The Sternberg Report

Nielsen Alternative Audience Measurement Not Ready for Primetime (and may never be) 2/23

When it comes to national television measurement used for the buying and selling of commercial time, Nielsen is an industry-mandated monopoly.  While potential competitors have periodically emerged, they failed to sustain enough support to survive – not necessarily because Nielsen did anything to impede them, but because advertisers and networks have been unwilling to pay for multiple sources to provide similar national TV audience data.

While there have been occasional calls for change, the industry’s unwillingness to support any real competition to Nielsen, along with networks and media agencies continuing to sign long-term Nielsen contracts, make the status quo is hard to budge.

Why Alternatives to Nielsen Have Failed to Sustain Support

There have been numerous unsuccessful attempts by other companies to compete with Nielsen, both on a national and local level.  The most common result has been occasionally pressuring Nielsen to make improvements to its own methodology and increase its sample size.

Here’s a brief look at the most notable attempts to compete with Nielsen.

• 1985: After more than 30 years of being essentially unchallenged in the national TV audience measurement arena, British company AGB entered the game and posed the first real threat to Nielsen’s dominance.  It had been using something called people meters in Europe, and saw an opportunity to expand into the U.S. market.  AGB had the advantage of actually using a better methodology than Nielsen’s antiquated meter/diary approach. 

AGB spent nearly two years testing its people meter in Boston before trying to roll it out nationally.  Nielsen responded by launching its own people meter, and increased its sample from 1,200 to 2,000 homes (to match the size of AGB’s sample).  The following year Nielsen increased its sample to 4,000.  As a result, AGB failed to sustain industry support and ceased its U.S. operation in 1988.  The main problem was that ad agencies were not willing to pay for two identical national measurement services, and most of the networks were not willing to support a new ratings system that did not report higher numbers than Nielsen (I believe at the time only CBS and MTV were willing to go forward).

• 1987: D. Percy & Co. developed a passive meter, which used a heat-sensitive, infrared device to detect when someone was in front of the television set and when someone left the room.  But when people found out that the heat sensors could be thrown off by the presence of a large dog, jokes ensued, and any potential support fizzled.  Nielsen announced its own plans to develop a passive meter, which never went beyond the testing phase.

• 1991: Arbitron’s ScanAmerica was way ahead of its time as it tried to marry TV viewing to product usage (sample participants were asked to run a “scanner wand” over the product code on each store-bought item).  Single-source data was considered the holy grail at the time, and this approach seemed to be what advertisers had been seeking.  But a lack of belief in the methodology, the limited number of “scannable” items,  and an unwillingness to invest in an unproven system in a faltering economy, resulted in ScanAmerica shutting down only a year after being introduced.  Had ScanAmerica come along a few years later, when the economy was back on track and other viewing sources were cutting into network ratings, it might have received more interest.    

• 1993: Arbitron, which had been competing with Nielsen for four decades in collecting local TV ratings (in roughly 200 markets), canceled the service.  Local stations, which had been forced to subscribe to both Nielsen and Arbitron to accommodate advertisers and their agencies, who were more or less equally divided among the two services, were under increasing economic pressure from cable and other competition.  It no longer made financial sense for them to support two essentially identical rating systems.  Nielsen, which already had a lock on national TV measurement, won the day.  Nielsen acquired Arbitron (renamed Nielsen Audio) in 2013.

• 1993: The broadcast networks tried to develop a rival rating service, SMART (System for Measuring and Reporting Television), with a new people meter provided by Statistical Research, Inc. (SRI).  But they couldn’t get the necessary ad-agency support and it never got beyond the “media lab” stage (I thought at the time SRI did great work and provided valuable insights).  It folded in 1997. 

• 2007: erinMedia’s plan to launch a new national ratings system to collect and process viewing data from set-top boxes was derailed when Nielsen announced it was forming a new unit called DigitalPlus to essentially do the same thing (which caused erinMedia’s funding to disappear).  In 2005, erinMedia had filed an anti-trust lawsuit against Nielsen Media, which was confidentially settled in 2008.

• ComScore, which merged with Rentrak in 2016, stands as the only real competition to Nielsen – primarily with local TV stations. Most major media agencies, networks, station groups, and streaming services subscribe to some level of ComScore data. 

So, when it comes to national television audience measurement, Nielsen remains a virtual monopoly, albeit an industry-mandated one.  Nielsen ensures its monopoly status, with its clients’ approval, by continually signing long-term staggered contracts with networks and media agencies.  This means any fledgling measurement company cannot actually replace Nielsen, but must operate side-by-side (at least for several years).  Since the industry has long been loath to support two essentially identical rating services, particularly for national currency measurement, Nielsen has continued to operate largely unopposed.

When Nielsen Has Been Forced to Improve TV Measurement

There have be only two instances, more than 20 years apart, when Nielsen was forced to overhaul how it reported television audiences – in 1987, when the switch was made from the antiquated household meter/diary system to national people meters, and in 2009, when DVRs and time-shifted viewing led to the shift from program ratings to average commercial-minute ratings (C3).

• In 1985, when AGB, which had been people meters in the UK, tried to introduce them into the U.S. market, this represented the first time a real threat to Nielsen’s dominance emerged. Even Nielsen had to admit that this new electronic measurement system was far superior to its own meter/diary system, which had considerable human bias attached to it – the highest rated networks and programs, as well as shows airing multiple times per week (daytime, early morning, evening news, late night, syndication) benefited when people manually filled out diaries at the end of each week.  Recall tends to favor the most popular and longer-duration programming.  Nielsen was forced to develop its own people meter system.

• In 2007, commercial avoidance through fast-forwarding had become one of the biggest advertiser concerns. DVR penetration among U.S. TV homes hit 20%, and measuring DVR playback and delayed viewing was now a priority.  Virtually every study and survey ever done indicated that anywhere between 70% and 80% of VCR or DVR playback involved fast-forwarding through commercials.  But there was no actual Nielsen data to prove it, and Nielsen’s national people-meter sample had just started including DVR homes.  Nielsen was forced to report DVR playback (something it was never able to do with VCRs), which led to C3 (average commercial minute ratings up to three days after the original broadcast).

How these two fundamental changes were implemented shows how much the industry’s priorities have changed over time – the speed of change in the access to video content and in consumer behavior has caused good research to take a back seat to rushing new products to market.

There was a time when any changes to audience measurement needed to undergo extensive vetting before the industry would consider implementing them.  People meters were evaluated by industry committees for nearly three years – including a full year of side-by-side data to compare it with the old meter/diary method – before agencies and networks decided to use it as marketplace currency.

Before switching from average program ratings to C3, however, little research was done into the methodology for measuring average commercial minutes.  This was the first time that marketplace business concerns overrode the necessity for validating research methodology.  It is also the moment that Nielsen shifted away from being a pure research company – at the following year’s national client meeting, Nielsen actually proclaimed that getting a product to market was now more important than validating the research beforehand.

Does Anyone Really Want More Accurate TV Audience Measurement?

The major impediment to improved audience measurement is that despite claims to the contrary, neither buyers nor sellers have traditionally wanted more accurate audience measurement.  Sellers want higher ratings (so they can charge more for advertising) and buyers want stability (so they can project future performance).  More accurate audience data is conducive to neither.

• Sellers want higher ratings – you never hear any network complain that Nielsen is overcounting their audience (although for years it did).  But every time I can recall reported television usage or network ratings declining suddenly, or for no reason anyone can pinpoint, they blame Nielsen and call for change.  There’s a reason some networks pushed so hard for viewing in bars and restaurants to be included in currency measurement?  Anyone who knows anything about viewing habits or audience measurement knows how absurd it is to think more than a small fraction of people in bars or restaurants watch and hear commercials.  It’s all about higher reported ratings.  When Nielsen was unable to report VCR playback, on the other hand, the networks were happy to continue using the artificially inflated numbers Nielsen reported (for about 20 years, until DVRs overrode the need to properly measure VCRs).

Any new measurement system does not provide higher broadcast network ratings than Nielsen, was not able to sustain major media company support.  Today, however, with the major media companies owning linear and streaming platforms, losing broadcast viewers but gaining more viewers elsewhere may be more palatable.

• Buyers want stability – accuracy is fine, but stability is required to be able to project future performance. Anyone who was in a media agency research group when the industry switched over to buying and selling based on C3 remembers the chaos that ensued during the upfront and for much of that year.  There’s a reason that what was supposed to be a “one-year band-aid” is still being used 13 years later.  Moving to more accurate commercial measurement would require not only additional staff, but would result in significantly less stable and projectable ratings.

Back in the days when there were relatively few viewing options, and most networks started and ended their seasons at the same time, there actually was a degree of stability to people’s viewing habits.  Not so today.  Traditional TV seasons, with new series debuting in the Fall and Spring, might still exist for the broadcast networks, but not for other platforms (or for viewers).  Streaming services drop new seasons and new shows throughout the year, whenever they are ready, and not always at the same time as previous seasons. 

Some streamers drop entire seasons at once, some two or three episodes before switching to weekly, and others use the broadcast network once-a-week model.  When a new season of Stranger Things, or a new show like Squid Games or The Recruit premieres, for example, my viewing habits immediately change.  I’ll binge a few episodes a night, and DVR my regular linear shows (which I’ll binge two or three weeks later).  My viewing is not nearly as stable or predictable as it was 10 years ago, and much of my viewing would not be captured by Nielsen’s C3 (or C7) measurement.

• And let’s not forget that agencies do not want to incur dramatically increased costs for improved ratings systems, or multiple currencies that would require significant spending for new or custom databases (and staff) without increasing their revenue.

Can Samples Still Adequately Measure the TV Universe?

The whole purpose of a sample is to be representative of the total U.S., with the idea that you and your demographic cohorts have similar viewing habits.  Your cohorts are determined based on characteristics that Nielsen has determined impact viewing behavior – such as age, sex, race/ethnicity, presence of children, income, education, language spoken at home, etc.  Also important is whether or not you have cable/satellite/telco (i.e., pay TV services) or DVRs.

In the past, broad platform mattered more than individual platform.  In other words, whether or not you have cable does not require the sample being representative of every cable system, because that does not significantly affect viewing choices or behavior.  Nor is it important to know what type of DVR you have, since that will not substantially impact your delayed viewing, or how much you fast-forward through commercials. 

Whether or not you subscribe to streaming services, however, is not the same.  If you only have Netflix, the programming available to you, and your actual viewing habits, will be dramatically different than if you only subscribe to Paramount+.  Likewise, if you bundle Disney+, Hulu, and ESPN+, and add HBO Max, your viewing habits will be different than if you have Netflix, Prime Video, Peacock, and Apple TV+.  And there won’t just be differences in what you stream, there will be significant differences in your linear TV viewing as well.  The only way to have a meaningful television sample, is to accurately represent the total U.S. based on every possible combination of streaming service subscriptions and cable/satellite/telco.  This means that the make-up of Nielsen’s national and local samples could need to change dramatically every year or two.  The days when all Nielsen needed to worry about was cable and DVR penetration are gone forever.

But even if you are able to put together a sample that keeps up with the shifting combinations of platform usage, it won’t necessarily provide significantly more accurate data.  This is primarily because as more and more niche programming becomes available on more and more platforms, it is quite likely that demographic cohorts no longer have similar viewing patterns.

Nielsen still can’t accurately measure streaming, and won’t be able to until its sample reflects individual streaming service penetration and until it can measure viewing on all platforms and devices.  Netflix’s two minutes of viewing data is meaningless gibberish that tells us nothing about how many viewers are actually watching anything.  The press should stop repeating (as opposed to reporting) these bogus numbers provided by streaming services.  Is Squid Game really Netflix’s most popular series ever?  Maybe.  If ABC said 50 million people watched Grey’s Anatomy this month without any third-party verification, I doubt anyone would report it as a real number.  In reality, no reported streaming data is anywhere near being comparable to linear ratings reported by Nielsen or ComScore.

The fact that Nielsen only reports on streaming titles from Netflix, Hulu, Prime Video, and Disney+ (it recently AppleTV+), and only measures streaming on a TV set, is an ongoing embarrassment.  Netflix has repeatedly said that Nielsen’s limited reported streaming data is “not even close” to the actual numbers. 

There are actually more high-quality shows on television than ever before.  The most popular ones seem to be on streaming services.  It seems that way because the press headlines, social media chatter, and industry “buzz” tell us so.  Are Stranger Things or Squid Game really more popular than NCIS or Chicago Fire?  Of course not.  It’s just that we’re not used to evaluating linear TV shows based on time spent viewing or combining multiple sources of their viewing (because advertising isn’t bought and sold that way).   

In reality, we have no idea how many people (or who) are watching any individual streaming show or platform.  Whatever limited data is currently provided by streamers is not using the same metrics as Nielsen (or one another).  So, we really do not have any valid ongoing comparisons between linear TV viewing and streaming using the same metrics or time frame.  And any comparisons we do get compare minutes of total viewing among shows where some have eight episodes available to stream to others that have more than 100 episodes available.  We do know that broadcast ratings tend to decline every season.  Streaming series may as well, but we just don’t see the data.   

Will New Vendors and a Joint Industry Committee Change Anything?

A number of advertisers, media agencies, and industry trade organizations joined NBCUniversal’s Measurement Innovation Forum, which is designed to evaluate current audience measurement methodology and come up with alternatives to Nielsen.  NBCU sent out a request for proposal (RFP) to more than 50 companies (including Nielsen) to help “build a new measurement ecosystem for us that reflects the future.”  Ironically, this was not in response to the basic flaws in current C3 measurement, but rather was spurred by the problems Nielsen encountered maintaining its national people meter sample during the pandemic – which resulted in reported network audience declines that seemed illogical to say the least.  Again, media companies only seek action when they believe reported ratings are too low, not when they believe they are inaccurate.

