How Nielsen issues and measurement alternatives will impact TV upfronts

TV networks are bullish on using alternatives to Nielsen panel data as currencies for deals in the upcoming spring ad haggle. But despite Nielsen’s widely reported issues and new alliances forging between media sellers and measurement firms, it’s unlikely 2022 will be the year the TV industry shifts en masse away from Nielsen. Advertisers are expressing a lack of confidence in these new solutions as a result of just not enough time before dealmaking kicks off to prove that they are a reliable alternative. As a result, it’s unlikely that more than high-single-digit percentages of this year’s upfront deals will be written on anything other than the same old Nielsen age and gender demos used for decades. Ad Age's 2022 Upfronts and NewFronts calendar Instead, this year's tests could set the stage for a bigger share shift in 2023, and ultimately, topple the near-monopoly Nielsen has enjoyed for decades. "It’s really difficult to imagine with all the different companies involved and tests just starting, and that we won’t have any real, solid info on regularly scheduled programming for at least three to four weeks, that anyone is going to want to make a leap to use this new audience measurement for this year’s upfront exclusively," according to one media buyer. "That doesn’t mean we might not have some deals that get done that have dual measurement systems—one as a contractual piece and one to watch." What’s important to note is the difference between currency and measurement. “There’s a lot of smoke in the air right now on measurement and a lot about currency, and they are two different things,” said Geoff Calabrese, chief investment officer, Omnicom Media Group North America, adding that the confusion is similar to how people often interchanged the phrases connected TV and streaming. Subscribe to Ad Age now for the latest industry news and analysis. But a currency is something that is transacted against, like Nielsen GRPs (gross ratings points) or CPMs (the cost to reach 1,000 viewers). “That will be the broadcast 2022-2023 currency across the industry,” he said. “No one is far enough along to transact on anything different on both the seller and buyer side. None of the new currencies are set up to work in an automated way right now. It will be a testing year for currencies.” What is likely, he said, is brands will guarantee on Nielsen and in parallel measure on alternatives. Reluctance to make big commitments to alternative currencies comes despite problems with Nielsen’s traditional ratings. Undercounting led to Nielsen’s Media Rating Council accreditation being suspended last year. Limitations of Nielsen’s 41,000-household panel make measurement of lesser-watched shows challenging, and deals using anything other than its broad age-gender categories impossible. These factors are driving experimentation with measurements based on tens of millions of set-top boxes and smart TVs. While Nielsen has said it should have fixes identified by the MRC in place by mid-year, that won’t be in time for the upfronts (of course, with the exception of Comscore, none of Nielsen’s competitors have even applied for MRC accreditation yet). Nielsen's woes got worse Wednesday when Byron Allen's networks, including The Weather Channel, sued the company for fraudulently misrepresenting its measurement capabilities and seeking to rewrite contracts over the loss of MRC accreditation. Amid all this, an abundance of emerging measurement companies have swooped in and are trying to solidify themselves as a potential replacement. TV networks, which have seen dwindling ratings according to Nielsen’s metrics, are certainly eager to find alternatives that paint viewership in a better light. To this end, Fox Corp. is working with Comscore; Paramount and Discovery are utilizing both Comscore and VideoAmp; Disney Advertising struck a deal with Samba TV; and NBCUniversal tapped iSpot.tv. While Nielsen’s well-publicized troubles have played a role in opening minds and wallets to alternative currencies, it may have been inevitable anyway in part because of demand from clients to go beyond traditional demos to use custom audiences and performance guarantees against sales or other measures, said Empower Chief Investment Officer Cathy Shaffner. “It’s something we’ve been preparing for quite some time,” Shaffner said. “Our clients are definitely going to be taking advantage of the opportunity to be able to write deals in the upfront on different currencies.” But she didn’t have a projection on how much upfront business would be done on alternatives. Ad Age A-List 2022 Best agencies of the year, ranked Top production companies to know about Definitive rankings of advertisers and agencies Opportunities abound, commitments not so much Speaking during the Coalition for Innovative Media Measurement Summit last month, NBCU’s Chief Business Officer Krishan Bhatia estimated that a third of the media giant’s business (outside of the upfronts) is already transacted on currencies that are not Nielsen-based. Discovery’s U.S. ad sales chief Jon Steinlauf predicts 5% to 10% of the total estimated $25 billion in deals done in the coming upfront—not counting streaming—could be written with currencies other than Nielsen, with the percentage increasing when streaming is added. But while big agencies are all in on testing, it