Even though Nielsen noted that most prime-time viewing still occurs live (97% of it, to be precise), the TV networks were determined to focus the conversation on people who record programs and watch them (and sometimes the ads in them) at a later date. Marketers and their media buyers, who were expecting to discuss how many viewers disappeared during ad breaks, instead found themselves back where they were during the last upfront -- debating the value of live viewers vs. the DVR crowd.
In exchange for letting Madison Avenue have its commercial ratings -- and therefore negotiate on the basis of a smaller audience -- networks are trying to bake in some way to regain the other audience they're losing, the time shifters. They are insisting they get paid for that sliver of DVR-enabled viewers who stick around to watch the ads as well as the programs after they originally air.
That will stick in the craw of many advertisers, which "really see the biggest value in those ratings that are live or close to live," said Bill Duggan, exec VP, Association of National Advertisers. "It's just such a short-term business environment these days."
Until now, marketers have paid TV networks for ad time based on the popularity of shows, not viewership of the commercials themselves. Commercial ratings are a step toward changing that, allowing prices to be set by viewership of ad breaks. While the new Nielsen ratings don't track individual ads or specific time slots, they offer average viewership of all the national commercial minutes in a program. And that could be the metric upon which this year's upfront deals are struck. But the networks are pushing for it to include DVR viewers, hoping to bank a figure at least on par with last year's upfront take, estimated between $8.75 billion and $9 billion. Buyers and sellers seem to be settling on "live plus three," allowing the ratings to include viewers who watch as many as three days later. "It gives the media credit for the way in which people are and will increasingly watch TV, and that's in some sort of time-shifted mode," said Alan Wurtzel, president-research and media development for NBC Universal.
Keeping viewers in seats
The problem is that most DVR viewers zap past the ads. Those who do watch them may see them long past their expiration dates. According to Nielsen, about 17% of U.S households have DVRs, and viewers 18 to 49 watch 10% of all broadcast-network prime-time programming via DVR. Network executives estimate more than half of those viewers skip the ads altogether. Even though Nielsen data shows that audiences grow the longer the viewing window, viewership of commercials lags significantly behind viewership of programs.
This brings up issues for advertisers. A number of big-spending categories need to reach consumers at a specific day and time. Package-goods marketers, for instance, often use TV ads to push products being promoted with coupons. If an ad tells people to "pick it up in this Sunday's paper," and the ad is viewed after Sunday, "that message has now been devalued," said Scott Haugenes, senior VP-group director, national broadcast, Initiative. Fast-food marketers often have tie-ins to short-lived promotions -- offers for particular sandwiches or film openings.
Retailers are known for advertising sales taking place in a few days. For movie studios, advertising on network TV on Thursday night has long been a dependable way to drive audiences into theaters for Friday film openings. "For the studios, the commercial message is timely. It has to be day-specific," said Jeff Robinson, senior VP-national television, Palisades Media Group, which handles buying for a number of movie studios.
More every day
While DVRs don't account for the majority of viewers today, "there will be more every single day," said Ed Gold, director-corporate advertising for State Farm Insurance. "We are very concerned about utilizing any playback numbers until it's proven to us that people actually watch the commercials during playback." Nielsen's data is supposed to be compiled via set-top monitors that note whether viewers change the channel during an ad break or zap through ads with a DVR.
For advertisers more focused on developing image and building awareness, people who see their ads days after they air are just as welcome as those who see them live. "We are in agreement that 'live plus three' data is the appropriate metric since most time-shifted viewing occurs within that time frame and the majority of our campaigns are not day and date sensitive," said Jon Stimmel, director-media buying, Unilever USA. "DVR playback of programming is only going to increase, so altering the economic model now is imperative."
Even with commercial ratings in hand, this year's upfront is expected to continue at a glacial pace, media buyers said. Once completed in a matter of days, the annual ad-sales bazaar is taking weeks as a dizzying array of new media gives big networks more competition for ad dollars.
Ultimately, commercial-ratings data doesn't solve Madison Avenue's need to demonstrate to senior corporate executives that advertising helps increase sales and brand awareness. Adding DVR viewers ito the mix may muddy the waters, and both sides now must be sure those viewers are really worth the extra money. "We want to pay for what we get. What we get is someone watching a 15- or 30-second spot," said State Farm's Mr. Gold.