Tests of potential alternatives to Nielsen (such as ComScore, iSpot.tv, Samba TV, VideoAmp, Xandr, and LiveRamp) have reportedly not yielded the results the industry is looking for.  Different companies have been providing substantially different numbers from Nielsen and from one another.  And even the same suppliers have sometimes produced widely different numbers from one week to the next.  As I’ve already mentioned, in today’s media world, currently structured samples (and data modeling) are woefully inadequate in measuring the universe of TV viewers, so significant disparity in data produced by different samples should not surprise anyone.

If data provided by these different companies continue to dramatically diverge from one another, none is likely to be seen as a valid alternative to Nielsen as marketplace currency.

Obviously, a giant set-top sample in the range of tens of millions would be best, but it would still need to be representative of the country at large based on age, income, ethnicity, media device ownership, streaming subscriptions, etc.  But even that would significantly under-report viewing sources with a large amount of over-the-air only homes, and would still need a Nielsen-type panel to ascribe demographic data to these homes.  But if I had faith that the household sample was indeed representative of the country at large, I would have no problem with a panel for demos.

Now five major media companies (NBCUniversal, Paramount Global, Fox, TelevisaUnivision, and Warner Bros. Discovery) along with the Video Advertising Bureau (VAB) are forming a “joint industry” committee to create standards for audience measurement.  Notably missing from this alliance (at the moment) is Disney (which owns ABC and ESPN as well as Disney+ and Hulu). 

Since it can’t really be called a joint industry committee if it only consists of sellers, they recently announced that media agencies have been invited to join, or as they phrased it,  “We believe that if we’re going to realize our collective ambitions of ensuring accurate cross-platform solutions for measuring premium video are available, we cannot do it alone. We want your feedback as we establish new standards for the future.”  I find the use of the word “feedback” rather than “participation” interesting, to say the least.

  

There are just three times I can recall advertisers, media companies (sellers) and media agencies (buyers) in the same room discussing how to improve TV/video audience measurement.  Even prior to the switchover to people meters, Nielsen held separate meetings among researchers from the networks and ad agencies – and neither the network salespeople or agency buyers were present.

• In 2005, the Council For Research Excellence (CRE) was formed (I was privileged to be one of its founding members). The CRE initially consisted of around 40 top industry researchers, representing advertisers, networks, local station groups, syndicators, and media agencies.  While the CRE did conduct some landmark research, it did not lead to any substantial changes in Nielsen’s measurement methodology – not really surprising, since the “independent” Council’s research was funded by Nielsen (roughly $3.5 million per year).  For those who don’t remember or weren’t around at the time, the CRE was formed following Senate hearings on Nielsen’s purported measurement bias, so Nielsen could avoid the federal government becoming involved in overseeing national TV audience measurement.  Lawyers were present at many of our early meetings because the potential for collusion between buyers and sellers was a major concern.  Nielsen pulled its funding in 2017.

• In 2009, television buyers, sellers, and researchers convened for a meeting with top Nielsen executives to discuss how to measure television viewing via DVRs.  This was the first time top sales people and buyers were included in this type of meeting.  Measuring delayed viewing had become a major concern among advertisers (Nielsen had just started including DVR homes in its national sample).  There was urgency to arrive at a solution before the 2009 upfront.  Advertisers and agencies, of course, only wanted live viewing reported as marketplace currency, while the networks wanted a full week of delayed viewing (C7) reported.  C3 was the compromise. 

• A few years later, the ANA convened a select group of advertisers, sellers, buyers, and researchers to discuss replacing Nielsen’s C3 measurement with true commercial ratings. This meeting ended with Nielsen, in its typical arrogance, basically telling us they heard our concerns, but had no intentions of shifting away from C3 anytime soon (this was 10 years ago).

Only extremely urgent marketplace forces and advertiser concerns have led to any real audience measurement improvement.  Measuring streaming may qualify as one of those times – particularly with Netflix and Disney+ joining other streamers in offering an advertiser-supported tier.  Although given that the major media companies own several of the major streamers (Disney+, HBO Max, Paramount+, Peacock, Hulu), I don’t see why they can’t provide combined actual viewing data in the same format to advertisers – unless, of course, they realize the data will not be as big as they are currently able to lead people to believe they are by releasing nonsensical data such as billions of minutes viewed.

What the Industry Needs to Do to Improve TV Audience Measurement

It’s interesting that even with all the criticism leveled at Nielsen, the company is still used as the base to compare any new potential vendors to gauge the validity their reported ratings.  So, if another company reports data that is 30% higher or lower then Nielsen’s, it is immediately thought to be “wrong.”  But we really have no idea if this is the case.

In addition to re-thinking sample construction, the first thing that needs to be done is to get a handle on what current rating services can and cannot accurately measure.  While this might sound logical and simple, I can’t remember this ever being done (outside of the old telephone coincidental days).  Even when the industry took the major step of moving to average commercial minute measurement (C3) in 2009, there was precious little analysis done into the methodology Nielsen uses to calculate these ratings.

The only good attempt to get some of these answers was in the CRE’s landmark Video Consumer Mapping Study in 2007-08.  I was co-Chair of the CRE’s Media Consumption and Engagement Committee, which commissioned the study.  One of the lesser-known findings was that Nielsen’s overall usage levels of households and broad demographic segments, such as total viewers and adults 18-49 were remarkably similar to the observed viewing behavior in our sample.  Once you started to look at narrower age groups, however, the reported Nielsen data started to stray significantly from the observed viewing data.  And this was just overall TV usage levels, not individual program ratings (and was 15 years ago, when video viewing was not nearly as splintered as it is today).  DVR penetration was barely 20% of the U.S., and there were no streaming services.  At the time, I suggested we replicate the study every five years, but that never happened – primarily because it was so expensive, and the CRE (and Nielsen) had other priorities.

It is actually not that difficult to figure out how accurate current TV measurement is.  I bring this up every time I write on this topic.  When I was on the CRE, I proposed a methodology for gauging how accurate Nielsen was at measuring an increasingly fragmented video viewing environment.  Nielsen didn’t want to have anything to do with it then, but the industry should consider it now. 

Here’s all you need to do: 

• Develop a sample of 100 or so of the top researchers in the industry (buyers, sellers, advertisers), who are adept at detailed work and understand how audience measurement works. Nielsen, ComScore (and others) would meter their TVs, DVRs, smartphones, computers (desktops, laptops, tablets) and any other video viewing capable devices they own.  They would also be given portable meters to measure their exposure to out-of-home video and audio.  Let’s see how many actual people are actually watching the commercials in bars and restaurants compared to what the portable devices pick up as “exposure.”

• Set up several different viewing scenarios for what and how each participant will view video content and commercials during a single day (6am-1am), which would include both live viewing and viewing via DVRs (with normal fast-forwarding, pausing, etc.).

• Participants log in their video and commercial exposure and viewing (down to the second).

• Compare their actual viewing to what the meters report. We would then be able to see and address weaknesses in audience measurement, see how much real-world viewing is not being captured by current methodology, and gauge the differences between such things as exposure (the opportunity to view) and actual viewing, and between individual commercial viewing and average commercia minutes.

Not only will this provide, for the first time, a look at how accurate reported ratings are, but it will also tell us exactly where improvements to audience measurement need to be made (which was the original but unfulfilled purpose of the CRE).  The project could be overseen by a group of retired research executives or some well-respected company with no skin in the game.

Until something like this is done, all this talk will be little more than the sellers trying to get higher ratings, or moving away from just measuring eyeballs to the even more difficult to measure behavioral and attentiveness data (which everyone has been discussing for years).  Most attentiveness data I’ve seen over the years have been gibberish.  There has always been a tendency to start focusing on the next shiny object before actually fixing what is still the biggest piece of the pie – in-home viewing to television sets.  But if we don’t get that right, measuring real cross-platform viewing will remain out of reach.

So Whats Next?

That’s a good question.  I doubt whether the industry will follow my proposal to discover the actual weaknesses in current audience measurement techniques.  That would require the expensive, time-consuming process of fixing them, and not necessarily supply the answers anyone wants to deal with.  So, if past is prologue, we’ll probably see more talk and several new proposals on how to “better” measure video and cross-platform viewing.  New companies will come in with innovative techniques for measuring the video landscape (or portions of it), but won’t get the funding they need to go through the extended scrutiny the industry will require.  Nielsen will be forced to make some changes to how it operates.  When the next upfront rolls around, most everyone will likely still be using Nielsen as their primary national marketplace currency.

If the media conglomerates sign long-term contracts with Nielsen during the next round, we’ll know most of this was just talk.  If they sign one-year deals, making Nielsen (and others) continually prove themselves, then maybe real change will happen.

Some Pre-Upfront Thoughts (5-22)

In a series of presentations to the advertising industry this week, the major media companies are announcing plans for their linear and streaming platforms during the next year or so, which includes their respective fall TV schedules.  This marks the start of the “upfront” season, when advertisers willmj,spend upward of $20 billion buying commercial time on national television shows scheduled to air during the 2022-23 broadcast year.

As I do every year, I will be reporting on each company’s presentation, and once I watch all the new series pilots, evaluating their upcoming broadcast network programming.  But first I have a few pre-upfront thoughts.

Do the Upfronts Still Matter? 

In today’s video world, the very idea of a fall TV season seems old fashioned.  The broadcast networks might still adhere to fall- and mid-season schedules for debuting new shows but their competitors do not.  Ad-supported and premium cable networks premiere many new shows during the summer months, while streaming services drop new series whenever they happen to be ready.  In a television landscape of 10-13 episode cable shows, and 6-10 episode streaming series, when you can binge entire seasons at one time, most viewers don’t think in terms of TV seasons anymore.  Their favorite non-broadcast shows premiere, go on hiatus, and return at different times during the year.

The broadcast networks, however, still hold onto a schedule that starts in the fall.  They have traditionally been locked into weekly schedules of first-run programming coinciding with their local affiliates’ sweep months of November, February, and May (which dates back to a time when local ratings were measured via paper diaries four times a year).  Current audience measurement technology makes sweep months increasingly irrelevant, although the “official” broadcast season continues to end in May.  It’s also easier to sell commercial time upfront if buyers know when every show will premiere.  And let’s not forget they still make the most money from selling advertising in their linear network programming. 

The once highly anticipated “upfront week” has become a much more subdued affair of late.  Because of the pandemic, the last two years were exclusively virtual presentations, which simply don’t have the same energy as live events at Radio City, Carnegie Hall, or Lincoln Center, and the subsequent celebrity-filled after-parties.  This year’s upfront events will be live, but those who don’t yet feel comfortable returning to crowded settings will still be able to live-stream the presentations. 

Until recently, there was also a fair amount of anticipation among the general public during this period.  After the upfront schedule announcements, pundits would proliferate on syndicated entertainment shows, and in print magazines, and newspapers, throughout the summer talking about the new fall TV shows.  Online chatter and buzz would ensue.  There used to be little else happening in the television  arena, and aside from the latest theatrical release or celebrity scandal, the upcoming fall TV season was the one of the only big entertainment news items.  Today, with so many high-profile streaming services with new programming premiering year-round, the broadcast fall TV season is no longer the only game in town, and new broadcast network shows simply don’t generate as much pre-season buzz as they did just a few years ago.

The upfront season has traditionally benefited sellers more than buyers, and have been seen as big branding events for the broadcast networks and the top tier ad-supported cable networks.

• The upfronts have served as annual reminders to the ad industry and media press that the broadcast networks are still watched by significantly more viewers than any other video source and are still the best way to reach large chunks of viewers at one time. On this basis alone, the upfronts have been extremely valuable to the broadcast networks (as well as some of the larger ad-supported cable networks).

This will be the third consecutive year, when instead of individual events for broadcast and cable networks, we have presentations from competing media conglomerates, each of whom owns a broadcast network, ad-supported and premium cable networks, digital platforms, subscription and ad-supported streaming services, and sports and news operations. 

The broadcast network schedule announcements have long been the foundation of these upfront presentations, but last year marked the first time they were not the main focus.  The presentations were instead designed to tell us that these media companies are everywhere, can reach everyone, have high-tech analytic capabilities to optimize and better target any ad campaign, are diverse and inclusive, and are better equipped and have better scale to provide advertisers and viewers what they want than any other media company (they all made essentially the same claims).  This year’s presentations are likely to be even more focused on the depth and breadth of scale, as well as streaming ads, and using alternate “currency” measurement to supplement (but not replace) Nielsen.

• The upfront system enables the networks to continually raise prices for a shrinking product. By traditionally having the broadcast upfront first, the networks have created an artificial demand for what is essentially an unlimited supply of rating points.  It also allows the sellers to force the buyers to purchase advertising in less desirable programming so they can get the more desirable inventory. 

Keep in mind that 30 years ago, the average broadcast network rating was more than 10 times higher than the average of the top-10 cable networks.  Twenty years ago, it was roughly 7 times higher.  Today, it’s barely 3 times higher.  The advantage broadcast had over the top ad-supported cable networks is not nearly what it used to be.   But if more cable networks shift away from original scripted series, the broadcast networks will again have an advantage.

• For advertisers, audience guarantees makes the process seem worthwhile. If the buy underperforms what a network promised (guaranteed), the network provides the advertiser with additional commercials to make up the shortfall.  This was important at a time when there were wide disparities among network and individual program ratings, and future performance was less predictable.  

 

As average ratings have declined, however, they have become easier to project from one season to the next.  Blockbuster hits are few and far between – particularly in mid-season.  It is much more likely you will under-estimate a show’s performance than over-estimate it, and far more likely you will not overestimate an entire buy.  And if you’re not buying upfront, but rather going into the marketplace just a month or two before a show airs, if you can’t project the audience with a reasonable degree of accuracy, you should be doing something else.

• The upfronts are basically a futures market, allowing media companies to provide Wall Street with the confidence that they are financially healthy.

For advertisers, the upfront contains a fair amount of uncertainty.  When you buy inventory for an entire year upfront, you know going in that much of what you think you’re getting won’t be there later in the year.

For the networks and studios, spending tons of money on new programming and pilots also remains a risky proposition – only about 21% of all the new series that debuted over the past five years will still be on the air next season.  Increasingly, partnerships and back-end deals (often with streaming services) are necessary to help offset these high costs.