seems they’re not committed to writing deals with alternative currencies. Omnicom Media Group has six clients lined up to test alternatives in advance of the upfront, said Kelly Metz, managing director of advanced TV. Among them are State Farm and AT&T, which are participating in a test of VideoAmp and Comscore with Discovery. But OMG made it clear that clients are making no commitments to do deals in them yet. Bharad Ramesh, executive director of research and investment analytics at WPP’s GroupM, likewise isn’t making such commitments. “We are running trials, and we will make a decision in due course in consultation with our clients on whether we want to use an alternate currency to trade,” he said. Dentsu U.S. does expect to do some upfront deals using VideoAmp data this year, as it has in prior upfronts, said Cara Lewis, head of U.S. media investment. The agency is currently testing VideoAmp with several clients. “In the upfront, there will definitely be clients who trade on alternative measurement,” Lewis said. “There are some who are ready to go. They’re invested and they’ve been trying different things for years.” “Percentage-wise, I can’t really put a number on it, because I don’t know what’s going to come out of these tests, but I would think, yes, we’re going to have a decent amount on Nielsen [in the coming upfront] but we’re not going to be 100% Nielsen,” Lewis said. Horizon Media expects 10% to 15% of its upfront deals this year to be done on alternative currencies, said Dave Campanelli, chief investment officer, who goes further than others in his projections. Buyers, he said, “have to all get comfortable that we are not going to be on a single currency. Maybe that’s somewhat temporary until all this shakes out and Nielsen gets its act together with Nielsen One, and then one of the others will arise as a good second.” Hodgepodge of options One issue is that trading on alternative currencies comes with a hodgepodge of menu options, and more choice isn’t necessarily better in a market that demands consistency. Different networks and media holding companies have offered different sets of alternate currencies, though the primary ones at this point appear to be Comscore, VideoAmp and iSpot, according to several agency executives. And each of these have a different approach. VideoAmp and Paramount are looking to deliver bigger audience numbers than Nielsen does and are heavily focused on linear TV, an agency buyer said. NBC with iSpot is looking “more holistically across screens,” the buyer said, “and while I’m sure NBC would like to see bigger numbers, their goal is really how to be fluid across screens.” “The networks are coming to us and saying they want to test, but we also don’t buy just that network set,” Dentsu’s Lewis said. “We also want to see the full landscape.” Thus, among several tests Dentsu is involved with, some include using alternative measurement across a single network group, while others involve looking at what several clients bought across the whole landscape, she said. Those tests don’t necessarily apply to live campaigns, and are instead being applied after a campaign runs to see what would have happened if they used alternative currencies rather than Nielsen for the buy. Certainly, advertisers have been utilizing other forms of measurement outside of Nielsen for so-called secondary guarantees for some time. Essentially this is when a deal is struck based on an Nielsen demographic guarantee but a portion of the buy is also measured against another audience segment, like those in the market for a new vehicle or parents of newborns. These so-called “secondary guarantees” are what Nielsen CEO David Kenny said in a Feb. 28 earnings call are most likely to be handled by alternative providers. But he said agency investment managers and big advertisers have told him their main “fiduciary responsibility” is to maximize investment against a relatively stable audience while avoiding the risk of double counting. “I think there is a frustration with paying more for less in some of the traditional linear business, so they’re looking for that leverage,” Kenny said. “That’s why I believe they’re still going to want that single base case of what’s going on in that market.” But Horizon’s Campanelli, who projects doing 10% to 15% of this year’s deals on Nielsen alternatives, said those will go beyond mere secondary guarantees. “What we’re talking about here is instead of doing a deal on Nielsen 18-49, it would be VideoAmp or iSpot or one of the other alternatives,” he said. “So it is sort of a step back to take a step forward.” Writing deals with advanced targets or custom audiences using Nielsen panel ratings are “tough because Nielsen’s base is so small,” Campanelli said. “VideoAmp and Comscore have tens of millions of households you are matching on. This temporary step back could lead to better advanced targets.” Nielsen One’s ‘trial’ Kenny also noted during its earnings call that Nielsen has made data available from the alpha version of its own under-development Nielsen One service, which co-mingles data from set-top boxes and smart TVs with its panel, to all the major agency holding companies in advance of the current upfront. The trade group the Video Advertising Bureau took issue with the release of these numbers. Even though Kenny also said Nielsen One isn’t expected to play a role as a currency until the 