In May, the broadcast networks will be unveiling their new programming and primetime schedules for next season. But March and April are when cable networks try to persuade advertisers they are the best among the many cable networks that get virtually the same number of viewers.
If you look at season-to-date C7 Adult 18-49 primetime ratings for the broadcast networks, there is about three-tenths of a rating point separating first-place and second place – a small difference. But in the cable world, this same small gap is considered massive. The #3 and #25 ranked ad-supported cable networks are separated by just three-tenths of a rating point. Why is this marginal rating difference so big for cable?
Every cable network (except ESPN and Adult Swim) averages less than half a rating point among adults 18-49 in primetime. When ratings are so small, even modest disparities become big percent differences. Unlike broadcast, cable network ratings are analyzed using two decimal places instead of one. Otherwise there would be too many networks with identical ratings for buyers to rank (and we know how network buyers, sellers and researchers like to rank things). Whenever you start playing around with expanding decimal places, you know you're dealing with small numbers.
Do rankings matter? When trying to project next season’s performance, however, there really is no difference between a network that gets a .33 and a .27 rating this season. The difference may just be statistical noise, and those numbers could easily be reversed next season. Since the switch to C3, this is more likely than ever. Instead of averaging 60 minutes for an hour-long program, for example, you’re averaging maybe 15-20 minutes. This can only add to the statistical bounce when dealing with such small ratings and small sample sizes (the two major contributing factors to statistical error). The .33 rating will rank 8th among Adults 18-49 while the .27 (which is just six-hundredths of a rating point lower!) will rank 14th, and most people will think the network with the .33 rating is much better positioned and will get more viewers next season. This, of course, is not necessarily true.
Having recently worked at a cable network where we went from ranking 14th one season, to 8th the next, to 11th the next (with average ratings that were essentially unchanged), I can attest to how crazy this is. Industry perception of our performance changed significantly despite our stability and consistent ratings.
If actual rankings based on ratings don’t matter much (at least among the top 20 or so cable networks) what does matter?
Original scripted series have been key in branding and re-branding several cable networks. They often create buzz, improve the network’s reach, and have more engaged program viewers than any other genre. More than half of all viewing to original scripted cable series, however, is time-shifted via DVRs. In 2010, there were only two original scripted series on cable that had 50% or less live viewing (Rescue Me and Mad Men). During the 2013/14 broadcast year, the vast majority of original scripted cable series had less than 50% live viewing.
Live viewing matters. Whether or not you believe C3 or C7 take fast-forwarding through commercials into account (they don’t), the best research I’ve seen on the subject (and not just because I conducted the study) showed brand message recall to be three times as great for primetime series viewed live than those time-shifted via DVRs (there was virtually no difference in program engagement). I think that’s all that needs to be said on the value of live viewing.
Median Age is a secondary measure. Audience size should trump audience skew. In other words, if your target is Adults 18-49, if two networks have the same number of those viewers, why does it matter that one network has a median age of 48 and the other has a median age of 52? Several years ago, when CBS first took the rating lead among Adults 18-49, it was the only network with an average median age over 49. Median age does not tell you how many viewers are watching. There seems to be some mystical value still pegged to anything under 50, which is simply ridiculous, particularly when the actual size of the audience is similar.
Median Income is valuable but misleading. If you’re looking at Adults 18-49 $100K+, it’s really the household income of those adults 18-49. For 18-24 year-olds, that is often their parents’ income. Any income measure should start with 25 at the youngest.
It also does not take household size into account. A 45 year-old couple with three kids and a household income of $100,000 probably does not have as much disposable income as a single 35-year-old with a household income of $75,000.
Someone with a household income of $100,000 in New York City, doesn’t have as much spending money as someone with the same household income in Omaha. When I was at Magna Global, I had Nielsen include income by region in NPower. I believe it is still there.
So while there is some directional value in median income analyses, people should be careful how they use it. At the very least, it should be merged with household size.
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