Are Ads on Streaming Platforms More Valuable Than Ads on Linear TV?

Ad-supported tiers on streaming services are important to their media company owners who are looking for additional revenue streams to help offset the high cost of programming, to advertisers who are searching for ways to reach consumers at a time of declining linear TV ratings, and to the general public, many of whom are looking for ways to reduce their own costs.

HBO Max introduced an advertising tier in 2021.  Netflix  has indicated it might start accepting ads in a lower-priced tier by the end of 2022.  Disney+ will do so even sooner.  This is not only a game changer, but it is the best thing to happen for advertisers in many years.  

From an advertiser perspective, one key advantage of linear TV is that you know in advance when viewers will watch the show (more or less), and that the audience will be fairly predictable and stable on a weekly basis – which means they are better suited to time-sensitive advertising campaigns.  That’s because network programming is locked into weekly schedule grids.  Not so with streaming series, where viewership is more likely to come in spurts, depending both on the platform and on how many episodes of a series are dropped at one time. 

Nevertheless, the advantages of streaming commercials to advertisers far outweigh any potential downside.  When you are streaming something, it is, along with DVR playback, typically the highest level of appointment TV (on demand).  There is no commercial avoidance through channel switching, and unlike DVR playback, you can’t fast-forward through commercials.  Streaming services also contain fewer ads per hour and significantly less commercial clutter than linear networks.

A “confirmed” commercial impression on a streaming platform is therefore far more valuable than a commercial minute impression on linear networks.  By confirmed, I mean certified by the streaming service (which has access to the actual data), not third-party measurement done by Nielsen, ComScore, or some other research company.  Current C3 ratings do not accurately account for commercial viewers on linear TV, and Nielsen’s sample is not representative of the streaming universe, nor does it measure all streaming services or devices.

While most streamers don’t reach nearly as many viewers as a broadcast network, Netflix does.  Even if only 20% of current Netflix users opt for the lower-priced ad-supported tier, it would probably place Netflix above any linear cable network in terms of audience size, particularly for its most popular series – and there’s no question that a lower-priced version will attract more subscribers.  Advertisers will know exactly how many viewers they are reaching and for how long (if they don’t rely on third-party measurement for streaming).

 

Many people, particularly younger folks, do not really want ads interrupting their streaming.  They’ve grown accustomed to ad-free viewing.  So we seem headed toward another situation (that we’ve already seen to a degree with DVRs) where the most desirable viewers, those with more disposable income, will be the greatest ad-avoiders.  The demographic differences between those who opt for ad-supported streaming and those who can easily afford not to, bears watching.  Will some people want the ad-supported tier for the more expensive Netflix and HBO Max but not for the less expensive Disney+, Paramount+ or Peacock?  This, of course, requires good research into streaming, including who subscribes to which form of which service and why.  Research which is now sorely lacking (non-existent?).

Some Pre-Upfront Questions (and maybe some answers) (3/22)

Until the early 2000s, changes to the media landscape – what was available to view and how it could be viewed – were gradual.  The slow pace of change made predicting consumer television viewing habits relatively simple, and slow-to-change research companies didn’t have to pivot too quickly, nor innovate too often. 

Over the past 20 years, however, the media environment has been in a constant state of change.  How people use and relate to media, video, and individual television shows is largely dependent on the ever-expanding array of media devices and subscription video platforms they can access.  While most people eventually got the same access to almost everything (pre-2005), this is no longer the case.  Developing national television samples that adequately represent the country at large has become increasingly difficult.

The way broadcast networks, once the only national television presence, have dealt with threats to their dominance hasn’t really changed much over the years – they’ve traditionally tended to think of only one another as their real competition.  As a result, their combined audiences have continued to erode at an unnecessarily rapid pace.

With all that said, here are some related questions I have leading into the upfront season.

Why do the broadcast networks promote their competitors but not one another?

Yes, I know I’ve been writing about this for years, but I’ve yet to receive an answer that makes sense.  Whenever I ask network executives for their rationale, I get responses like, “Why would we ever help our competition?,” “Our affiliates wouldn’t like it” (a real 1980s response), “It’s an ego thing,” or “I don’t know.”  The answer should be, “Because we’ve been committing promotional malpractice, we’ve decided to change this absurd policy immediately.  We realize it’s the best way to maximize viewer sampling and improve our overall ratings.”

I do actually understand how this reasoning originated.  In the beginning, there were only three broadcast networks competing for national advertising dollars.  With no competitors other than themselves, they fought fiercely for every rating point, and would never think of helping one another.  Then, in the late 1980s and early 1990s, as more and more people started to get various cable networks, the term “network erosion” entered the media lexicon.  But it wasn’t until the early 2000s, when ad-supported cable networks started airing original scripted series, that cross-promotion became a key element in cable’s growth (at the expense of the broadcast networks). 

Cable networks, never encumbered by the tradition of ruling the airwaves, quickly understood the best way to grow their audience was to appeal to those who were watching similar shows on other networks.  They also realized that it didn’t really hurt them if other cable networks did the same.  The more cable networks that grew viewers, the more advertising dollars would shift from broadcast to cable, and everyone would eventually benefit – which is exactly what happened.

There are several cable networks that air some of my favorite scripted series, but I don’t watch much of their other programming.  I could name more than a dozen shows off the top of my head that I never would have started watching had I not seen it promoted on a different network.  This is also true for when those shows return mid-year for a new season – I would not have realized, for example, that Killing Eve (one of my favorite shows) had recently returned for its final season had I not seen it promoted on another network.

There’s a reason streaming services are spending so much money advertising on linear television.  They know that the best way to get viewers and new subscribers is to advertise where the most viewers still congregate.  How else would I have known two of my favorite streaming series, Ozark (Netflix) and The Marvelous Mrs. Maisel (Prime Video) had recently returned?  Yet while the broadcast networks constantly sell broadcast television to advertisers as the best place to reach large chunks of target viewers at one time, they still don’t act that way it when it comes to their own product.

Viewers don’t think in terms of ABC vs. CBS vs. NBC vs. FOX anymore.  Only network executives still think that way.  

The broadcast networks continue to stubbornly refuse to promote one another’s new shows, while gladly accepting ads from their real competitors – namely premium cable networks and streaming services.  The idea that a new show produced by CBS can’t be promoted on CBS because it airs on ABC, is, to say the least, ludicrous.  Another point that illustrates how absurd this all is – the  broadcast networks accepted ads for most streaming services, but not for CBS All Access, for no reason I can find other than it had “CBS” in its name.  As soon as it rebranded itself as Paramount+, the other broadcast networks started happily taking its ads (as I had predicted thy would).

In this year’s Super Bowl on NBC, there were 10 promos for NBC shows and 8 for its steaming service, Peacock.  But there were also 2 ads for Disney+, 2 for Prime Video, 1 for Netflix, 1 for HBO Max, 1 for HBO, and 1 for AMC+.  There were none for ABC, CBS, Fox, or CW.

In what other business does a company refuse to advertise its product to the largest group of readily available customers?  These aren’t just random consumers the broadcast networks are choosing not to pursue.  These are their prime prospects, whom the networks know are already watching similar programming, who are at that moment most receptive toward receiving a message about other TV shows.  They are already watching and engaged with the exact type of program the networks are trying to promote.  I’m not sure how to say it any more plainly.

It is essential for the broadcast networks to finally understand that keeping viewers tuned to any broadcast network is the best way to keep them in the broadcast arena and get them to switch over to their programming.  A broadcast hit on one network actually does benefit all networks – it reminds the industry and the press that except for the occasional cable blockbuster (such as The Walking Dead or Yellowstone), nothing else is capable of delivering as large an audience at one time as a successful broadcast series.  Yet the broadcast network seem perfectly willing to encourage their viewers to seek out other platforms. 

Why are rankings more important than ratings?

The networks (and the press) have long considered program rankings far more important than actual ratings.  This is likely another reason the broadcast networks still refuse to cross-promote one another – they’d rather they all decline and the other networks decline more, than they all grow, but the other networks grow more.

I still cringe when I see an article that talks about how well a program performed, winning its time period with a 0.5 rating among Adults 18-49 (it seldom mentions that the 4^th place network got a 0.35 rating).  The headline here should be, “If a 0.5 rating is good enough to win the time slot, the broadcast networks have big problems,” or, “If less than two-tenths of a rating point separates first and fourth place, who cares who’s #1?”

The upfront is designed to reward rankings over ratings, and enables the networks to continually raise prices for shrinking audiences.  I led research departments at major ad agency groups for more than 30 years, and while media buyers would often ask for program or network ranking reports, I can’t recall many instances where anyone asked if a show or network’s actual ratings were up or down from the previous season.  If I was putting together a ranker chart for a presentation, I was never asked to include the actual ratings (in fact, I was usually asked not to).

For the larger cable networks, ranking among the top 10 matters more than growing their audience.  I worked at a cable network where even though our average rating was up from the previous year, we slipped from 10^th to 11^th place among adults 25-54.  This was considered a disaster.  The fact that only three-tenths of a rating point separated the 3^rd and 20^th place cable networks was not relevant.  The following season, our average rating was unchanged, but we had managed to climb to 8^th place (because other networks declined).  Celebration time. 

Focusing on rankings, and hurting other networks at the expense of your own audience growth, is short-term thinking that leads to long-term decline.  Imagine how the industry (and press) would react if each broadcast network increased its audience next season.  The only reason it won’t happen is because the networks don’t want it to.

What audience measurement currency should be used this upfront?

The Video Advertising Bureau (VAB), the industry trade group that represents both broadcast and cable networks, is demanding that Nielsen stop releasing its new “Big Data” monthly audience reports, which include set-top-box data and smart TV Automated Content Recognition (ACR) data to complement Nielsen’s traditional age/sex panel data.  The VAB cites initial data provided to the industry as “rife with illogical audience patterns and contradictions, that render it currently unusable.”  They want any new data that could be used in pricing advertising inventory held back until after the upfront, and want Nielsen to explain how the data was created.  After the upfront, the industry can examine the data.  The VAB also believes that offering two different measures leading into upfront negotiations will just serve to create confusion.

Nielsen responded that it was disappointed the VAB chose to raise its concerns in the press, and that Nielsen has been in regular contact with its clients to review the audience methodology.  Nielsen went on to say “…a trade group associated with traditional TV channels is an incomplete and biased subset of the video marketplace.  We prefer to work openly with the entire industry to get the best measurement solution.  Furthermore, based on client feedback across buyers and sellers we made the decision to allow either data set to be used for trading in the fall.”

One key question should be, do industry expectations of what audience data “should” look like matter?  The answer if you want accuracy is no.  But since accuracy has never been as important to the buyers and sellers of commercial time as stability (without which the industry will have trouble functioning), the practical answer is yes. 

This is one reason no new measurement service has been able to unseat Nielsen as national industry currency, nor is any likely to.  The industry relies on trending data and a degree of stability,  A new system that generates substantially different data from Nielsen is scary.  Since virtually no one has ever really tried to understand how accurate Nielsen ratings are, no one wants to deal with trying to figure out if a new system that reports significantly different data is actually more accurate.  And if it provides essentially the same data, what’s the point in switching away from the only company with 50 years of experience and some of the best researchers in the business?

While much of the industry pretends to want the most accurate measurement possible, the reality is that sellers want higher ratings and buyers want stability.

I’ve been saying for a few years now that so-called demographic cohorts, the foundation of Nielsen audience samples, no longer necessarily have similar viewing habits or even access to the same viewing options – particularly when it comes to streaming services, DVRs, and multi-media devices.  This makes current sampling procedures woefully inadequate in projecting total U.S. television viewing.

I don’t know about you, but my viewing is not nearly as stable and predictable as it was 10 years ago.  I have a DVR and subscribe to multiple streaming services.  When Netflix recently dropped the 4^th season of Ozark, my linear TV viewing changed dramatically for a week or so as my wife and I watched all seven episodes and then caught up on the regular shows we missed via DVR (we forgot to record one HBO show, so we caught up with that one on HBO Max).  This happens whenever a streaming services drops one of our favorite series – our viewing pattern changes, even if they drop just one episode a week rather than a full season.  Often times we will wait until two or three episodes are available so we can watch more than one at a time.

Here’s my problem with both the VAB and Nielsen perspectives.  There is no question that census-level “big data” is more accurate than a relatively small national sample used in Nielsen’s panel.  There is also no question that the panel will provide more stable and “logical” data.  But Nielsen always likes to have it both ways.  It positions itself as the arbiter of good research when it suits its needs, and then as simply a data provider when it suits other needs.  By saying it is merely providing data and it’s up to buyers and sellers to decide which to use, it is in fact putting its stamp of approval on both.  In reality, one is better and should be used as marketplace currency.  Until both buyers and sellers can agree on which is “best,” it is probably a good idea to hold off until after this year’s upfront, and then spend the next few months examining and validating the new data.

It should be noted that anytime you dramatically improve audience measurement, the previously highest rated networks will tend to decline and the lower rated ones will tend to increase.  When Nielsen switched for the old meter/diary measurement to people meters, there were some significant changes in reported viewing patterns – no one thought they were “illogical” because we all understood it to be a vast improvement in measurement methodology.  Of course, at the time, there were limited viewing options, and  it had been long assumed that the old diary system resulted in human bias that cause the most popular TV shows, and those that aired multiple times a week in syndication to be overstated.  In today’s much more splintered video environment, with many more cable networks, numerous streaming services, and multiple viewing platforms, no one knows how a vastly improved audience measurement methodology will or “should” impact reported viewing.

Should Disney+ and Netflix offer lower-priced advertising tiers?

Yes.

Is it better for a streaming service to drop an entire season at once

or on a weekly episode basis?

I’ve always felt as though companies that owned both linear TV networks and streaming services tended to drop streaming series episodes once-a-week because they don’t want their network audience to become dependent on bingeing, but rather continue to expect new weekly episodes, which has always been the ad-supported linear network model.  This accounts for how Disney+, Hulu, HBO Max, Paramount+, and Peacock schedule most of their original series.  Apple TV+ probably does the same because it does not have the extensive libraries or acquired programming the others have stockpiled, so it benefits them to give viewers a reason to come back every week.  And I’m sure that all believe they will delay subscriber churn if viewers need to return every week for two or three months to watch one of their favorite shows (instead of watching 10-13 episodes in less than a week).

