Back in June, when Nielsen said it would begin issuing commercial ratings for TV this fall, many in the industry assumed the data would be available for use as currency during the 2007 upfront market. Now, however, those expectations appear wildly optimistic—at least for cable networks and syndicated shows—as it becomes obvious that Nielsen will be unable to fix the flaws in how it measures such outlets before next year.
That lack of a new currency will likely trigger another major battle between buyers and sellers leading into next year's upfront over how to value DVR viewing—an issue that was supposed to be settled with the introduction of the commercial ratings. Some broadcast network execs insist that the current system, based on program ratings and live viewing only, must be replaced in time for next year's upfront. But others argue that it makes no sense to have one ratings system used by broadcast networks while cable and syndicated shows continue to use the existing program-based ratings method.
"If it's going to be used as currency, it all has to be done the same way," said Steve Sternberg, head of audience analysis for Interpublic Group's Magna Global. "That's at least a year away, because you need to test the data for a year before making a decision."
But David Poltrack, president, CBS Vision, the network's research arm, said last week that the current system has to go sooner than that. "If the alternative is to have the upfront based on live-only, like it was this year, that's unacceptable," he said. "We're talking about 10 percent of the audience of some of these top network programs being given away free. We can't do that again." Specifically, Poltrack pointed to programs like ABC's Grey's Anatomy and CBS's CSI and Survivor as shows this season that have been replayed on DVRs by 10 percent of the audience. And that's with only an estimated 9 percent of U.S. homes even having the technology.
"We're better off with the experimental system that Nielsen has proposed and getting the process started and the software built" in time for next year, he said. "The process of debating this to death is not the way to go."
Alan Wurtzel, president of research and media development at NBC Universal Television, agreed with Poltrack that live-only program ratings are highly problematic and become more so as DVR penetration increases. Wurtzel said that this season as much as 20 percent of the audience of NBC's new Studio 60 is derived from DVR viewing. "That's an audience we don't get credit for," he said. Commercial ratings would solve the issue, because ads that are fast-forwarded through aren't counted, while spots viewed during playback at regular speed are.
But Wurtzel stopped short of insisting that commercial ratings have to be in place by next year's upfront, before there's a chance to evaluate the data issued by a new system.
"Of course we want credit for DVR viewing," said Wurtzel. "Commercial ratings would address that, but I don't want to go ahead and throw up in the air $50 billion or $60 billion worth of advertising with an untested system." While the NBC TV network is participating in Nielsen's commercial ratings trial, which starts Dec. 11, Wurtzel last week confirmed that the company's cable networks, including USA, Bravo and CNBC, are opting out for now.
There are indeed flaws with the way Nielsen measures cable TV audiences (such as its inability to distinguish between local and national commercials), and most of that industry's major networks have opted out of the commercial ratings test. Cable executives argue that it makes no sense to participate in a test that will produce inaccurate results. And they point to the fact that Nielsen (owned by Adweek parent VNU) has acknowledged it needs to make adjustments in the way it measures the medium to come up with more accurate data. The other cable networks opting out so far are Lifetime, ABC Family and ESPN, MTV Networks, Discovery Channel, TBS, TNT, CNN and The Weather Channel.
The cable exodus followed a letter from CAB president Sean Cunningham to cable networks urging them not to participate until Nielsen corrects how it measures the medium.
"Nielsen's ability to produce accurate and actionable commercial ratings is just not there yet," said Cunningham. That said, Cunningham stressed that cable is working with Nielsen to correct the flaws and move toward commercial ratings.
Some agencies see cable's decision as an unnecessary delay. Lyle Schwartz, svp of research and marketplace analysis at WPP's Mediaedge:cia, said he saw some legitimate issues, but wondered if they justified opting out. "I just don't think the differences are all that much," he said. "Cable has worked hard to create a one-TV marketplace to be seen on a par with network television. But by opting out of this tape, we're now going to have this more refined data for broadcasters that we won't have for cable. In essence it creates two tiers of quality of information."
"No one is trying to delay this," said Tim Brooks, evp, research, Lifetime Television Networks. "The questions really revolve around how quickly and accurately Nielsen can resolve these issues, not just that they will, but that they in fact have." When that happens, said Brooks, cable networks will opt back in.
Nielsen said it is on the case. Sara Erichson, general manager of national services for Nielsen, said the ratings service believes it will have the cable methodology issues solved by the end of the first quarter of 2007. Still, Erichson said Nielsen would issue cable commercial ratings data in December even though only a "small minority" of cable networks are opting in to the system.
Meanwhile, Nielsen may get some competition on the commercial ratings front. Rival TNS Media Intelligence made a closed presentation to researchers last week urging the industry to consider its data, which more accurately identifies specific commercials. At the very least, said NBC's Wurtzel, "I think we need to explore it if we can."