It seemed like a simple enough idea: Why not try to track whether people watch TV commercials?
After all, Nielsen has been counting how many people watch certain TV shows for decades. So in June, the ratings agency announced it would start rating commercials, beginning next month.
But that announcement has set off a battle worthy of a Survivor episode, with just about everyone in the TV and advertising businesses disagreeing over how Nielsen should measure ad viewership. Nielsen is hearing some of the loudest complaints from the cable TV industry, who argue that that some of the quirks of their business -- including regional ads in sports and crawler ads along the bottom of the screen -- make their ads harder to measure.
And now, Nielsen's project has slowed to a crawl. Unable to resolving the infighting, it plans to delay releasing the new ratings until December.
And in an effort to help ease some objections to the new ratings, Nielsen has decided to give the new data away for free in the first year. It is also now calling the new effort an experiment and will let the networks choose whether to have their commercials rated or not.
"It's certainly fair to say that this hasn't been without some controversy," said Sara Erichson, general manager of national services at Nielsen. "We've been spending a tremendous amount of time talking to all of our clients."
Advertisers, who spend about US$70 billion a year on television commercials, have been particularly concerned about what they are getting for their money, as more people record shows on TiVos and other digital video recorders (DVRs), allowing them to fast-forward quickly through their spots.
Advertisers now have an alternative, too, giving them a bit of leverage in their demands for better information -- which they can now get on the Internet, where they can count mouse-clicks as a sign of an ad's success.
"Advertisers have been asking for years for a metric that is more accurate," said Jason Maltby, president of national broadcast at MindShare, an ad agency owned by the WPP Group. "We would all agree that the current system of program ratings is not going to work going forward."
However there are conflicting agendas. Broadcast and cable companies disagree on how to most accurately measure ad viewership. Ad agencies, which buy TV time for advertisers, want better data, but do not want to spend a lot for it. And Nielsen, a unit of VNU NV, a public media company based in the Netherlands, is concerned about angering its biggest clients, the television networks.
Indeed, "a loss of one or more of Nielsen's largest clients would adversely affect Nielsen Media Research's prospects," the company's last annual report says. Ad agencies and TV networks have traditionally negotiated commercial prices using ratings that show how many people, on average, watch an entire program, including commercials. The new ratings being contemplated would capture the average number of viewers watching the commercials for each show.
They track viewership using monitors in thousands of homes that show which station is on. Nielsen depends on viewers to push a button to indicate when they're leaving the room.
By most accounts, the battle over the commercial ratings began in May, at the so-called TV upfronts, where advertisers buy airtime for the upcoming TV season.
The first salvo was fired by the broadcast networks, who argued that ad buyers should pay for viewers who watch shows recorded on digital video recorders, or DVRs, not just those who watched it live.
The broadcast networks argued that many users of DVRs, which are in about 12 percent of households, do not skip commercials when watching shows recorded on DVRs. CBS, for example, says its internal research shows that viewers with DVRs watch about 40 percent of commercials across networks.
The TV upfront negotiations dragged on for weeks longer than usual, as ad agencies refused to use the data on recorded shows to negotiate ad rates, arguing that many DVR viewers do not watch commercials.
Eventually the agencies won and only real-time viewing was counted in calculating the price of commercials.
But the arguments did not end there.
As the upfronts were wrapping up, the broadcast networks opened discussions with Nielsen about a new form of rating that could prove that many DVR viewers watch commercials. Though the idea of rating commercials had been discussed for years, no group of customers had ever offered to pay for it. And now that there were several buyers, Nielsen said it would provide them.
TV networks have calculated their own commercial ratings for several years based on raw data from Nielsen. But they believe that Nielsen's own commercial ratings would be valuable because they are objective and will be released in an easy-to-read form.
Broadcast network executives are confident the commercial ratings will work in their favor. They say their primetime shows only lose 5 percent of viewers during commercials. A study by the American Association of Advertising Agencies and the Association of National Advertisers last year found that a similar average -- only 5.6 percent -- of viewers 18 to 49 actually skip commercials.
But the study, which did not include DVR viewers, also found a lot of variation, depending on the show. More than 20 percent of the audience left during commercials in about 4.3 percent of the shows monitored and the audience increased during commercials in about a sixth of the shows recorded.
In June, before Nielsen could announce its new commercial ratings, David Poltrack, the chief research officer for CBS Corp, mentioned Nielsen's new plan in a speech at the Advertising Research Foundation conference in New York on June 20.
TV and ad executives were stunned, and when Poltrack's speech ended, they dashed to the phone to call their Nielsen representatives.
Nielsen quickly confirmed the news and said the new rankings would include viewers of shows recorded on DVRs, which looked like doomsday to ad agency executives who feared the new ratings would lead to chaos.
"These are not commercial ratings, nor are they an acceptable surrogate," Steve Sternberg, executive vice president of audience analysis for Magna Global, told Jack Myers, who writes a blog on mediaVillage.com.
Meanwhile, the Cabletelevision Advertising Bureau, a cable industry association, contacted Nielsen with a list of concerns. Cable networks are technically different from broadcast networks and the group wanted to know how Nielsen would ensure that cable ads were rated correctly. The group wrote a letter on July 21 saying that Nielsen's announcement had created "much confusion in the market."
On Sept. 12, Nielsen wrote to clients that it had made a preliminary decision on how it would calculate a "commercial minute," since some minutes contain both commercials and programming. That decision suited most clients. The problem was a sample analysis of how various TV networks would fare.
Several cable networks found errors in that analysis within hours of it arriving in their inboxes. Jack Wakshlag, chief research officer for Turner Broadcasting, said that Nielsen was responsive; a week later, Nielsen sent clients a corrected version of the analysis. But Wakshlag said the experience left him wary of the commercial data that Nielsen plans to release.
Meanwhile, TV syndicators, who broadcast TV shows locally, were also up in arms. Several episodes of popular shows in syndication often appear on the same day and the Nielsen system misidentifies some commercial breaks, said Hadassa Gerber, director of research for the Syndicated Network Television Association. Gerber said that Nielsen has been cooperative in discussing and working to improve the problem.
"I don't want there to be any doubt with these numbers," she said.
With the TV and ad worlds in an uproar, Alan Wurtzel, president of research for NBC Universal, and Rino Scanzoni, chief investment officer for Group M, organized an invitation-only meeting. The much-anticipated gathering took place on Sept. 21 at NBC's headquarters at Rockefeller Center in New York. Only about 35 people were invited to attend, representing ad agencies, cable networks, syndication and broadcast television. Others were allowed to listen in on speaker phone.
When the dust settled after three hours, Nielsen agreed to label the commercial ratings it produces this fall as "experimental data," a change that satisfied most because it implied that the new ratings will not be used in upfront negotiations.
As the meeting was ending, Bruce Goerlich, the executive vice president and strategic research director at ZenithOptimedia USA, warned Nielsen not to issue the data too fast, echoing the sentiment of several in the room.
"Let's be realistic here. There are so many streams of data that are being issued now," Goerlich recalls saying. "Don't give me another stream where you know the numbers are incorrect."
Despite all the stumbling blocks, most believe the new commercial ratings are the wave of the future. Some advertisers and agencies would like to see individual commercials rated eventually, something Nielsen cannot now do. Some in the industry speculated that, one day, commercials might get price breaks from networks if they were entertaining enough to keep viewers watching.
For now, all eyes are on the Nielsen experiment.
"For a long time, the agencies have said, `Hey, prove to us that people are watching and we'll pay you for them,'" said Jon Nesvig, president of sales, Fox Broadcasting Co. "So, now we're proving it to them."
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