Netflix, of course, has always dropped entire seasons at once and couldn’t care less about the linear network model.  It also has so much more original content than any other streaming service that it doesn’t need any individual show to keep viewers coming back.  Amazon Prime Video used to drop entire seasons, but recently moved toward dropping a couple of episodes and then one per week.  This could be because they are not producing the same quantity of programming as in the past, and are putting on more “big event” series such as The Wheel of Time and the upcoming The Lord of the Rings: The Rings of Power.

There are a number of ways Netflix benefits from dropping full seasons of series.  When they drop an even moderately popular series, it will tend to show up on Nielsen’s weekly list of most viewed streaming shows.  And with the streaming service and the press reporting meaningless data such as billions of minutes viewed, Netflix’s full seasons have a tremendous advantage over other streamers’ once-a-week episodes.  Given the PR value of dropping entire seasons at once, which does lead to increased subscribers (who want to watch the “most popular” shows), I only see upside for everyone doing so – at least for some of their key shows.

I know with my own viewing habits, I never remember which day of the week a given streaming show debuts, so I tend to forget about a weekly show, and then wind up going back to it after two or three more episodes are available.

Here's What's Wrong With TV Measurement and How to Fix It (10/21)

When it comes to national television audience measurement used for the buying and selling of commercial time, Nielsen has long been an industry-mandated monopoly.  While potential competitors have periodically emerged over the years, they have failed to sustain enough support to survive – not because Nielsen did anything to impede them, but rather because advertisers and networks have been unwilling to pay for multiple sources to provide similar national data.

There have been a number of times when various issues arose regarding how and what to measure (household meters/persons diaries, people meters, passive meters, portable meters, commercial minute ratings, out-of-home viewing), new technology and devices (VCRs, personal computers, DVRs, tablets, smartphones) or “unusual” fluctuations in reported data (such as sudden TV usage declines among households, kids, or young men).  And most recently, problems maintaining a viable sample during the pandemic.  But while there have been occasional calls for change, the industry’s unwillingness to support any real competition to Nielsen, along with networks and media agencies continuing to sign long-term Nielsen contracts, made the status quo is hard to budge.

There have been only two instances, more than 20 years apart, when Nielsen was forced to completely overhaul how it reported television audiences – in 1987, when the switch was made from the antiquated household meter/diary system to national people meters, and in 2009, when DVRs and time-shifted viewing led to the switch from program ratings to average commercial-minute ratings (C3).

How those two fundamental changes were implemented shows how much the industry’s priorities have changed over time – or really how the speed of change in the access to video content and in consumer behavior has caused good research to take a back seat to rushing new products to market.

There was a time when any change to audience measurement needed to undergo extensive vetting before the industry would consider implementing them.  People meters, for example, were evaluated by industry committees for nearly three years – including a full year of side-by-side data with the old meter/diary method – before agencies and networks decided to use it as currency.  AGB’s attempt to enter the U.S. market with people meters pressed Nielsen to develop its own system – and since AGB did not provide anything substantially different, there was no reason for the industry to pay for two essentially identical measurement services.  Of course, back then there were no compelling forces at work to make us move fast. 

VCRs had promised but never realized the idea of people programming their own viewing schedules.  Even though by the late 1990s, roughly 90% of the country owned a VCR, its major use continued to be renting or buying movies.  The average amount of actual time-shifted viewing in primetime never rose above 5%.  But even more significant, Nielsen was never able to measure VCR playback among people (although it could measure recording and playback among households – it ascribed household playback to demos).  While this did become a big deal among advertisers and agencies for a few years, the networks didn’t see it as a problem.  Nielsen eventually just said sorry, nothing we can do, and the industry moved on. 

DVRs actually changed viewer behavior and forced the industry to change.   Unlike VCRs, the DVR allowed viewers to record television shows without having to use videotape, and both recording and playback was significantly more user-friendly.  As a result, there was a substantial amount of time-shifted viewing.  Also unlike VCRs, Nielsen was able to measure playback activity.  But while VCRs had become the fastest growing electronic device since television itself, DVR ownership grew at a much slower pace.  Having been introduced by ReplayTV and TiVo in 1999, it took a decade before DVRs were even in 25% of U.S. TV homes, and another decade before it reached half the country.  Nielsen finally started including DVR households in it national people meter sample in January 2006, when the devices were in nearly 20% of homes. 

 

Commercial avoidance through fast-forwarding had become one of the biggest advertiser concerns, and measuring DVR playback and commercial ratings was now a priority.  Virtually every study and survey ever done indicated that anywhere between 70% and 80% of VCR or DVR playback involved fast-forwarding through commercials.  But there was no actual Nielsen data to prove it.

Commercial Pod studies paved the way for C3.  As the industry started to publicly grapple with how to deal with delayed DVR viewing and fast-forwarding, some media agency analyses were already underway.  My Audience Analysis group at MAGNA Global conducted extensive commercial pod studies over four consecutive years (2005-2008), examining the dynamics of commercial pod versus program performance for broadcast, cable, and syndication.  We recorded hundreds of television shows across seasons, dayparts, and genres.  We separated program segments from commercial pods for each telecast, and matched it up with Nielsen’s NPower minute-by-minute ratings.  We shared our reports with advertisers, networks, Nielsen, and the press.  These studies gave the industry confidence that commercial-minute ratings were consistent enough from year-to-year to use as marketplace currency – which led to Nielsen implementing C3 in 2009. 

Nielsen switched to C3 with virtually no research into the methodology, or whether it actually accounted for fast-forwarding. While an extensive amount of analysis went into determining whether “commercial-minute” ratings were viable to use as marketplace currency, virtually no research was done by Nielsen to determine the proper methodology for calculating them.  Speed to market was considered more important than evaluating the measurement methodology.  The MAGNA Global Commercial Pod Studies defined commercial minutes as minutes containing at least 30 seconds of commercials.  Nielsen decided to define commercial minutes as those containing even one second of commercial time – and then weight averaging those minutes based on their commercial duration to arrive at the “average commercial-minute” rating.

In 2006 and 2007, Nielsen held a series of industry-wide meetings to figure out how to report DVR playback and commercial-minute ratings. The biggest debate at the time was not on methodology, but rather on what to report.  Buyers (advertisers and their agencies) wanted only live viewing to be used as marketplace currency.  Sellers (broadcast, cable syndication) obviously wanted a full seven days of delayed DVR viewing included in the reported ratings.  The final meeting on the subject, in which the C3 compromise was established, was the first time that Nielsen had invited top research, buying, and sales executives in the same room to discuss audience measurement methodology and related business issues.  It is also the moment that Nielsen shifted away from being a pure research company – at the following year’s national client meeting, Nielsen actually proclaimed that getting a product to market was now more important than validating the research beforehand.

Those of us who were involved in the discussions on how to best measure commercial-minute ratings, recall that C3 was designed as a one- or two-year band-aid.  The industry’s major computerized pre- and post-buy analysis systems, Donovan Data and Media Bank (which have since merged to create Media Ocean), could not yet handle individual minute measurement.  They still needed audience data in the format of Nielsen’s MIT tapes, which used average ratings data.  Advertisers wanted individual commercial ratings as soon as they were feasible.  I had been working with both Donovan and Media Bank, and both did have the capability of providing pre- and post-buys based on individual minutes the following year.  

Even though research was starting to clearly demonstrate fundamental flaws in C3 measurement, we were told it didn’t really matter individual commercial measurement would soon be the marketplace currency.  I recall telling whoever would listen at the time that  given the chaos that ensued with the switch to C3, and the additional expense and staffing required to handle moving to actual commercial measurement, that C3 would likely be the end point.  That was 12 years ago.

It should also be noted that the vast majority (if not all) of Nielsen executives did not (and probably still do not) know exactly how C3 is calculated.  Many have probably forgotten, that when the “C” streams of ratings data were first made available, Nielsen sent an advisory to clients saying that you couldn’t simply subtract Live viewers from Live + 7 Days to calculate time-shifted viewing.  Since that’s what everyone was doing, and it made logical sense to do so, many of us research types started to wonder why.  It raised some uncomfortable questions about exactly how these calculations were done, because Nielsen quickly stopped saying it.  If you specifically asked them they would tell you, but otherwise they never brought it up again.

While many people think the methodology for calculating C3 takes fast-forwarding through commercials into account, and only measures exposure to the commercial minute, this is actually not entirely correct.  It has to do with the way Nielsen measures viewing to the average minute.  Rather than counting the majority of viewing to the average minute, it takes the plurality of viewing.  In other words, the channel viewers tuned to the longest during the minute.  If, for example, in a given clock minute, you are watching 20 seconds of ABC, and 10 seconds each of four other networks, you are counted as watching ABC for the entire minute.  If there is no plurality for that minute, Nielsen goes back to the previous minute and uses that plurality for both minutes.

Nielsen’s rules for allocating minute-by-minute viewing were designed for a time when virtually no one had remote control and it actually took a minute or more to get up and change the channel.  In the 1960s and 70s, plurality of viewing to a given minute was pretty much the same as viewing to the entire minute.  Individual minutes were not reported, so it didn’t matter how Nielsen measured them.  They were simply aggregated up to average program ratings.  No one ever thought about how viewing to a single minute was derived.    

When it comes to time-shifted viewing, however, the flaws in C3 methodology become apparent.  With live viewing, there are multiple channels.  During a commercial break, you can stay on that channel for 20 seconds and then scan several other channels during a given clock minute.  When you DVR a program and play it back, however, there is only one channel.  The majority and plurality of viewing are therefore the same.  If you are playing back a program, watch 20 seconds of a commercial minute and fast-forward the remaining 40 seconds, your viewing falls into something Nielsen calls AOT (“all other tuning”), and the commercial minute will receive no credit for your viewing (because both the majority and plurality of tuning is not to the commercial minute).  You would need to be tuned to the majority of a clock minute to be counted in delayed DVR viewing.  So, Nielsen’s methodology for counting live commercial minutes and delayed commercial minutes are not only different, they are both fundamentally flawed.

Nielsen still can’t accurately measure streaming, and won’t be able to until its sample reflects individual streaming service penetration and until it can measure viewing on all platforms and devices.  Netflix’s two minutes of viewing data is meaningless gibberish that tells us nothing about how many viewers are actually watching anything.  The press should stop repeating (as opposed to reporting) these bogus numbers provided by streaming services.  Is Squid Game really Netflix’s most popular series ever?  Maybe.  If ABC said 50 million people watched Grey’s Anatomy this month without any third-party verification, I doubt anyone would report it as a real number.  In reality, there are no streaming data that is anywhere near being comparable to linear ratings reported by Nielsen or ComScore.  The fact that Nielsen only reports on titles from Netflix, Hulu, Prime Video, and Disney+ (it just added AppleTV+), and only measures streaming on a TV set, is an ongoing embarrassment.  Netflix has repeatedly said that Nielsen’s limited reported streaming data is “not even close” to the actual numbers. 

A number of advertisers, media agencies, and industry trade organizations have joined NBCUniversal’s Measurement Innovation Forum, which is designed to evaluate current audience measurement methodology and come up with alternatives to Nielsen.  In August, NBCU sent out a request for proposal (RFP) to more than 50 companies (including Nielsen) to help “build a new measurement ecosystem for us that reflects the future.”   Ironically, this is not in response to the basic flaws in current C3 measurement, but rather was spurred by the problems Nielsen encountered maintaining its national people meter sample during the pandemic – which resulted in reported network audience declines that seemed illogical to say the least.

This seems somewhat similar to the Council for Research Excellence (CRE).  I was one of the founding members of this group, formed in 2005, which consisted of 40 top research executives from major Nielsen clients – representing advertisers, media agencies, broadcast and cable networks, syndication companies, local television stations, and industry trade associations.  There are obviously some significant differences. 

The CRE was designed as an independently operated group, which was basically set up so Nielsen could avoid government intervention into how it measures media audiences.  It’s stated goal was to evaluate Nielsen measurement methodology and recommend ways to improve.  Nielsen funded the research at a cost of about $3.5 million per year (although having no say in the projects we undertook).  The CRE’s first major effort was the landmark Video Consumer Mapping Study, which still stands as the best original research into consumer media habits I’ve ever seen.  The study was conducted in 2008 by the Ball State University Center for Media Design and Sequent Partners.  This study cost about $2.5 million, a number simply out of the ballpark for any agency or network to conduct on its own.  At the time, it seemed as though the CRE was the only industry entity capable of doing real good independent research, designed solely to advance how audiences are measured, without any sales-related agenda or bias – in retrospect, perhaps a naïve notion.  While there were several more interesting analyses produced by the CRE over the years, it never lived up to its initial promise and Nielsen pulled funding at the end of 2017. 

The NBCU-led effort is obviously not funded by Nielsen, and it remains unclear how much any accepted proposal will cost and who will fund it.  Also unclear is whether this is designed to find an alternative to Nielsen or a supplement to Nielsen.

So, how do we “fix” TV/video audience measurement?  If the real (as opposed to PR) goal is to actually build a better system, there are three basic steps that need to be taken.  Here is my proposal to NBCUniversal’s Measurement Innovation Forum:

The first step should be to determine what current Nielsen measurement is doing right and wrong.

• Develop a sample of 300 or so industry researchers, people who are adept at detailed work and understand how audience measurement works. Nielsen (and others) would meter their TVs, DVRs, and any other video viewing capable devices they own.  They would also be given portable meters to measure their exposure to out-of-home video and audio.

• Set up several different scenarios, from the simplest to the most complex viewing environments, for what and how each participant will view video content and commercials, in-home and out-of-home during a single day.

