Virtually all parties involved -- marketers, media buyers and the media themselves -- agree that in a video-on-demand world in which consumers control what they watch and when, the current broadcast advertising model is broken, or at the very least inadequate. 1 What they don't yet agree on is the solution, leading to mass confusion as networks scramble to create their own measurements in a race to develop a standard for counting those precious eyeballs. The trouble is, they should be working together, not apart.
"We're in the primordial soup," said Alan Wurtzel, president-research and media development at NBC Universal.
At present, TV advertisers are willing to pay for three days' worth of viewers who see commercials in different programs, but both buyers and sellers acknowledge that this standard has to develop further and could even change radically over time. "Not everything that is counted counts, and not everything that counts can be counted," said Jim Kite, president-connections, research and analytics at Publicis Groupe's MediaVest.
Already there is some sense of battle lines being drawn. Broadcast networks want to maintain their position as mass-audience delivery vehicles, especially since "scatter" ad pricing is weak and their traditional TV ratings continue to show signs of erosion. As of Oct. 15, the four biggest broadcast networks showed declines in live and same-day audiences between the ages of 18 and 49, according to Wachovia broadcasting analyst Marci Ryvicker, with Fox falling 1%, CBS 8%, ABC 14% and NBC 15%.
Just last week, Walt Disney Co.'s ABC crowed about how well its shows did when using relatively new "commercial ratings" and recently made the case for including viewers who play back recorded programs within a week after they air. "More viewers are watching shows on their own timetables, which may not be reflected in the overnight next-day numbers. The only truly valid year-to-year comparison would be one based on the live-plus-seven-day metric, once those stats are released by Nielsen," the network said in a statement.
NBC Universal, meanwhile, has touted what it calls its Total Audience Measurement Index, which is a measure of viewers across multiple venues, including network and cable TV, online, video on demand, and mobile. For example, the Oct. 6 episode of "Chuck" had about 9.04 million viewers, according to NBC, and an additional 1.06 million who watched it online. "There are people who believe what we have now is going to be a measurement for the next couple of years, and there are other people who are pushing for greater levels of accountability," said Marc Goldstein, president-CEO of WPP Group's Group M.
The key is what those viewers do once they see a marketer's ads. "Anyone can add up every time a screen is on and do a little head count of how many people are around, but that doesn't constitute a viewer, and it certainly doesn't constitute a viewer who can then be measured to see if their viewing behavior correlates to sales," Mr. Kite said.
Here, Ad Age examines some of the hot topics that have already begun to emerge as the debate continues:
Should advertisers be able to pay different prices for different kinds of viewing audiences?It's a viable question, particularly as digital technology allows some audiences to be measured more precisely than the group flocking to the living-room screen, said Mike Bloxham, director-insight and research at Ball State University's Center for Media Design. The problem is that the industry lacks the technology to measure such things precisely. Did the guy who watched a show on iTunes also watch it on TV, or are the two viewers unduplicated? Can the networks get good prices for online viewers that would help them offset the revenue they are bound to lose by separating those people from valuable couch potatoes?
"They are a very long way behind in terms of getting to that level of certainty, although the market is changing," Mr. Bloxham said. "The instinct, particularly in times of economic uncertainty, of course, is to hold on to what you know and what you feel you have more control over."
One idea that could save the day, Mr. Wurtzel said, is measuring viewer behavior over a long period of time. By monitoring viewers with hand-held devices that track their consumption of content, buyers and sellers might have a more reliable picture of how and when ad messages make an impression.
How meaningful are audiences who watch shows days, even weeks, after they originally air?The verdict on this one came when buyers and sellers agreed to pay for three days' worth of audiences who didn't skip ads when playing back shows on DVRs. For advertisers who have time-sensitive messages about movie openings or big sales, week-old viewers are about as attractive as week-old bread. "It is the best measurement for a lot of our clients, and look, there are still some clients that still want live only," said Group M's Mr. Goldstein. "We're comfortable with where we are, and where we've gotten, and I think we'll be there for a while."
TV networks maintain that the overall audience is important, particularly as DVR penetration continues -- and attracts the valuable 18-to-49 demographic. "You can't evaluate a performance of a TV program today without taking into account live-plus-seven ratings," said NBC Universal's Mr. Wurtzel.
How much of TV watching will become "on demand," prompting networks to charge premiums for programs that are watched live?For as much attention as it has gotten, DVR viewing is likely to be part of a larger parcel of on-demand viewing conducted through computer screens and downloads to portable devices. As with online video, the likelihood of jamming dozens of ads into the mix is less likely than with a traditional TV broadcast. "I think what you'll see is an incredible proportion of an audience choosing not to be bound by the [networks' day and date] schedule. You're going to see an amplification of the behavior that we most typically associate with the DVR," Mr. Bloxham said.
While this development probably won't happen soon, he said, it is likely to further emphasize the difference between content that large groups of people watch together as it airs -- most likely news and sports -- and entertainment that can be stored and digested as people see fit. Tracking audience behavior will become more complex, as will figuring out how networks ought to promote programs to reach their maximum audiences.
Can interactive TV save the day?Media executives have been saying for years that lending the TV screen the same "click and response" qualities that are so much a part of the web and mobile devices will result in making TV more targeted. And cable and satellite providers seem to be doing more now to make this possible than ever before, with cable-industry consortium Canoe Ventures unveiling several developments in recent weeks.
One school of thought holds that networks will be able to charge a premium when they can direct specific ads to specific groups. Imagine the power Fox, ABC and the rest would have if they could still attract mass audiences but also find a way to use interactive applications to mine that crowd for demographic niches and deliver appropriate ads to each of those groups.
The problem: Other media also mine niches, said MediaVest's Mr. Kite, and word-of-mouth efforts and in-store TV can be purchased for a good value. When it comes to interactive TV, he cautioned, it just might be "too expensive to make it worthwhile."