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October 27, 2006

NBC/Universal Pulls Out of Commercial Ratings from Nielsen

NBC/Universal has put another roadblock in the way of the Nielsen commercial ratings, a ratings system that they initial requested along with the other big four networks over the summer.

Just a few days ago, when it was announced that the commercial ratings were going to be delayed until December. At the time, I wrote, "I've been waiting until the November date to see how this affects discussions of advertising on American television, etc., but it looks like I'm going to have to wait a little longer, as well the television industry. Will Nielsen's commercial ratings change anything about the current television system? Will networks trust the commercial ratings? Will advertisers? The controversies that this discussion has raised so far shows the tensions currently in the industry regarding advertising and the continued vitality of the 30-second spot. I am betting that these commercial ratings will continue to be a major battlefront in this argument."

This is a battle that started back in June among the advertisers and networks, with Nielsen trying to strike common ground but ultimately dissatisfying both groups in a reach to compromise. I first wrote about commercial ratings on June 21, saying that, "If Nielsen continues with their push for active/passive viewer measurement as well, I wonder if we will eventually be able to also have attempts to measure the level of engagement people have during certain ads. We might find that particularly creative ads catch people's attention and ads placed right before a show comes back from commercial break, etc. But, even though I still question the validity of many Nielsen numbers, I think this will provide some basis for discussion." David Poltrack with CBS voiced some initial complaints about the numbers, particularly questioning the validity of DVR numbers regarding whether people skip commercials.

Of course, it didn't take long for people other than Poltrack to raise concerns. Poltrack was questioning the motives of advertisers in requesting the numbers, but advertisers had some complaints of their own. On July 13, I wrote that, "while the Nielsen ratings were attacked from one side by the networks even as they were asking for them, they've faced major attack this week from the other side: the media buyers who are placing commercials for advertisers." In this case, it was Magna Global, who asked for a second-by-second measurement system that would give advertisers a better indication of the number of people watching advertisements.

I also detailed their complaints with VCRs, since "Magna argues that statistics say that 1/3 of things recorded on a VCR are never watched (especially by people who pop a tape in to record something coming on later and leave the VCR running for hours). Further, of those who do watch the tape, as many as 2/3 of them skip commercials. On DVRs, that Magna points out "that current proposals would count DVR viewings up to a week after the show airs. For time-sensitive advertisements, such as for a weekend sale or a movie's opening weekend, the time that the viewer watches the commercial is essential to know." And, finally, an anger about the fact that the Nielsen system would count any minute with ad time in it as a commercial minute, even if the majority of the minute is filled with programming from the show.

I wrote, "It's no surprise that people on both sides of the advertiser/broadcaster fence would fall into disarray over this issue, though. After all, the broadcasters aren't too thrilled to be going through this process in the first place, since they've been trying to uphold the status of the 30-second spot. And advertisers have plenty of reasons to be skeptical at what they see as protections built in. It shouldn't surprise anyone to hear Nielsen's policies knocked as not being an accurate reflection of real viewer behaviors, especially since it measures on quantity only and does not know how to handle new technologies at this point."

Then, in August, ad agencies chimed in, asking that VHS tapes not count in commercial ratings averages because only recording is measured, not viewing on a VCR, echoing Magna's complaints. I wrote, "These issues surrounding the VCR aren't a new point of contention from advertising agencies, but it has an even more immediate impact on these commercial ratings, which may have a significant future impact on how advertising rates are negotiated and purchased. However, the networks maintain that, since playback cannot be measured, the number of recordings should be measured because including the data is more accurate than excluding it."

The Weather Channel offered one alternative, using a true minute-by-minute system that does not average together the commercial ratings for each half hour or hour but rather showed the actual ratings each minute for advertisers to see the exact numbers for the minute their particular ad ran in.

NBC claims to have pulled out because they are not happy with the controversies raised and Nielsen's inabilities to deal with them, but this highlights the problems with the commercial ratings when one of the initial requesters have reneged on their interest. We'll see what happens throughout December. Will NBC merely be the first of the big four to pull back out of their interest, and what long-term effects will these points of contention cause between advertisers and networks in relation to the 30-second spot?

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