• Participants would then log in their video and advertising viewing (down to the second). They should write down their media behavior in minute detail, what they are watching, what platforms they are using, whether they are time-shifting, when they are fast-forwarding through commercials, when they switch channels, which commercials they are seeing (and hearing), etc.

• Compare their actual viewing to what the meters report. We would then be able to address weaknesses in audience measurement, see how much real-world viewing is not being captured by current methodology, and gauge the differences between such things as commercial exposure (the opportunity to view) and actual viewing, and between individual commercial viewing and C3.

Not only will this provide, for the first time, a look at how accurate reported ratings are, but it will also tell us exactly where improvements to audience measurement need to be made (which was the original but unfulfilled purpose of the CRE).  

The second step is to determine whether samples or panels are even adequate to measure national video viewing in today’s increasingly splintered media environment.  I would argue as currently structured they are not.

• The whole purpose of a TV sample is to be representative of the total U.S., with the idea that you and your demographic cohorts have similar viewing habits. Your cohorts are determined based on characteristics that Nielsen has determined impact viewing behavior – such as age, sex, race/ethnicity, presence of children, income, education, language spoken at home, etc.  Also important is whether or not you have cable/satellite/telco (i.e., pay TV services) or DVRs.  On occasion, Nielsen has added certain things to the list, but even then, it was always with the impact on linear TV viewing in mind.

• In the past, broad platform mattered more than individual platform. In other words, whether or not you have cable does not require the sample being representative of every cable system, because that does not significantly affect viewing choices or behavior.  Nor is it important to know what type of DVR you have, since that will not really impact your viewing behavior and how much you fast-forward through commercials.  Whether or not you subscribe to streaming services, however, is not the same.  If you only have Netflix, the programming available to you, and your actual viewing habits, will be dramatically different than if you only subscribe to Paramount+.  Likewise, if you bundle Disney+, Hulu, and ESPN+, and add HBO Max, your viewing habits will be substantially different than if you have Netflix, Amazon Prime Video, Peacock, and Apple TV+.  And there won’t just be differences in what you stream, there will be significant differences in your linear TV viewing as well.  The only way to have a meaningful television sample, is to accurately represent the total U.S. based on every possible combination of streaming service and cable/satellite/telco subscriptions.  This means that the make-up of Nielsen’s national and local samples could need to change dramatically every year.  The days when all Nielsen needed to worry about was cable and DVR penetration are gone forever.

The third step is to decide if a single source or multiple sources are preferable for measuring multiple current and future platforms.  I used to be firmly on the side of believing single-source measurement was the way to go.  I’m no longer so sure that any one company is capable of measuring all video viewing on all platforms.

A final note in the category of “be careful what you wish for” - understand that having more accurate video viewing data is likely to make few people happy.  Although advertisers do want the most accurate data, they and their agency representatives need stable (i.e., projectable) audience data in order to effectively plan and buy commercial time.  Networks, on the other hand are interested primarily in higher ratings.  While the high cost of supporting a competing national measurement service to Nielsen is one factor in continuing to only have a single currency, the main reason is that none have demonstrated they would produce higher ratings.

The only real way to put pressure on Nielsen to make fundamental changes or to actually go with an alternate measurement system is to move toward one-year contracts.  As long as all the media conglomerates continue to sign long-term 5-to-7-year deals, not much is going to change.

Does the Media Industry Really Want More Accurate Ratings? A Brief History of TV Audience Measurement (9/21)

The advertising and media industries have traditionally relied on Nielsen for national and local television audience measurement as currency for the buying and selling of commercial time (and for evaluating the video landscape).  Now it seems that several forces are at work conspiring to have this tradition come to an end – most notably, Comcast-owned NBC Universal, a long-time Nielsen critic, which recently issued a request for proposals to more than 50 companies (including Nielsen) to “build a new measurement ecosystem for us that reflects the future.”  They believe, as do many others, that current research methodologies are not able to fully measure viewers in an increasingly splintered video environment, and a single source or single metric is no longer viable.

Whether NBCU or the other media conglomerates want to actually replace Nielsen, or develop systems to operate alongside Nielsen is unclear.  But it should be clear that no advertiser or media agency in their right mind is going to accept a measurement service where the sellers have oversight into how their own audiences are measured.  There will still need be a third-party independent measurement, and Nielsen will likely continue to be a major (if not the only) player.

Before I get into a brief history of TV audience measurement and some of the issues involved, here are some basic points worth noting.

• There have been more changes to the video viewing landscape in the past 15 years than in the previous 50. Since 2005, there has been a sea change in what, where, how, and when consumers could access video content – from the introduction of Apple’s first video iPod, to the widespread use of DVRs, to the rise of social media, to the first smartphones, to the availability of multi-media devices, to the launch of multiple streaming services.  It’s hard to believe Netflix’s first hit series debuted just eight years ago.  These changes have been rapid and constant, and are making measuring video viewing and audience behavior more complex.

• Research is traditionally slow to change and adapt to shifting marketplace conditions. Before people meters brought the first major change to TV audience measurement in 30 years, the 3-network, 15-channel, one-screen, live-viewing TV world did not require much change in how viewers were counted.  This enabled Nielsen to continue trudging along without needing to innovate too much or pivot too quickly.  More than 20 years separated the two fundamental changes in national TV audience measurement (aside from sample-size increases) – the introduction of people meters in 1987 and the shift from program ratings to average commercial minute ratings (C3) in 2009.

• Nielsen is an industry-mandated monopoly. There have been several attempts by various companies to compete with Nielsen (which I discuss later in this report).  Except for ComScore, none have managed to pose any real threat to Nielsen’s dominance.  While they have served to pressure Nielsen to make improvements to its own service, the industry (both buyers and sellers) has balked at funding two audience measurement companies that would essentially provide the same thing.  While everyone likes to complain about Nielsen, so far few have wanted to spend the money required to really do much about it or foster any real competition.

• Does anyone really want the most accurate ratings possible? Advertisers obviously should, but I would argue that neither buyers nor sellers do.  Sellers want higher ratings, buyers want stability – accuracy is conducive to neither. 

 

• Sellers want higher ratings – you never hear any network complain that Nielsen is overcounting their audience (although for years it did). Back when we were evaluating AGB, as soon as I saw that they were not producing higher ratings than Nielsen, I knew that network support would fade.  And why have some networks pushed so hard for viewing in bars and restaurants to be included in currency measurement?  Certainly not because they provide an accurate portrayal of commercial exposure.  Higher reported ratings. 

• Buyers want stability – accuracy is fine, but stability is required to be able to project future performance. Anyone who was in a media agency research group when the industry switched over to buying and selling based on C3 remembers the chaos that ensued during the upfront and for much of that year.  There’s a reason that what was supposed to be a “one-year band-aid” is still being used 12 years later.  Moving to more accurate commercial measurement would require not only additional staff, but would result in significantly less stable and projectable ratings.

Here’s a brief look at some of the issues the industry has been grappling with for years…

Current Measurement is Not Nimble Enough to Handle Rapid Change

Until the early 2000s, the pace of change to how and where viewers received content was relatively slow, enabling cumbersome media measurement conglomerates to trudge along with serviceable audience measurement. 

It’s hard to imagine now, but before people meters debuted in 1987, the national Nielsen television sample was only 1,200 homes, and demographic data was only available 36 weeks of the year.  In a three-network, one-screen, single platform, 15-channel, live-viewing world, this was acceptable.  People generally had the same access to the same channels and devices, and as cohesive groups of people aged, their media habits were largely predictable.

Here’s a brief look at how the video media landscape has evolved since then:

• During the late 1980s, VCRs started to become prevalent, eventually being owned by 90% of U.S. TV households. Watching pre-recorded videocassettes became the first major new use of the television set since videogames.  This contributed to the broadcast networks giving up on original scripted series on Saturday nights (which was now the biggest movie rental night).  They subsequently cut back on airing made-for-tv and theatrical movies as well.  Time-shifted viewing, now possible for the first time, remained relatively minor (about 5% of overall primetime viewing).

The home VCR became the fastest growing electronic device since television itself, and caused real problems for audience measurement.  It marked the first time Nielsen had to admit it couldn’t measure an element of television viewing.  It was able to capture VCR recording, but playback among individual people remained beyond its scope.

• In 1990, the average home could still only receive 33 channels. Viewing habits remained relatively stable, and aside from VCR usage, there weren’t many major challenges to audience measurement.  During the early-to-mid 1990s, as cable and satellite television expanded, and phone companies were allowed into the TV business, the number of channels available to the average home began to rise sharply.

• In the late 1990s, DVRs became a reality, but growth was considerably slower than it had been for VCRs. It would take another decade before DVRs were even in 20 percent of the country and needed to be addressed in developing television samples for audience measurement.

• Prior to 2005, changes to the media landscape – what was available to view and how it could be viewed – were gradual. Most people wound up getting the same access to almost everything.  The slow pace of change made predicting consumer television viewing habits relatively simple, and slow-to-change research companies didn’t have to pivot too quickly, nor innovate too often.

• Since then, rapid change has been the norm – from the introduction of Apple’s first video iPod in 2005, to social media led by Facebook and Twitter in 2006, to the first iPhone in 2007, to the launch of Netflix and Hulu in 2008/2009, to the first iPad in 2010.

• Netflix’s first original scripted hit (House of Cards) debuted just over eight years ago, in 2013. Prime Video released its first original scripted series the same year (Alpha House and Betas). Hulu debuted its first successful original scripted series in 2013 as well, with the teen drama, East Los High.  Other subscription video on demand services followed.  CBS All Access (now Paramount+) debuted in 2015.  In late 2019, Disney+ and Apple TV+ joined the mix, followed by HBO Max and Peacock in mid-2020.  The eight major streaming services are now spending at least as much on original programming each year as the five broadcast networks combined.  There are also several niche streaming services available to viewers.  Today the average home can receive more than 200 channels and subscribes to three or four streaming services.

Can Samples Even Measure the TV Universe Anymore?

Unless they are representative of the total U.S. population based on subscriptions to individual streaming services, and combinations of streaming services, Nielsen samples can’t accurately measure TV viewing anymore.

The whole purpose of a TV sample is to be representative of the total U.S., with the idea that you and your demographic cohorts have similar viewing habits.  Your cohorts are determined based on characteristics that Nielsen has determined impact viewing behavior – such as age, sex, race/ethnicity, presence of children, income, education, language spoken at home, etc.  Also important is whether or not you have cable/satellite/telco (i.e., pay TV services) or DVRs.

In the past, broad platform mattered more than individual platform.  In other words, whether or not you have cable does not require the sample being representative of every cable system, because that does not significantly affect viewing choices or behavior.  Nor is it important to know what type of DVR you have, since that will not substantially impact your viewing behavior and how much you fast-forward through commercials. 

Whether or not you subscribe to streaming services, however, is not the same.  If you only have Netflix, the programming available to you, and your actual viewing habits, will be dramatically different than if you only subscribe to Paramount+.  Likewise, if you bundle Disney+, Hulu, and ESPN+, and add HBO Max, your viewing habits will be different than if you have Netflix, Amazon Prime Video, Peacock, and Apple TV+.  And there won’t just be differences in what you stream, there will be significant differences in your linear TV viewing as well.  The only way to have a meaningful television sample, is to accurately represent the total U.S. based on every possible combination of streaming service and cable/satellite/telco subscriptions.  This means that the make-up of Nielsen’s national and local samples could need to change dramatically every year.  The days when all Nielsen needed to worry about was cable and DVR penetration are gone forever.

Why Virtually All Attempts to Compete with Nielsen Fail

Over the years, there have been a number of unsuccessful attempts by other companies to compete – both on a national and local basis – not because Nielsen did anything in particular to impede them, but rather because the industry didn’t provide support long enough for them to be viable.  The most common result has been to pressure Nielsen into making improvements to its own methodology and increase its sample size.  

Here’s a brief look at the most notable previous attempts to compete with Nielsen.

• In 1985, after more than 30 years of being essentially unchallenged in the national TV audience measurement arena, British company AGB entered the game and posed the first real threat to Nielsen’s dominance. It had been using something called people meters in Europe, and saw an opportunity to expand into the U.S. market.  AGB had the advantage of actually using a better methodology than Nielsen’s antiquated meter/diary approach. 

AGB spent nearly two years testing its people meter in Boston before trying to roll it out nationally.  Nielsen responded by launching its own people meter, and increased its sample from 1,200 to 2,000 homes (to match the size of AGB’s sample).  The following year Nielsen increased its sample to 4,000.  As a result, AGB was only able to sign up one broadcast network (CBS, which had long been a Nielsen critic) and a few ad agencies.  I remember one of my first major decisions as Manager of Broadcast Research at a major ad agency was whether to continue supporting AGB (we had paid the first-round ask of $25,000, but balked at the second-round request).  Without widespread industry support, AGB ceased its U.S. operation in 1988.  The main problem was that ad agencies were not willing to pay for two identical national measurement services, and the networks were not willing to support a new ratings system that did not report higher numbers than Nielsen.

• In 1987, D. Percy & Co. developed a passive meter, which used a heat-sensitive, infrared device to detect when someone was in front of the television set and when someone left the room. But when people found out that the heat sensors could be thrown off by the presence of a large dog, jokes ensued, and any potential support fizzled.  Nielsen announced its own plans to develop a passive meter, which never came to fruition.

• In 1991, Arbitron’s ScanAmerica was way ahead of its time as it tried to marry TV viewing to product usage (sample participants were asked to run a “scanner wand” over the product code on each store-bought item). This single-source approache seemed to be what advertisers had been seeking.  Once again, CBS was the first broadcast network to support an attempt to compete with Nielsen.  Unfortunately, no other network, only one ad agency, and just a handful of advertisers, were willing to provide funding – a lack of belief in the methodology, the limited number of “scannable” items,  and an unwillingness to invest in an unproven system, were cited as the main reasons.  Without industry support, Arbitron could no longer afford to continue with the system, and ScanAmerica shut down in late 1992, only a year after being introduced.  Had ScanAmerica come along a few years later, when the economy was back on track and other viewing sources were cutting into network ratings, it might have received more interest.    

