MTV Eschews Spot Ratings in Ad Talks

Cable Stands to Lose if Audience Measurement Changes

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CHICAGO (AdAge.com) -- Coming up with a common ratings currency for buying advertising is proving particularly tricky for cable networks. While most of the TV industry appears ready to price ads based on ratings that measure how many viewers see commercials, MTV Networks is telling ad buyers it wants to continue to make transactions based on program ratings.
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Commercial ratings for MTV Networks channels such as MTV and VH1 are significantly lower than their program ratings, a condition some attribute to a young, antsy audience prone to channel surfing. Some buyers think moving to commercial ratings will make it difficult for MTV Networks to maintain its ad prices.

Making up for audience attrition
The network can argue that its power to draw younger viewers that advertisers want to reach makes up for its audience attrition during commercial breaks. MTV Networks declined to comment.

MTV Networks' preference for sticking with program ratings embodies this year's dance between buyers and sellers as they adjust to new technologies for counting audiences.

Upfront negotiations have been slow to ramp up as buyers and sellers wait for Nielsen Media Research to release commercial ratings data this week, and ad agency executives said they plan to take some time to digest the new data before negotiating in earnest on nearly $9 billion in ad commitments. Advertisers prefer commercial ratings because that measures the number of people actually seeing their ads, rather than the number of people watching the programs.

The broadcast networks are pushing commercial ratings that would count some viewers who delay watching shows with the digital video recorders that have been costing them live viewership. Syndicators see the new measurement as an advantage because their viewers tend to stay tuned and watch live. For cable, commercial ratings are a mixed bag, with MTV Networks among the most affected.

Lost viewers for MTV
When the American Association of Advertising Agencies first looked at commercial ratings in 2005, MTV lost more than 20% of its 18- to 34-year-old prime-time viewers during breaks. Over the course of a day, VH1 lost 14% of its 18- to 49-year-old viewers during breaks.

"When you look at their commercial ratings, they're really in a deep hole," said one ad buyer. "Those years when MTV could command whatever they wanted and get it, they just don't exist anymore."

While it is expected to push hard for program ratings, MTV Networks is discussing other possible metrics, including measures of how engaged viewers are with spots, ad buyers familiar with the talks said. That may signal that if buyers are determined to go with commercial ratings, MTV Networks won't be left on the platform when the train leaves the station.

MTV Networks also is saying that while commercial ratings will be an appropriate advertising currency in the future, there are still too many kinks to be worked out now, according to ad buyers.

Like many cable network groups, MTV has issues with the new numbers Nielsen Media Research plans to release this week. While Nielsen was fairly quickly able to produce acceptable commercial ratings numbers for broadcast, it has had problems calculating accurate figures for cable.

Concern over Nielsen's tracking
Cable sales executives remain concerned that Nielsen cannot track the changes they are making to better deliver commercial messages, such as including branded content in commercial breaks.

A senior sales executive said that, given the uncertainty over the cable ratings numbers, a variety of scenarios are being discussed with buyers, including using quarter-hour program ratings for buying ads.

Chris Boothe, president-activation at the Starcom media-buying agency, said for cable, metrics could be different by network and by genre of network.

"We're having some minute-by-minute [ratings] discussions with some vendors," he said. "It's a little bit across the board."

Rino Scanzoni, chief investment officer at media-buying agency Group M, said his firm plans to do all of its ad deals based on live commercial ratings plus three days of playback viewing on DVRs, and that adopting that standard is especially important for cable.

Cable networks that perform poorly in commercial ratings hurt advertisers by having long breaks and putting network promotions in the first position within those pods.

Cable should clean up its act
"Cable is clearly where they need the financial incentive to clean up their act," Mr. Scanzoni said. "MTV right now still has some relatively long commercial pods and they still keep a majority of their 'A' positions for promos."

Mr. Scanzoni said he didn't believe MTV would take a huge hit in upfront sales in a switch to commercial ratings. He said MTV has started to implement changes to its format, and that it has seen a big influx of viewers thanks to college students who were added to the Nielsen count this season.

While discussions were going on between networks and buyers last week, few expected significant deals to be made until the middle of June.

"The days when this business was conducted over a couple of weeks and into the wee hours of the morning are history that will not replicate itself in my lifetime. It's a different business," Mr. Scanzoni said.

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Jon Lafayette is a reporter for Television Week.
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