Nielsen’s New Ratings Data Trigger Debate Over Value

New York The move by Nielsen Media Research later this year to incorporate playback viewing from DVR recordings into its daily ratings reports has sparked an industry debate over how advertising time should be bought and sold in the future.

The broadcast and cable networks have been pushing Nielsen to revise the ratings system to include tracking viewers watching pre-recorded shows, so that they can charge advertisers for the larger audience. Or try to, anyway. Not surprisingly, advertisers have not been as interested in having the DVR viewing reported because of the high percentage of viewers that research shows skip through the ads. Without ratings documentation, playback viewing is a bonus audience advertisers don’t pay for.

Up to now, the DVR ratings debate has largely been contained to the offices and corridors along Madison Avenue and Network Row. But IPG ad-buying arm Magna Global has brought the issue to the forefront. Company chairman and CEO Bill Cella told Adweek that Magna will not use the revised system for negotiating deals for the 2006 upfront market. Cella said the agency will stick with the numbers that have been available all along—so called “live” viewing—and will not negotiate rates based on the new Nielsen numbers that factor in DVR viewing.

“That’s our policy,” said Cella. “And now is the time to let people know that, because everybody starts to get ready for the upfront in January,” even though the market itself doesn’t usually break until late May or June. MAGNA negotiates ad rates for all the IPG media shops, including Initiative and Universal McCann, which collectively bought ads in the U.S. worth more than $12 billion, according to RECMA estimates for full year 2004.

WPP’s Mediaedge:cia also plans to use live-only data for now. Lyle Schwartz, the agency’s director of research and marketplace analysis, said that would only change if Nielsen starts issuing ratings that would measure the level of commercial skipping, which is not likely to happen in the near term.

But several other top-10 media agencies are mulling how to use the new data in negotiations. “We have not made a final decision,” said Harry Keeshan, evp, national broadcast, Omnicom’s PHD. “It looks like it has the potential of changing our currency,” he said, comparing the new data to the last sea change in Nielsen methodology, when it switched from handwritten diaries to people meters in the 1980s to keep track of demographic viewing. “I see us having that same kind of long, drawn-out debate on it,” he said. “We’re looking very closely at it.”

Other shops also want to analyze the new Nielsen data, which will start being issued Dec. 26, before making a definite decision.

“We’re still trying to get more information from Nielsen about how they will tabulate the data,” said Jason Maltby, co-president, national broadcast, WPP’s MindShare. “I think people are waiting to see what some of that data looks like before making a determination.”

Omnicom’s OMD is currently conducting a study of DVR usage with TiVo and cable operators, including Comcast, to gain a better understanding of how the devices affect viewing behavior. Those insights will help the agency determine not just which set of data might be used in negotiations, but might also help reshape messaging for DVR homes, said Joe Uva, CEO, OMD Worldwide. “There may not be one answer for everything,” he said.

MAGNA’s position is based on several factors. First, the current numbers already include same-day playback of programs taped on analog VCRs. Overall, such playback amounts to only a fraction of total viewing, but it is playback that advertisers are paying for even though viewers are probably skipping through most of the commercials, said Cella. On top of that, additional payments for DVR viewing, in which 80 percent to 90 percent of the commercials are being skipped through (according to MAGNA’s own research), “is not fair to our clients,” he said. “Why pay more money when we pretty much know what the outcome is going to be?”

Other shops say live-only viewing data will be used for negotiating most, but not all, of their buys. “There may be a few clients where we would consider same-day,” said Jon Mandel, WPP’s MediaCom chairman. But most clients, he said, create specific ads to target live viewing that occurs at different times of the day. “So for a food client, it’s, ‘When do you want to advertise—before they eat or after they eat?’ It’s a creative issue, not a media issue.”

But the networks remain convinced there is value to audiences who watch shows in playback mode. “The notion that anything that is seen off the disk takes advertising effectiveness to zero is completely incorrect and ignores what we’ve come to learn about how people view programs,” said Alan Wurtzel, president of research and media development, NBC. “There’s a lot more to learn before we take final positions.”

Tim Brooks, evp, research, Lifetime Television, says newer research shows most viewers want DVRs “to reorganize when they watch TV. Skipping is a secondary part of it, and some spots stop people in their tracks.” He also said that some recorded viewing is delayed by as little as five minutes and that to dismiss such viewing as valueless “doesn’t make much sense.”

DVR penetration is still low; current estimates vary between 7 percent to 13 percent of households, according to researchers. MAGNA estimates that 8 million homes (between 8 percent to 9 percent of U.S. households) have DVRs now. But Cella said that could grow to between 30 percent and 40 percent in five years, making the debate on how the data are used to buy ads all the more critical.

Nielsen will begin issuing two new sets of daily ratings in December. One set will include live viewing plus all the playback from DVR recording that occurs the same day. The second set of new ratings will include live viewing plus all DVR playback for a full week.