• Arbitron, which had been competing with Nielsen for four decades in collecting local TV ratings (in roughly 200 markets) canceled the service in 1993. Local stations, which had been forced to subscribe to both Nielsen and Arbitron to accommodate advertisers and their agencies, who were more or less equally divided among the two services, were under increasing economic pressure from cable and other competition.  It no longer made financial sense for them to support two essentially identical rating systems.  Nielsen, which already had a lock on national TV measurement, won the day.  Nielsen acquired Arbitron (renamed Nielsen Audio) in 2013.

• In 1993, the broadcast networks tried to develop a rival rating service, SMART (System for Measuring and Reporting Television), with a new people meter provided by Statistical Research, Inc. (SRI). But they couldn’t get the necessary ad-agency support and it never got beyond the “media lab” stage (I thought at the time SRI did great work and provided valuable insights).  It folded in 1997. 

• erinMedia’s plan to launch a new national ratings system to collect and process viewing data from set-top boxes was derailed in 2005 when Nielsen announced it was forming a new unit to essentially do the same thing (which caused erinMedia’s funding to disappear). erinMedia filed an anti-trust lawsuit against Nielsen Media in 2005, which was confidentially settled in 2008.

• In 2009, NBC was the driving force behind a consortium of companies, which included the four major broadcast networks, some large cable companies, along with several big advertisers and media agencies, in an effort to back a potential new competitor to Nielsen. I don’t recall specifically what happened with this effort, but no new Nielsen rival emerged – although it did contribute to Nielsen finally measuring DVR homes, more screens, and commercial minute ratings (C3).

So, when it comes to national television audience measurement, Nielsen remains a virtual monopoly, albeit an industry-mandated one.  Nielsen ensures its monopoly status, with its clients’ approval, by continually signing long-term staggered contracts with networks and media agencies.  This means any fledgling measurement company cannot actually replace Nielsen, but must operate side-by-side (at least for several years).  Since the industry has long been loath to support two essentially identical rating services, particularly for national currency measurement, Nielsen has continued to operate virtually unopposed.

Today, ComScore, which merged with Rentrak in 2016, stands as the only real competition to Nielsen – primarily with local TV stations.  Most major media agencies, networks, station groups, and streaming services subscribe to some level of ComScore data.  And given the current situation (outlined below), the company is probably feeling good about the possibility of expanding its footprint.

The MRC Suspends Nielsen Accreditation:  So?

This should be a very big deal, but so far the industry isn’t acting that way.  While researchers are familiar with the Media Rating Council (MRC), until fairly recently, most of the folks who actually buy and sell media had little contact with or knowledge about the company.  The MRC was formed at the behest of the U.S. government following the 1950s quiz-show scandals.  It conducts audits of companies that measure media to basically determine whether they do what they claim to do and are in compliance with industry standards.

Even before the pandemic, and the VAB’s (the TV network industry trade group) claim that Nielsen was dramatically undercounting television usage, I had written about how the rise of multiple streaming platforms and the fact that the average home subscribes to at least three streaming services, resulted in Nielsen no longer being able to capture the full scope of television viewing.

Combine this with clear examples of problems related to the COVID-19 pandemic, when Nielsen field agents could not enter its 40,000 national television homes to conduct regular maintenance of its sample.  The VAB claims this resulted in significantly lower reported total weekly reach levels than pre-pandemic (from 92% to 87% - which is an unprecedented single-season drop when not changing measurement methodology), and major viewing declines among the TV networks, (in the neighborhood of 20%).  Neither seems reasonable at a time when virtually everyone was confined to their homes.

The VAB asked the Media Rating Council (MRC) to suspend its accreditation of Nielsen’s TV data.  Nielsen, in a curious move, said it wanted a temporary “hiatus” from MRC accreditation so it can better “focus on innovating our core products, continuing to deliver data that the industry can rely on and ultimately creating a better media future for the entire industry.”  This seemed designed to avoid getting bogged down in a process that could only provide negative publicity for Nielsen, which hoped to distract the industry into focusing more on such things as wearable portable meters, as well as its new Nielsen One service, which promises total cross-platform measurement. 

It would be far worse for the MRC to independently revoke accreditation than for Nielsen to voluntarily suspend it on its own.  The MRC responded saying that a company needed its approval to suspend accreditation, and that this issue was so serious that it “requires further consideration by the full MRC board.”  It also noted that Nielsen’s National Television Service had some “deep-rooted ongoing performance issues” that threatened it accreditation status even before the pandemic.  As I was writing this, the MRC announced that it was indeed suspending Nielsen’s accreditation. 

This won’t necessarily have much impact on whether the industry continues to use Nielsen data, but it does open the door to other companies, such as ComScore, to argue that Nielsen is no longer the “gold standard.”   ComScore has reportedly asked the MRC to move its own upcoming audit for its service from early 2022 to October 2021. 

More importantly, it lends credence to the idea that  transparency, innovation, and new measurement yardsticks are urgently needed in an industry that has been traditionally slow to make any substantial change.  The switch from meter/diary to people meters and the shift from program ratings to C3 were more than 20 years apart.  The next five years could see more innovation in TV/video currency measurement than the past 50 years.  Nielsen will certainly have a major role in this, but not the only role.  On the other hand, we’ve heard talk like this before.  Let’s see what happens when buyers and sellers have to agree on not only what needs to be changed, but how it’s going to be funded.

What the Industry Needs to Do to Improve Audience Measurement

The first thing that needs to be done is to get a handle on what current rating services can and cannot accurately measure.  While this might sound logical and simple, I can’t remember this ever being done (outside of the old telephone coincidental days).  Even when the industry took the major step of moving to commercial minute measurement (C3) in 2009, there was precious little analysis done into the methodology Nielsen uses to calculate these ratings.

The only good attempt to get some of these answers was in the Council for Research Excellence’s (CRE) landmark Video Consumer Mapping Study in 2007-08.  I was co-Chair of the CRE’s Media Consumption and Engagement Committee, which commissioned the study.  One of the lesser-known findings was that Nielsen’s overall usage levels of households and broad demographic segments, such as total viewers and adults 18-49 were remarkably similar to the observed viewing behavior in our sample.  Once you started to look at narrower age groups, however, the reported Nielsen data started to stray significantly from the observed viewing data.  And this was just overall TV usage levels, not individual program ratings (and was 13 years ago, before video viewing was nearly as splintered as it is today).  DVR penetration was barely 20% of the U.S., and there were no streaming services.  At the time, I suggested we replicate the study every five years, but that never happened – primarily because it was so expensive, and the CRE had other priorities.

It is actually not that difficult to figure out how accurate current TV measurement is.  When I was on the CRE, I proposed a methodology for gauging how accurate Nielsen was at measuring an increasingly fragmented video viewing environment.  Nielsen didn’t want to have anything to do with it then, but the industry should consider it now. 

Here’s what you need to do: 

• Develop a sample of 100 or so of the top researchers in the industry (buyers, sellers, advertisers), who are adept at detailed work and understand how audience measurement works. Nielsen (and others) would meter their TVs, DVRs, smartphones, and any other video viewing capable devices they own.  They would also be given portable meters to measure their exposure to out-of-home video and audio.

• Set up several different viewing scenarios for what and how each participant will view video content and commercials during a single day.

• Participants would then log in their video and advertising viewing (down to the second).

• Compare their actual viewing to what the meters report. We would then be able to see and address weaknesses in audience measurement, see how much real-world viewing is not being captured by current methodology, and gauge the differences between such things as exposure (the opportunity to view) and actual viewing, and between individual commercial viewing and C3.

This will tell us what the industry needs to do next.  It would be a good idea to have Nielsen, ComScore, and a few other companies involved.  The project could be overseen by a group of retired research executives or some well-respected company with no current skin in the game.

Until something like this is done, all this talk will be little more than the sellers trying to get higher ratings, or moving away from just measuring eyeballs to the even more difficult to measure behavioral and attentiveness data (which everyone has been discussing for years).  There has always been a tendency to start focusing on the next shiny object before actually fixing what is still the biggest piece of the pie – in-home viewing to video screens.  But if we don’t get that right, measuring real cross-platform viewing will remain out of reach.

We should be clear about one thing, however.  Despite claims to the contrary, neither buyers nor sellers have traditionally wanted accurate audience measurement.  Sellers want higher ratings and buyers want stability (so they can project future performance).  Accurate ratings are conducive to neither.  Anytime you really improve audience measurement, the highest rated vehicles tend to decline and the lowest rate tend to increase.  And when you get more granular data, it will tend to be less stable from day to day or week to week.  Individual commercial ratings will almost certainly be less stable and projectable than C3.

You only need to look at what happened with C3 ratings to understand what’s going on.  The stated goal of advertisers and agencies has always been drilling down to actual commercial audiences.  The reason why average commercial minutes were used as a surrogate was ostensibly because the computer systems that processed Nielsen ratings for pre- and post-buys (at the time, Donovan Data Systems and Datatech) were unable to report actual minute-by-minute ratings.  

Implementing C3 instead of actual commercial or commercial pod ratings was a good excuse for agencies, which would have needed to hire extensive additional staff to deal with reams of more granular data, with little stability in reported numbers (making projections of future performance much more complex).  It was a good excuse for advertisers, who otherwise might have the creative execution blamed for poor individual commercial ratings.  It was also a good excuse for sellers, since we all did extensive research that indicated C3 ratings, as measured by Nielsen, would not be far off from the live program ratings it had previously reported (which, of course, is logical hooey – there is no way you can tell me that viewers are watching just commercial minutes, even over three days, at the same degree as those watching the actual program at the time it airs – that would mean most DVR users are not fast-forwarding through commercials, which is ridiculous).

C3 was planned as a one- or two-year band-aid until the industry’s pre- and post-buy systems were able to process more granular data.  I worked with both Donovan and Datatech, and they had this capability the following year.  That was 11 years ago.

So What Happens Next?

That’s a good question.  I doubt whether the industry will follow my proposal to discover the actual weaknesses in current audience measurement techniques.  That would require fixing them, which would be expensive, time-consuming, and not necessarily supply the answers anyone wants to deal with.  So, if past is prologue, we’ll probably see more talk and several new proposals on how to “better” measure video and cross-platform viewing.  New companies will come in with innovative techniques for measuring the video landscape (or portions of it), but won’t get the funding they need to go through the year-long (or more) scrutiny the industry will require.  Nielsen will make some changes to how it operates – and possibly re-submit for MRC accreditation (unless the advertisers strangely continue to not be bothered by any of this).  If the media conglomerates sign long-term contracts with Nielsen during the next round, we’ll know most of this was just talk.  If they take a page out of the NFL’s playbook, and sign a one-year deal, making a measurement service prove itself, then maybe real change will happen.

New Television Season Things to Ponder

As the pandemic continues to wreaks havoc with life in general, television programming is no exception.  Here are a few things worth pondering (or, at least some things I’ve been thinking about) as the new primetime television season gets underway.

• Another issue with TV audience measurement
• Network promotional follies
• Why ratings don’t matter
• How network shows are dealing with COVID-19 and police brutality
• Netflix goes linear (in France)

Can Nielsen (or anyone) accurately measure TV viewing?  I’ve written many columns on various issues I have with TV audience measurement, including the absurdity of advertisers and agencies allowing Nielsen to measure “viewing” in bars and restaurants.  But there’s another issue that seldom comes up, which in today’s video landscape is more important than ever – the composition of Nielsen’s sample.

Central to a well-drawn sample, is the idea that you and your cohorts have similar viewing habits.  There are generally more than a dozen categories that Nielsen uses, which research has shown are significant factors in what and how much television people view.  These include such things as age, sex, income, education, race, language spoken at home, presence of children, etc.  Also important, is access to programming.  It has been essential that cable and satellite penetration, as well as media device ownership in the sample match the country at large.  It didn’t really matter what cable, satellite, or telco system people in the sample subscribed to.  They don’t typically have much impact in channel or program availability or usage.  Likewise, VCR and subsequently DVR ownership are important, but again, which particular type or brand is not relevant, as it has virtually no impact on which programs are time-shifted. 

Streaming, on the other hand, is a different animal entirely.  Knowing that 70% of the country has at least one streaming service and 40% have three, and constructing the sample accordingly, is not good enough.  People who have just Netflix have substantially different access to programming and have different viewing habits than folks who have just Amazon Prime Video.  Likewise, viewing habits are significantly different among those who have Netflix, Hulu, Disney+, ESPN+, and Peacock, than those who have Prime Video, HBO Max, Apple TV+, CBS All Access, and BritBox.  For any TV audience measurement service to have relevance, it needs to continually update its sample to match the universe’s subscriptions to specific streaming services (perhaps all that are in at least 10% of TV homes).  Otherwise, there’s no way for the sample to be representative of the population at large, and its reported audience data become increasingly less meaningful.

Promotional Follies:  In the era of Peak TV+, with more viewing choices available than ever before, it takes viewers longer to even become aware of a new series, much less start watching it.  Because of the pandemic, this is the first time in 30 years I haven’t seen any fall TV pilots – there isn’t the normal pre-season industry analysis of new shows.  This makes effective on-air promotion (still the best way to create awareness) more important than ever, particularly for ad-supported networks, which need viewers to start watching a new series more quickly than a subscription streaming service does.

Regular readers of The Sternberg Report know that one of my pet peeves (polite term) and frequent rants is the stubborn refusal of the broadcast networks to promote one another’s programming.  The television landscape of the 1980s and 1990s saw the broadcast networks fiercely battle for every rating point, with ad-supported cable being their only real competition.  ABC, CBS, NBC, and FOX were the only places to watch original scripted primetime series, and most TV programs were watched live as they aired.  In today’s much more splintered media world, the broadcast networks should see themselves as allies against everything else (even though all broadcast nets are part of conglomerates that also own streaming services).

