move this way — well, you know what happens to things that don’t evolve.”
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