Advertisers spent $1.9 billion on local cable TV systems last year, according to Cabletelevision Advertising Bureau, but cable operators believe they can get much more if they can show more accurate ratings data to marketers and agencies.
"It's a multibillion-dollar shortfall in revenue that cable operators can't get because they can't prove who's watching," said Bill Livek, president-CEO of ADcom Information Services, the Carlsbad, Calif.-based company that TCI and WPP's Kantar Media Research Group are backing.
Other investors in ADcom include Arbitron Co.; GE Capital; Veronis, Suhler & Associates; and Sandler Capital Management. Others are expected to invest.
Arbitron itself was once a powerhouse in local TV measurement, but abandoned that arena a number of years ago.
The problem for local cable is that many cable programs have extremely low ratings, and the sample size of the Nielsen Station Index makes it difficult to reliably measure those ratings, Mr. Livek said.
TWO MARKETS NEXT
TCI will start its rollout of ADcom in two major markets: San Francisco and Dallas. In San Francisco, ADcom will install household meters in 1,556 homes by September 1999, ramping up to 2,580 by 2005. In Dallas, ADcom will start with 930 homes and end up in about 1,500 in the same time frame. The household meters will all be installed in cable homes.
Nielsen's NSI has about 450 meters in San Francisco and about 360 in Dallas, according to a company spokeswoman.
WPP and TCI decided to back ADcom based on a test the company has been conducting in a MediaOne cable system in Jacksonville, Fla., for the last year. Those results have shown significant gains in local cable ratings numbers over Nielsen.
"We're encouraged by what they're doing. It's too early to say definitely, but their methodology seems sound," said Allen Ginsberg, exec VP-media director, BBDO South, Atlanta.
Jerry Machovina, TCI's exec VP-advertising sales, said the company is in a quiet period because of its pending merger with AT&T and that he could not comment.
Kantar Media Research has major investments in a number of information and research companies, including Simmons Market Research.
In each cable household it goes into, ADcom will meter every TV in that home, something Nielsen doesn't do. So ADcom, and those subscribing to its service, will know what the ratings are for shows being watched in teen-agers' bedrooms as well as those viewed on living room sets.
METERS PLUS DIARIES
ADcom will also supplement the meters with two separate diary measurements that will go to additional cable homes in the markets. One will survey age and sex information, the other will be a monthly survey of "traditional demography information that diaries provide now for advertisers," said Mr. Livek.
"If it's meters and diaries, and if local cable operators are going to begin putting money into research, that's a good thing," said Jack Loftus, Nielsen's senior VP-communications, adding that TCI is talking to Nielsen about installing people meters in local markets.
PROBLEM FOR NIELSEN
Announcement of the ADcom rollout comes on the heels of last week's news that the board of the Media Rating Council voted in a confidential session to deny accreditation to a large portion of data used to tabulate ratings in 28 of the 40 NSI metered markets (AA, Aug. 17, et seq.). Nielsen uses telephone solicitation to find viewers for its sample in affected markets.
Richard Weinstein, MRC executive director-CEO, declined comment. At press time, Mr. Loftus said Nielsen had not been contacted by MRC about any decision.
Nielsen also faces a challenge to its national ratings service by Statistical Research Inc.'s Smart, which is lining up investors for a national rollout.