2024 upfront, the VAB sees the wide release of numbers from the big data sets that will feed Nielsen One akin the Nielsen trying to offer its own alternative currency in the 2022 upfronts. “Nielsen’s launch of big data into national TV this September will be offered in parallel to our existing measurement currency,” according to a Nielsen statement. That move came in response to clients’ feedback. “This will enable buyers and sellers to trade against big data plus panel metrics, while giving our clients runway to adapt” to the Nielsen One launch in advance. But the VAB called foul on Nielsen offering two data sets as currency in the upfronts in a March 7 letter to Kenny, particularly given some seemingly inexplicable inconsistencies between them. “We’re in an era of multiple currencies, but that wasn’t meant to imply two data streams to be used as currency from one provider,” said VAB CEO Sean Cunningham, “because it sets up the challenge of knowing which is the truth set.” No networks so far have offered to accept Nielsen’s alternative data as currency in this upfront, and executives of two agency groups said they have no intention of asking for it to be used. ‘All these babies are ugly’ Nielsen putting its “big data” set into the market does highlight one fact—that its next-generation measurement at this point is just as un-audited and un-accredited by the MRC as those of other providers whose data is offered by networks as currency. And the others all have their own challenges. “All of these babies are ugly,” said a second agency executive, referring to methodological and data issues with alternative currency providers. Still, all the alternative providers have been working with big data sets for years longer than Nielsen, and some are rising to the top, this executive said. Tests currently underway could further increase confidence in some of them. Beyond accuracy questions, other factors make it hard to do deals using Nielsen alternatives. Many media agency contracts provide performance incentives for hitting or exceeding CPM targets based on Nielsen ratings, the agency executive said. But Dentsu’s Lewis said contracts aren’t a major sticking point. “If clients are comfortable,” she said, “I don’t think that’s a piece that will hold us back.” Another problem is that what buyers ultimately need to compare isn’t the performance of alternative providers against current Nielsen panel-based ratings, but against Nielsen One, which isn’t fully functional yet. And a third buyer noted that many clients will be reluctant to move off of Nielsen because they’ve long evaluated media effectiveness using marketing-mix models based on its data. Does better data really benefit buyers? A deeper, if more cynical, question is whether advertisers may win by sticking with Nielsen panel data as currency even if alternative measurements are more accurate. “The thing to remember is the networks are exploring new currencies and measurement partners because they feel their value is being ignored by Nielsen,” said one buyer. “None of them would be doing it if tests with iSpot or the others showed they aren’t reaching as many people as they think. While Nielsen is fundamentally flawed, it is balanced for both the buyer and the seller.” That balance part, however, is debatable. Cases where Nielsen ratings lead to over-delivery against network audience guarantees are exceedingly rare, Cortex Media CEO Manuel Reyes noted in a recent presentation to the Association of National Advertisers Media Conference. “I don’t think I’ve seen an over-delivery in maybe 10 years,” he said. The errors that led to Nielsen losing MRC accreditation were from undercounting audiences. Overall, the VAB has estimated $690 million worth of TV time under-counted by Nielsen, based on subsequent restatements, which equals close to 2% of what Zenith estimated to be $40 billion in 2021 national TV spending. The VAB was vocal in blowing the whistle on undercounts last year, leaning on iSpot data to dispute Nielsen’s numbers. Comscore and VideoAmp, likewise, didn’t show the same broad audience declines that Nielsen’s panel did. But while agencies and many clients also use data from those Nielsen competitors to plan and optimize, the buy side wasn’t objecting publicly to Nielsen’s numbers. Indeed, agencies and marketers have for years used alternate measures to spot buys where the big-data sets from the likes of Comscore and VideoAmp suggest more value than Nielsen’s panel data assigns. In other words, flawed Nielsen data can deliver savings. But Lewis said she doesn’t believe attachment to arbitrage strategies will hold back the use of alternative currencies. Optimization goes beyond just getting the best deals using Nielsen demographics as currency, she said, and clients already are transacting on custom audiences or measures using alternative providers. Ultimately, perhaps buyers and sellers will negotiate lower CPMs on currencies that make audiences bigger. The VAB's Cunningham paints a rosier picture where it's more about alternative currencies showing how media investments impact their business. "The way everybody wins," he said, "is that marketers get better cause and effect metrics." Don’t miss the latest news. Sign up for Ad Age newsletters here.

Why TV upfront deals will still use Nielsen measurement despite all the talk

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