Analyst: Nielsen’s Revised Sample Won’t Immediately Impact Ad Market

In redefining the TV household, ratings service takes first step in a long journey

If a journey of a thousand miles begins with a single step, Nielsen’s plans to expand its sample to include non-linear TV deliveries is a bit like lacing up one’s boots before planting one foot in front of the other.

The ratings giant this week proclaimed its intention to redefine the U.S. TV household, broadening its scope to include homes with “at least one operable TV/Monitor with the ability to deliver video via traditional means of antennae, cable [set-top box] or satellite receiver and/or with a broadband connection.”

While Nielsen’s goal is to capture “all viewing in all homes,” thereby validating the deliveries that occur beyond the bounds of the tube, the new criteria won’t take effect until the start of the 2013-14 broadcast season. As such, during the spring upfront negotiations the networks won’t be making ratings guarantees against any additional deliveries.

In other words, as broadcasters complete the process of securing commitments for as much as 80 percent of their seasonal ad inventory, any ancillary viewership in the fall will go unrewarded. Should the new standard demonstrate an actionable increase in non-linear viewing, those deliveries conceivably can be sold in the scatter market.

Analysts weighing in on the announcement said it was unlikely that the new measurement scheme would pay off in higher ratings, at least in the short term. In a report issued today to investors, Bernstein Research senior analyst Todd Juenger noted that the net impact of streaming video via alternative platforms “is still very small compared to traditional TV,” adding that whereas the average American watches five hours of TV per day, online video consumption works out to be around seven minutes per day.

Mobile streaming is an even smaller subset of all video deliveries, averaging out to a mere two minutes per day. Juenger’s figures were taken from Nielsen’s most current Cross-Platform Viewership Report.

When all video deliveries are tossed into the same cement mixer, non-TV views account for less than 1 percent of the total. And a good deal of that non-linear pool is likely to come from non-ad-supported subscription-VOD services such as Netflix and Amazon Prime. (Netflix has demonstrated little interest in becoming a Nielsen subscriber.)

Even when Nielsen begins measuring deliveries via the iPad and other tablets—a full reckoning of such usage isn’t expected until 2014 at the earliest—the traditional TV nets are unlikely to see much of a bump.

“Much of the [ancillary] viewing will come from web hubs such as YouTube, AOL, etc., which isn’t related whatsoever to the networks,” Juenger said, adding that while “the monetization of this viewership could be increased with better holistic cross-platform measurement, that would mostly help the YouTubes of the world at the expense of the TV networks.”

Advertisers that do begin to get a read on these hitherto unmapped consumption patterns are more likely to begin moving TV dollars to the Internet, Juenger said.

Naturally, the addition of impressions doesn’t automatically turn the knob on CPMs. As a fairly simple supply-and-demand system, rates generally increase when GRPs shrink—with fewer impressions to sell, network sales execs can charge higher prices for their inventory. Conversely, additional eyeballs translates to a need for fewer spots in order for marketers to hit their targets.

Juenger noted that the networks can help their cause by putting more stock in VOD content. If a more uniform ad model is developed for on-demand content and the ads are dynamically refreshed to ensure relevance, VOD could prove to be an invaluable addition to a network’s traditional spot load.

Of course, Nielsen must begin measuring VOD in order for the programmers to make a few bucks on those impressions…and “at the specific program level—or even ‘commercial audience’ level—for the commercials in the content,” Juenger said.

If any network is likely to see an immediate impact from the reconfigured ratings sample, it is the youth-skewing CW. Overall deliveries for the home of The Vampire Diaries, Arrow and Supernatural should improve appreciably once iPad usage is comprehensively measured.

Given the state of live-program deliveries, the networks are looking to make strides wherever they can. Through the first 21 weeks of the current broadcast season, Fox is down 24 percent in the crucial 18-49 demo, while ABC is off 12 percent and the CW has fallen 13 percent. Ratings at CBS and NBC are both flat versus the 2011-12 campaign, but there’s little joy to be found in not losing ground. For one thing, CBS just enjoyed the inimitable jolt of broadcasting the Super Bowl, a once-every-three-years privilege that fills in the cracks and generally ensures a victory in the seasonal ratings race. (The week before airing the Super Bowl, CBS was down 13 percent in the demo.)

The outlook is even darker at NBC. As late as mid-December, the Peacock was scorching the competition, averaging a 3.1 in the dollar demo, an improvement of 24 percent from the year-ago period. But with the National Football League sidelined until next fall and The Voice on hiatus until March 25, all momentum now appears to be lost.