The Television Bureau of Advertising, which represents local broadcasters, has released an analysis of Nielsen Media Research data for July that finds satellite systems, which do not carry local advertising, dramatically erode cable TV's audience, in some markets by almost 50%. But according to local broadcasters, cable system operators and interconnects are failing to subtract satellite viewers when reporting total viewers to marketers buying local ads.
"We are telling advertisers that they should trust, but verify," said Gary Belis, TVB spokesman. "We are putting out the ADS penetration number and telling advertisers and agencies you need to look at this when looking at a rating." ADS is an acronym for alternate delivery systems, an industry term for media that is not wired or broadcast. Satellite makes up 96% of all ADS viewers.
Local broadcasters are concerned that cable operators are inflating their reach numbers in order to justify higher prices for local advertising. According to media agency executives, local cable's cost per thousand prices are as much as 25% higher than local broadcast pricing in many markets. Local broadcasters are struggling to catch up.
According to the TVB analysis, in Springfield, Mo., 46.3% of homes receiving cable programming receive it through ADS and in Dallas, that number is 37.6%. "If you're the local Chevy dealer in Dallas and you're buying Comcast in Dallas," said TVB President Chris Rohrs, "you've got to reduce your expected audience as reported by Nielsen by 37.6%."
"The potential overstatement of the wired cable audience for a local advertiser is awfully big," he claimed.
do the math
Nielsen Media Research does not break out numbers for cable and satellite, which are reported together. Advertisers and their agencies must separate the numbers themselves.
"You're going to have to do the math," said Kathy Crawford, exec VP-director of local broadcast operations at WPP Group's MindShare. "It's a big issue for buyers, who need to understand they have to break out the numbers manually."
Nielsen will be reporting, for the first time, separate numbers for cable and ADS during the November sweeps (Oct. 30 through Nov. 26). "We're breaking them out," said a spokesman at Nielsen, "to allow the marketplace to evaluate and make their own judgements."
"If an advertiser has been buying local cable thinking they were getting the full amount of ratings reported by Nielsen in their rating book, they could be overestimating what they are getting and there might be some make-goods out there," said Cathleen Camp, senior VP-director of spot broadcast at Rubin Postaer, Los Angeles. "But ... I don't know how that will happen. When Nielsen breaks out the satellite numbers in November there will be lots of data."
Comcast, meanwhile, charged TVB was creating controversy. Comcast does not count ADS viewing in sales proposals, said Jonathan Sims, VP-research, Comcast ad sales. "TVB has decided to finesse long-term chronic audience erosion of broadcast by declaring that cable is experiencing its own audience erosion via growth of alternative delivery systems."
"Our contention is that in fact wired cable delivery is growing," said a spokesman at the Cabletelevision Advertising Bureau.
According to a recent CAB analysis of Nielsen data for the 2002-2003 season's four quarters, ad-supported cable averaged a prime-time U.S. household delivery of 31.2 million, beating all broadcast networks combined by 2.4 million viewers.
But Mike Burgess, general manager at KOB-TV in Albuquerque, N.M., where ADS penetration of cable is 35.6% according to the TVB, said the practice of reporting satellite and cable numbers to local advertisers is endemic. "When we compete against them, the advertisers will give us ratings that the cable system gave them, and they'll include ADS numbers. At least 25% of those numbers are wrong."
The issue perhaps will only be solved when satellite operators offer local ad insertion. "DirecTV has said they will ultimately be able to insert local advertising," said Ms. Crawford. "But they won't be able to get there without investing in hardware."
A DirecTV spokesman said the company has no plans to run local ads at this time.