Nielsen Readies New Local Ratings

Nielsen Media Research in about two weeks will issue a new stream of ratings data for local TV programs that includes, for the first time, three days of playback DVR viewing.

The new data stream, known in the industry as L3, has sparked a debate over how local ads should be bought and sold. It has also raised questions about when — or if — commercial ratings might be introduced to the local broadcast market.

Stations hope to make the L3 ratings data a currency for buying and selling local ads.

Buyers, however, insist that the measurement doesn’t indicate how many viewers are fast-forwarding through commercials in playback mode. They also argue that the new system is useless for time-sensitive local retailers who often run one- or two-day sales events. In such cases, for viewers watching in playback mode on day three, the sale would be over and, in effect, the money spent trying to reach such consumers would be wasted, per buyers.

Many of the big buying shops — including WPP Group’s MindShare, Mediaedge:cia and MediaCom and Interpublic Group’s Universal McCann — have said they would not buy local ads based on L3 numbers. They plan to continue using live local program ratings to formulate media buys.

“We’re going to stick with live ratings for now” in the local markets, said Lyle Schwartz, managing partner, director of national broadcast research and marketplace analysis at GroupM, the WPP media agency management arm. L3, he said, provides an “overestimation of commercial viewing” because it cannot detect when viewers are fast-forwarding through commercials.

Kathy Doyle, svp, director of local broadcast, Universal McCann, said her shop would also stick with the live program ratings to buy local spots. “We will not use it,” she said of L3. “We do a lot of retail locally, so it’s the client’s money down the drain” if viewers see a spot during DVR playback days after an advertised sale has ended.

But station executives counter that as DVR penetration grows (Nielsen’s current estimate is about 25 percent, or 25 million homes), it is only fair that they get credit and payment for viewing to ads and content that are played back. “Consider that more than half of all playback occurs within one hour” of a program’s live broadcast, said Pat Liguori, svp of research and electronic measurement for ABC Owned Television Stations Group, making the case for L3.

The dollars at stake are high, said Liguori, noting that she has seen increases of up to 4 rating points for programs when DVR playback is added to their audience. On an annualized basis across the entire industry, that translates to possibly hundreds of millions of dollars in TV exposure.

“I understand there are time sensitive advertisers but not every advertiser has a time sensitive product,” Liguori said. “The larger DVR penetration gets, the less representative the live only numbers will be.”

The debate is similar to last year’s dispute between the national networks and advertisers. That difference of opinion was settled when the two sides agreed to buy and sell ads with live commercial ratings plus three days of DVR playback viewing, known as C3.

Buyers found that compromise acceptable because the live viewing measured ads, not programs, and the playback viewing counted only viewing of commercials, not those that viewers fast-forward through.

So why not implement commercial ratings at the local level?

Buyers, sellers and Nielsen Media Research executives say they’ve received numerous requests for such ratings from advertisers. That said, there are also numerous hurdles, according to Kevin Svenningsen, Nielsen svp, managing director of local television client services.

Not the least of which, he said, is the fact that Nielsen measures local TV stations on a quarter-hour basis. In order to measure commercial minutes, that methodology would have to change so that stations would be measured on a minute-by-minute basis.

The problem there is that the switch would result in an immediate drop in ratings for the local stations — by some estimates a 10-15 percent on average. (This stems from differences in the ways stations are credited in the minute-by-minute methodology.)

Liquori said she would have issues if Nielsen switched the methodology for local ratings. “The way Nielsen calculates its average commercial minute ratings for national TV, viewers only have to watch a few seconds for that minute to be counted [albeit on weighted basis],” she said. “Show me something a little more precise before you come talk to me about changing a system that shows people viewing for five minutes. That kind of engagement is worth something.”

“There would be enormous push back” from stations if Nielsen tried to switch the local methodology, said one executive at a major station group.

But others noted that stations fought hard when Nielsen initially proposed people meters for local markets, because ratings for that switch were also expected to drop — and they did. But LPMs are now installed in 14 markets and Nielsen plans to have them in place in all 56 metered markets by 2012, a company rep said.
Tina Silvestri, svp sales operations of NBC Local Media, says she’s not automatically opposed to commercial ratings for local markets. “I know that’s something our clients would be interested in and we want to be accountable.” But she too sees huge hurdles, including the relatively small sample sizes that make up rating panels in local markets. In New York, for example, about 800 meters are used to tabulate viewing for the estimated 7.4 million households in the market. “It just doesn’t seem like it could be a reality anytime soon,” she said.

Said Nielsen’s Svenningsen: “I think we’re headed that way. I have come across that request a fair amount of time from buyers and advertisers. With the demand for more granular data I think will get there. Obviously it would require a lot of discussion within the industry.”

Mediaweek and Adweek are a unit of the Nielsen Co.