Ad-supported cable networks learned long ago that promoting one another’s programming is the most effective way to boost all of their ratings and attract more advertising dollars.  There are several ad-supported cable series over the years that I’ve watched regularly only because I saw them promoted on another network.  The broadcast networks still steadfastly refuse to do this, thereby not advertising to the largest chunk of available consumers of their product, who are most receptive to their message.  They should understand that whenever they develop a This is Us, The Good Doctor, Young Sheldon, or The Masked Singer, it benefits all of them, reminding both the ad industry and the press that the broadcast networks are still capable of producing the highest rated shows on the air (The Walking Dead and Yellowstone notwithstanding).  The advertising industry, which benefits from strong ad-supported programming, should be encouraging this type of cross promotion at every turn.

I was again reminded of this lunacy while I was watching this year’s Primetime Emmy Awards on ABC.  They, of course, had several promos for the host network’s programming (eight by my count).  There were also numerous ads for its competitors.  It had five ads for ad-supported cable networks (CNN, Nat Geo, TBS, and FX), two ads for premium cable (Showtime), and 16 ads for various streaming services (4 for its own Disney+, 2 for Apple TV+, 2 for Amazon Prime Video, 1 for Hulu, 2 for FX on Hulu, 3 for HBO Max, and 2 for Peacock – for some reason the network had previously banned ads for Netflix).  Conspicuously missing from this list was CBS All Access, which I suspect is simply because it has CBS in its name.  Once it officially changes its name to Paramount+, all the broadcast networks will probably happily accept ads for programs it won’t touch today.  There were, of course, no ads for CBS, NBC, FOX, or CW.  And the broadcast networks wonder why their competitors continue to siphon off their viewers, and why their own combined ratings continue to decline.

Given the pandemic delayed season, irregular start dates for both returning and new shows, and virtually no pre-season buzz for new series, cross promotion is more important than ever.  Not to do so is nothing short of promotional malpractice – and one reason initial ratings for returning series are down sharply from last year.  Just as an example, I follow television for a living, and was not aware of the season premiere date for ABC’s The Good Doctor.  I watched it a few days later on Hulu.  Had the premiere been promoted during primetime on other broadcast networks or Sunday football on CBS, FOX, or NBC, I would have known when it was returning.  The same is true for any number of season debuts for new and returning shows.

Do Ratings Matter?  Well, of course they do.  But only to the degree that they affect overall network rankings.  This has to do with an antiquated upfront buying system, where price increases have less to do with whether ratings are up or down, and more to do with the network standings.  I’ve said this before, but if you give broadcast network executives a choice between having their ratings increase by 10% and being in third place or having their ratings decline by 10% and moving into first place (because other networks declined more), every one of them would choose the latter.  This, of course, is a recipe for declining ratings.  On the ad-supported cable front, being in the top 10 matters more than anything.  I was head of research at a cable network, and I remember one year our ratings were up from the previous season, but we had slipped from 9^th place to 11^th place among adults 25-54.  It was not a happy time.  The following year, when we were back in the top 10, there was again joy in Mudville.  This, despite the fact that only about three-tenths of a rating point separated 3^rd and 30^th place among ad-supported cable networks.  Actual rating size was irrelevant, network rankings meant everything.

This is one reason NBC decided to air its Donald Trump town hall at the same time ABC had previously scheduled its Joe Biden town hall.  They expected to beat ABC significantly (which didn’t happen).  That was more important to them than getting higher ratings on a different night.  This is also one of the main reasons the broadcast networks stubbornly refuse to cross-promote one another’s programming.  Doing anything to help another network is seen as unimaginable.  Foolish short-term thinking that has resulted in long-term audience declines.

COVID-19 Storylines:  Several TV series are incorporating COVID-19 into their plots.  I was watching the season premiere of The Good Doctor, and was struck by how well they illustrated the way doctors and hospitals were dealing with the new coronavirus at the outset of the pandemic.  The season premiere of NCIS New Orleans also handled it well.  These storylines being integrated into popular TV shows might actually get some people to take the virus and mask wearing more seriously than politicians or real-life doctors ever could.

 Police Shows Get Re-Invented:  Following George Floyd’s death, and the subsequent nationwide protests against racism and police brutality, broadcast network cop shows, which typically portray the police as heroes and police brutality as a justified means of getting the bad guys to confess, have been forced to undergo much-needed changes.

Chicago P.D. has been probably the biggest example of abusing suspects to get them to reveal crimes (in virtually every episode).  And, of course, virtually every suspect they rough up is actually guilty, so the show presents it as a necessary evil.  These “hero” cops are willing to do whatever it takes to protect the public, even if it means repeatedly crossing the line.  In this season’s premiere episode, a new supervisor (a Black woman) is brought in and tells Hank Voight, the head of the intelligence unit (played by Jason Beghe) that she’s on his side, and knows he’s a good cop, but if he doesn’t change his methods he will be gone within a few months.  And when he is about to take a suspect downstairs to “the cage,” where he can rough him up to get info without anyone else seeing it or any cameras recording it, one of his Black detectives tells him “we can’t do this anymore.”  While Voight yells at him and tells him to quit if he doesn’t like it, he ends up listening to him.  It seems like most police/detective/FBI shows are undergoing changes and hiring consultants to help re-invent the genre and cover topics such as police brutality, systemic racism, and related issues more realistically.   

Netflix Goes Linear (in France):  As streaming competitors enjoy substantial subscriber growth during the pandemic, Netflix is looking for new ways to keep its subscriber base engaged, appeal to new viewers, and maintain its leadership position.

One of the main things that give streaming services an edge over linear broadcast or cable networks (aside from no advertiser-driven content restrictions) is that new programs don’t have to fit into a set schedule geared to a specific audience, or adhere to an artificial fall or mid-season.  Nor do they need to concern themselves with average ratings (reach is the more significant metric).  A series can have anywhere from 6-13 episodes per season (as opposed to 17-22 episodes for most broadcast shows), and new seasons need not debut during the same month each year.  And while a network such as CBS might have trouble scheduling a show appealing to young viewers in the middle of its older skewing lineup, Netflix series appealing to substantially different audiences, such as Ozark, Stranger Things, The Crown, GLOW, Daredevil, Grace & Frankie, Jessica Jones, Sex Education, The Umbrella Academy, The Queen’s Gambit, and The Kominsky Method can thrive side-by-side.

While continuing to have the most user-friendly interface, so many series become available every month that trying to find something new to watch often takes longer than actually watching the show.  And while Netflix’s model has worked quite well, experimenting with new options is smart.

Netflix France has announced a new web-based feature that provides subscribers with a 24-hour grid that is the same for everyone, with programming refreshed every few days.  Presumably this virtual channel would consist of whatever series are most popular in France, along with some new series and movies Netflix wants subscribers to sample.  This service is reportedly rolling out in early December.  This is a brilliantly obvious move, and if it works in France, there’s a good chance it will eventually be tried in the U.S.  Since Netflix already reaches roughly two-thirds of TV homes here, retaining subscribers is now perhaps more important than attracting new ones.  Although Netflix has been steadfast in its insistence that advertising will never be a part of its business model, this might also provide some opportunity to at least experiment in that area.

Advertisers to Waste Money on Out of Home Viewers

Nielsen recently announced that it was delaying plans to incorporate out-of-home viewing into its regular ratings reports, which had been scheduled to start with the upcoming fall TV season.  There was an immediate backlash from the broadcast networks, and Nielsen quickly reversed itself.  It is now going to include this data starting in September 2020 as originally planned.

The real headline should not be “Backlash from Networks Causes Nielsen to Reverse Itself,” but rather, “Paying for Phantom Viewers – Why is There No Backlash from Advertisers?” 

Why would cable networks such as A&E, AMC, Comedy Central, Discovery, Hallmark, ION, Lifetime, and numerous others that would not benefit at all, but would be hurt by Nielsen artificially boosting the ratings of some of their competitors, be in favor of such a move?

I’ve been in this business for more than 30 years, and for most of that time, various networks have been trying to get Nielsen to measure out-of-home viewing, and integrate the data into its standard reported ratings, which the advertising industry uses as marketplace currency.  The leading proponents (and potentially greatest beneficiaries) have been ABC/ESPN, ViacomCBS, CNBC, and Turner (now WarnerMedia).

I’m wondering what has happened to the agency research community?  Ten years ago (or so), when I was head of Audience Analysis at a major media agency, we would laugh Nielsen out of the room when they periodically would bring up including out-of-home viewing into its standard rating reports (which are used for the buying and selling of advertising).  Any junior media researcher (at least those working for more than a month or two) should know that out-of-home viewing in bars and restaurants have virtually no value to advertisers.

Traditionally the networks (sellers) have had the most influence on what types of audience data Nielsen evaluates in supplemental reports or analytical products, but agencies/advertisers (buyers) have ultimately decided what would be included in marketplace currency data.  Supplemental reports on out-of-home viewing have been produced for many years, but attempts to include them in regular rating reports have been repeatedly squashed by agency research directors who understood that this data, while interesting from a pure programming standpoint, have little relevance to advertisers.  Let’s be clear here.  Nielsen’s reason for being is not simply to measure program audiences, but rather to facilitate the buying and selling of commercial time.  Why in the world would advertisers pay for extra program viewers who largely do not see or hear their commercial message?

There is no question that major sports – NFL Football (CBS. Fox, NBC, ESPN, NFL Network), College Football (ABC, Fox, ESPN, regional sports nets), NCAA Basketball Tournament (CBS, Turner), Major League Baseball (ESPN, TBS, Fox, FS1, local stations, regional sports nets, MLB Network), NBA Basketball (ABC, ESPN, TNT, NBA TV, regional sports nets), NHL Hockey (NBC, NBCSN, ESPN, local stations, NHL Network), and Soccer (Fox, FS1, FS2, ESPN, Univision, Telemundo, ABC, CBS, beIN) will benefit most.  When Nielsen measured in-home program ratings, I could understand the argument that out-of-home program ratings should be included (I disagreed, but I understood the argument).  But in a C3 and C7 world, where the goal is to get as close to commercial minute ratings as possible, including bar and restaurant viewing makes no sense.

Anyone who has ever watched sports in a bar or restaurant knows the sound is either off or impossible to hear and understand, and when the commercial comes on you turn your attention away from the TV.  In short, the opportunity to see and hear a commercial message is far less than in an in-home setting (and in many cases, nonexistent).  And let’s not forget that if an advertiser buys a commercial and the station or network loses the audio feed, the advertiser will typically get some sort of make-good, either in the form a free ad time or cash back. 

Proximity to a turned on set is not the same as viewing, and is not the definition that applies to in-home viewing.  Right now, for example, my wife is watching TV in the same room where I am writing this report.  Were we a Nielsen household, she would be counted as a viewer while I would not.  I am not paying any attention to the TV.  But if we were outside, the portable device would include me as watching the program.  In addition to these obvious drawbacks, when you are in a sports bar, there are multiple screens that have commercials at different intervals.  I could be the same distance from three or four different screens, even though I might be watching only one or two of them.  Would I be counted as watching all four screens?  The whole idea of measuring commercial minute viewing in a sports bar is ridiculous.

There are some out-of-home venues where viewing should be measured by Nielsen and counted by advertisers.  Data from college campuses has been available for several years.  Viewing in hotel rooms would certainly be valuable to advertisers, as would the increasingly popular mobile viewing on smartphones and tablets.  I’m not sure how I feel about TV viewing being measured at work – I often had the TV tuned to CNN or CNBC with the sound off.  But bars and restaurants?  Measure them in supplemental reports, and let networks try to sell it as added value.  It doesn’t belong as part of currency ratings.  I simply don’t understand why any advertiser would accept this, particularly those who buy a lot of sports.  And I certainly don’t understand why media agencies are not up in arms. 

Why Nielsen is Modeling Demos Even Though It's Bad Research

 Not so long ago, when Nielsen was a research organization, I had a series of conversations with top executives of the company on a variety of research issues. We touched on a number of topics, including some of the audience measurement techniques being used by other research companies.

I was assured that Nielsen would never do IAG type research or model demographic data (as Rentrak was beginning to do). Obviously, we all agreed, both were just bad research. Although these are two completely different audience measurement products, I mention them together because they indicate how far Nielsen is starting to stray from its long-standing position as the research gold standard.

Of course, Nielsen has since purchased IAG and re-named it TV Brand Effect (apparently without making any improvements). Now Nielsen has announced it will soon be modeling demographic data and incorporating it into its marketplace currency standard – namely its national peoplemeter ratings.

I’m reminded that at a Nielsen national client meeting six or seven years ago a top Nielsen executive got on stage and actually proclaimed that validating its research was no longer Nielsen’s number one concern. Rather, getting products to market would take precedence (and glitches would be dealt with as they arose).

And here we are. It’s a vastly different media world than just a few years ago, and I find myself for the first time considering if modeling is the way to go. I’m leaning against it.

The Problem With National TV Samples in the 21st Century

Twenty years ago, everybody pretty much had the same viewing platforms and devices. When something new came out to either add additional channels or enhance the TV viewing experience, most people eventually got it. This remained true through 2000, as VCRs reached about 90% of TV homes (and DVRs were just being introduced).

In today’s media world, everyone doesn’t get everything anymore. Nearly half the country still does not have a DVR. Television is a fundamentally different medium among DVR owners, even when they are watching live TV.  In a few years, a third of all viewers might be heavy mobile TV viewers (mostly under 30-year-olds), while the rest of the country may watch TV that way only occasionally. Similarly, viewing TV content online will be heavily done by a segment of the audience, but the growing 45+ population might actually be watching more TV on a television set.

Those who watch (as opposed to have access) to TV content on multiple platforms will vary by content provider, platform, device, demographic group, income, life stage, and numerous other factors.

As viewing options expand, samples become less capable of measuring them.

The whole purpose of Nielsen’s national TV sample is the idea that you and your cohorts, based on a dozen or so categories that Nielsen has determined to impact TV viewing (income, geography, presence of kids, etc.) have similar viewing patterns.

This worked quite well from the 1960s (when three broadcast networks accounted for more than 90% of all TV viewing) through the 1990s (when the average household could still only receive about 30 channels and could only watch TV content on a television set). If I watched Seinfeld, and came into the office talking about being the master of my domain, virtually everyone (at least everyone Nielsen said was just like me) knew exactly what I was talking about. My viewing was indeed remarkably similar to my “cohorts”.

These days, simply because of the number of viewing options available, differing device ownership, and varying levels of streaming and DVR usage, examples of you and your “cohorts” watching different things (or the same things at different times) are commonplace.

I recently noted to some of my friends that the woman who played Sarah Connor in the new Terminator movie was one of the stars of Game of Thrones. None of them watch that show and didn’t know who she was.

One of my favorite shows is TNT’s The Last Ship. A friend, who even 5 or 10 years ago watched almost all the same shows as I, has never seen it.

If I, and one of my cohorts, watch the same program, but he time-shifts it to tomorrow, and I watch it live today, how is a sample supposed to project that?

Today there are just too many niche and time-shifting viewing options for anything less than huge (I mean really huge) samples to accurately measure program ratings. I might love sci-fi programming and comic books (which I do), while my neighbor who Nielsen says fits my profile in every measurable way football and basketball junkie. Well, we both might be watching the same number of TV hours per week and even the same amount of live versus time-shifted viewing. But I might be watching Walking Dead, The Flash, and old Star Trek The Next Generation episodes, while my neighbor has ESPN, The NFL Network, or the NBA League Pass on every night. Nielsen might accurately project that men of a certain age, income, and family size are watching television, but may no longer be able to distinguish what they are actually watching.

Nielsen samples are uncanny in their accuracy in measuring total television usage for broad demographic segments. I was involved in spearheading the Council for Research Excellence’s landmark Video Consumer Mapping Study as co-Chair of its Media Consumption and Engagement Committee. One of the study’s lesser-known findings was that Nielsen’s overall usage levels of households and broad demographic segments, such as Adults 18-49 were remarkably similar to the observed behavior. Once you started to look at narrower age groups, however, the reported Nielsen data started to stray significantly from the observed viewing data. And this was just overall TV usage levels, not individual program ratings.

More recently, when I was head of Research at ION, we would often ask Nielsen how it was possible that an hour-long show like Criminal Minds can possibly lose half of its adult 25-54 audience in the second half hour and gain 40% among adults 18-24? The next day it might be the exact opposite. They would diligently analyze the data and then tell us that 10 people in the sample switched to something else, and that resulted in a reported rating decline of 48%. There was really nothing we could do about it other the make Nielsen do the same analysis every time we noticed some audience fluctuations that defied common sense. This is something certainly not unique to ION. If you scrutinize the daily cable ratings of virtually any network, you’ll see many “illogical” fluctuations. Small ratings and small samples contribute to greater statistical error. If I were at a cable network now, I would favor almost anything that would dramatically increase sample sizes.

The Problem With Modeling

The problem’ with modeling, is that is not good research for measuring viewing behavior no matter how good the modelers. And calling them “scientists” doesn’t make them better researchers. We are supposed to accept that modeling viewing behavior from its national 25.000 peoplemeter sample to 13,000 local TV set meters will effectively double the national sample because Nielsen tells us the “math works out.” It’s not quite just making up numbers, but it’s close. You can model overall reach of a network or group of networks, but not individual average program ratings or time spent viewing. In other words, overall viewing is much more predictable, specific viewing much less so.

If the sample itself is not adequate in projecting viewing behavior of the population at large, what’s the point of modeling data based on that sample? Well, if we think that the modeled data won’t be any worse than the current sample’s data (I’m not sure), then effectively increasing the sample size is a good thing. That’s a big if.

I would rather have Nielsen’s experts model demographic data from its existing samples than have some other company do it. For example, I recently was evaluating Rentrak on behalf of ION Media Networks, and I questioned how they were modeling their demographic ratings (since with set-top ratings there is no persons data). I questioned them because the numbers they were producing did not look right to me. When I saw what they were doing, it was so ridiculous, and produced results that were so absurd, it made me question everything else they were doing (even though most of their other products seemed fine). The fact that they told me I was the first person to question their methodology led me to believe that no one else was actually using Rentrak’s “demographic” ratings (other possible reasons were too depressing for me to consider).

At least with Nielsen, they will be continuously examining the data to make sure there is some logic to the results.

Why No Industry Consensus?

So why couldn’t the Video Advertising Bureau (VAB) arrive at a consensus as to whether modeling is a good idea? I wasn’t in those meetings, but I suspect the reason is no one has any idea how this will impact Nielsen’s reported ratings. Traditionally, the networks have favored any methodological change if they believe their ratings will go up. But the unknown is scary and could negatively impact their business. Improvements to TV research methodology often cause broadcast ratings to move in one direction and cable ratings the other (the higher rated tend to decline, the lower rated tend to rise). Now that broadcast and cable networks are part of the same organization, those natural divisions may have been highlighted in their discussions.

When I was on the agency side (I was EVP of Research at Magna Global), it was traditionally the media agencies that decided what research would be used as buying and selling ratings currency. That no longer seems to be the case. Ten years ago, Nielsen would have been laughed out of the room if they proposed modeling demographic data (of course, 10 years ago they never would have even considered it).

I was one of the founding members of the Council for Research Excellence, which should be advising Nielsen on how to proceed here. This type of thing is the CRE’s entire reason for being. Let’s not forget it was created to pre-empt government intervention in Nielsen’s measurement process. The purpose of the CRE to quote from its website:

“Methodological research is concerned with the accuracy of audience measurements and the effects of possible changes in methods. It provides the foundation for valid, reliable and credible audience measurement.

The Council for Research Excellence is intended to give Nielsen's client base greater voice in the design and execution of methodological research.”

I haven’t heard anything from the CRE on this yet, but a POV distributed to the industry would be a great idea.  CRE members are from all sides of the industry, and its seal of approval would give Nielsen’s plan credibility that no matter how much “impact data” it releases, will otherwise be lacking.  And if the CRE says that Nielsen needs to reconsider their plans, it is the one thing that might influence them to stop, or at least pause.

Top 10 TV Audience and Research Myths and Misconceptions

In honor of David Letterman’s final month, here is my own top 10 list from the home office in Hoboken, New Jersey.

 
#10.    Millennials spend more time streaming than watching traditional TV.

 This makes for a good headline, but has no basis in reality.

 Millennials actually spend more than seven times as many hours per week watching traditional TV than watching video on the internet, multimedia devices, and smartphones combined (compared to 12 times as much for Adults 25-54).  As a group, they also DVR and fast-forward through commercials at a lower rate than older viewers.

 #9.    C3 ratings account for DVR fast-forwarding through commercials.

 Sorry.  Not true. 

 C3 ratings for most networks are higher than the live program rating.  Let’s think about this for a second.  Half the country doesn’t even have a DVR, yet we are seeing higher ratings for three days of just commercial minute viewing than for live viewing of the actual programs. This is so ridiculous on its face, that the industry should be crying out WTF!

Let's not forget that C3 was initially designed as a one or two year measure until industry post-buy systems were able to handle minute-by-minute ratings.  Nielsen did very little research into how C3 ratings should be calculated.

 #8.    Median Age can tell you which networks attract more young viewers. 

 Audience skew has nothing to do with audience size.

 Half the top-30 rated general entertainment cable networks among Adults 18-49 have median ages over 45.  Their average Adults 18-49 rating is about the same as those with median ages under 45.

 If you combined the Adult 18-49 impressions to all of the general entertainment cable networks with median ages between 35 and 45, they would add up to about the same as CBS’s Adult 18-49 audience (CBS’s average median age is approaching 60).

 
#7.    Online surveys.

 I know, let’s ask people who will take the time to answer an online survey, better yet, those who spend enough time online that they want to be in an online panel, how much time they spend online.  And then let’s assume they represent the country at large. 

 Because these types of surveys are so quick and relatively inexpensive, too many companies think that anyone can write the survey questions and analyze the results.  These surveys are only valuable if you have the right people asking the right questions.

 #6.    Pre-season buzz matters for new TV series.

 There are several reasons why pre-season buzz has virtually no impact on whether or not a program becomes successful.

 Despite the fact that much of their audience is older, the traditional press has always tended to focus on the younger and sexier programs.  It’s always fascinating to see what shows newspapers and syndicated entertainment magazines focus on, almost oblivious as to whom their own viewers or readers are.   CBS, often with the most successful new series, has traditionally received less pre-season buzz than other networks.

 Comic-con buzz is often heavily skewed toward sci-fi or super hero series, or shows with former sci-fi stars attached, and seldom have any affect on a show’s success potential.

 People who are chatting about new shows on social media before they premiere generally have not seen the pilot, and are not necessarily going to be watching the shows (even if the chat is positive) – particularly if the new show is scheduled opposite one of their favorites.  That’s different from people chatting about a show that’s already on the air that they have been watching.  That actually can provide an indication of whether a show is poised to grow or decline.

Over the past 15 years, roughly 30% of the series with the most pre-season buzz became successful – slightly lower than the average new series success rate during the same period.

#5.    Day-after recall studies.

In the 1960s and 1970s, when there were only three networks and a few independent stations, studies where you ask people if they remember seeing a given commercial in a given program might have had some value.  Not today.

Unless you know that the commercial in question is new and only aired in certain programs yesterday, there are simply too many viewing options to have any idea where viewers might have actually seen the ads. 

Several  years ago, the Cabletelevision Advertising Bureau (CAB) conducted the best recall study I've seen.  They called people while they were watching TV, asked what they were watching, asked what the last commercial was that they recalled, and then independently verified that those commercials actually ran in those programs. 

When I was at ION, I conducted a similar study through our Vision Critical panel, to compare ad recall among live and DVR viewers.  There is really no other way to get at this type of intelligence other than through near-immediate recall.  Day-after recall is an anachronism when it comes to commercials (though it still works quite well for program engagement).

#4.     Two words. Big Data.

#3.     Higher ratings lead to more ad revenue.

This is actually not the case.  Both broadcast and cable networks care much more about their ranking compared to their perceived competition than whether or not their ratings go up.

If you were to ask any broadcast network whether they would rather lose 5% of their audience next season but move into first place (because everyone else declined more) or gain 5% but slip into third or fourth place, they would all rather be in first place.  Otherwise, you'd see them advertising their programming on one another the way cable networks do so effectively.

Likewise, if you asked every cable network that currently ranks outside the top 10 among adults 18-49 and 25-54 if they would rather gain viewers and stay where they currently rank or lose viewers but move into the top 10, they would all choose the latter. This, despite the fact that generally less than half a rating point separate 20 or so cable networks.

Until the marketplace dynamics and industry perceptions that continue to make audience rankings more profitable than audience size change, we'll be analyzing rankings of continually declining audience bases.

#2.    Broadcast Networks Need to Follow the Cable Model.

If they want lower ratings, that's the way to go.  Only a handful of original scripted cable series are managing even a 1.0 rating among adults 18-49.  Even the lowest rated primetime broadcast series get more viewers than that.

#1.     Social media drives TV viewing.

I have not seen any credible research to indicate this is the case.  I would not take on face value any studies done by social media companies or Nielsen in partnership with social media companies.  TV viewing drives social media comments about those programs, but there is not yet any evidence that the reverse is true.  The average person spends about 8 minutes per day on Twitter (and 30 minutes per day on Facebook).  

C3 or C7: Does it Really Matter?

Often times, new and ostensibly improved research makes people think they are getting closer to the “truth” when they are actually getting farther away.  C3 is a good example. 

Those of us who were involved in the initial industry meetings that led to C3 as a compromise between buyers who wanted Live only and sellers who wanted C7, remember that Nielsen did very little research into the methodology it decided to use in calculating this new metric.  Part of the reason was that the upfront was approaching, the industry needed to deal with the growing impact of DVRs, and C3 was designed as a one-year transition (two at most) until the industry post-buy systems, Donovan and Datatech (since merged to form Media Ocean), were able to report and post on exact minute ratings.

I wrote about how C3 did not take fast-forwarding through commercials into account, which, at the time, Nielsen acknowledged, and most people in the industry should have been fully aware.  But again, since C3 was planned as a temporary measure, and DVR was penetration was barely in 20% of TV homes, it wasn't a priority to fix this.

I remember saying at the time that once C3 was implemented, it would become the standard metric, and it would be difficult to move to something else, since neither agencies or networks really wanted to deal with the nightmare workload involved in actually switching to minute-by-minute ratings on a massive scale – particularly after dealing with the one-year nightmare involved in just switching to C3 (anyone who worked in an agency TV research department back then knows what I mean).

I’ve been part of a few industry meetings since, then where the topic of individual commercial or commercial pod ratings (my choice) were discussed. But there never seems to be any follow-up.

Those of us who remember when cable was posted based on quarter-hour program ratings should realize that this data was significantly closer to actual commercial ratings than are C3 ratings (simply as a result of the way programs build or lose audiences over the course of a telecast).  C3, which merely weight-averages minutes that contain commercials based on how many seconds of commercial time are contained in each minute, is not necessarily close to any individual commercial rating.

Over the past few years, for some reason, a lot of people started to think that C3 accounts for fast-forwarding through commercials.  It doesn’t.  This has to do with the way Nielsen measures the average minute.  Basically, they look for the plurality of time viewed to determine whether a channel is counted as being viewed for that minute.  In other words, if during a given program minute, you are tuned to ABC for 20 seconds, and four other networks for 10 seconds each, you are counted by Nielsen as watching ABC for the full minute. 

When you are playing back something on DVR, however, there is only one channel.  So any viewing to that channel, even just a few seconds, is a plurality, and will count as watching the entire minute.  This will typically only impact the first and last minute of a commercial pod, but it obviously leads to C3 counting a significant amount of fast-forwarding as commercial viewing.

Switching to C7 would not change much in terms of how far away we are from actual commercial measurement, and since it gives a better indication of overall program viewing, there’s no reason not to go with C7.  Any research analysis of time-shifted viewing should be done on a full-week basis anyway.  The difference between C3 and C7 ratings for most cable networks is insignificant.  It is greater for the broadcast networks, which have a lot more original scripted series, and therefore much more time-shifted viewing.