Measurement Messiness Complicates TV's Annual Sales Season

4 weeks ago 18

Media companies are preparing to spotlight their buzziest television shows at the TV industry’s annual advance-sales presentations to advertisers, but marketers may be more preoccupied with measuring how many people watch and how to translate that into deals.

Veteran players like Comcast Corp.’s NBCUniversal and newer platforms such as Netflix Inc. will try to win over ad buyers during star-studded “upfront” pitches in mid-May at New York City venues including Radio City Music Hall and the Paris Theater. Before that, tech players including Inc., Snap Inc. and Roku Inc. will kick off the selling season with their so-called NewFronts events this week.

TV viewers’ shift to streaming platforms will loom large throughout. 

That change has created an opportunity to measure ratings directly rather than having to extrapolate from the consumer panel long maintained by Nielsen Holdings PLC, said Kelly Metz, managing director of advanced TV activation at Omnicom Group Inc.’s Omnicom Media Group.

“This is a bigger transformation than the industry has ever seen before,” Ms. Metz said.

Nielsen’s U.S. TV ratings, based on a panel of households that let the company track what they watch, have long been the industry’s so-called measurement currency. They have been the metric that underpins tens of billions of dollars in U.S. ad spending on commercials and digital-video and streaming ads. 

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Nielsen last month regained accreditation for its national TV ratings service, which had been suspended since 2021 following disputes over the accuracy of its data. 

Nielsen’s ratings stayed the dominant currency in TV ad deals even after the suspension because of the company’s size and longstanding clout. But the incident gave competitors such as Comscore Inc., VideoAmp, and EDO, which offer measurement services to ad buyers, an opening to push their products.

Major television players and media agencies meanwhile are joining together in a “joint industry committee,” which will seek to create new standards for audience measurement services, among other goals. The group argues that data from set-top boxes and smart TVs allows for more reliable measurement than that relying on the panel-only data that traditionally has been used. Nielsen said in April it wouldn’t respond at the time to a request for information it received from the committee, citing concerns about the committee’s standards and criteria for reviewing measurement providers and other issues, though the company said it would be open to further conversations if its concerns are resolved. 

It is still too soon for any of the newer players, or the offerings Nielsen is developing to take them on, to emerge yet as a new common currency, some experts said.

“There’s too much money at stake to just move away from something unless you have a tried-and-true alternative solution,” said Dave Sederbaum, executive vice president and head of video investment at agency holding company Dentsu Inc.

Measurement madness

Nielsen has been allowing agencies to evaluate a new “big data” product that combines its human panel-based measurements with data drawn from smart TVs and set-top boxes. By September 2024, the big data product will be Nielsen’s sole measurement offering, meaning buyers will no longer be able to measure campaigns using only the more traditional system, according to the company.

With the NewFronts and upfronts just around the corner, however, Nielsen last week said in a memo to clients it considers its traditional panel-only national TV audience measurements as the “currency of record” for the coming TV season.

“We understand these changes are complex and that every company in the media ecosystem is readying themselves at various speeds,” Nielsen said in a statement last week. The big data product will still be available for clients who want to use it for deals, it added.

Nielsen’s memo alleviated some confusion about whether marketers should use the new service to measure this year’s campaigns.

But smaller outlets, especially diverse and minority-owned publishers and diverse and minority-targeted publishers that say Nielsen’s panels historically undercounted their viewership, had been pushing for it to be used more widely this year, some experts said.

The delay suggests that the majority of ad spending in coming months will continue the pattern of recent years, largely relying on the old, panel-based Nielsen system supplemented by alternatives such as VideoAmp and iSpot.

Last year, many advertisers used some of the alternatives as a parallel means of measurement to test them out, but ultimately used the legacy panel measurement to transact on, said Sean Cunningham, president and chief executive of the Video Advertising Bureau, a trade group. This year, though, he estimates more advertisers are likely going to use those alternatives when they actually transact. He said the likelihood of using non-Nielsen currency data was boosted even more by the move of sticking with the panel-only product.

The holdup also increases the pressure on Nielsen to deliver a workable version of its new product to ad buyers later this year, when they start planning 2024 campaigns, some experts said.

More upfront challenges

The measurement muddle comes as the upfront marketplace faces other pressures as well.

Upfront commitments for video including traditional TV, streaming and digital video by ad buyers could be softer this year, with 27% of surveyed executives saying they plan to spend more this year, down from the 51% that increased their spending in 2022, according to market-research firm Advertiser Perceptions. Advertisers plan to allocate 49% of their 2023 video budget to upfront buys, down 7 percentage points from 2022, the firm said.

Spending on the traditional TV ad market has held steady in past years despite dwindling viewers because advertisers were willing to pay more to reach those audiences, said Dave Morgan, CEO of TV advertising technology company Simulmedia. This year, however, higher prices will no longer be able to account for shrinking traditional audiences because advertisers have more options when it comes to premium digital video, he predicted.

And marketers may be more cautious overall given economic uncertainty about the year ahead. They are aware that digital ad buys afford more flexibility than traditional television, which has a much stricter schedule.

“I think clients are definitely more cautious about committing long term at the upfront and feel like they have options if they don’t commit to the upfront,” said David Campanelli, executive vice president and chief investment officer at media agency Horizon Media.

Some of the largest, most sophisticated advertisers are already moving beyond relying entirely on a common measurement currency such as Nielsen’s panel data, said Ms. Metz of Omnicom. They are basing their ad buys almost entirely on so-called custom audiences, or groups of consumers that their own research has deemed most likely to drive sales, she said.

Some programmers are trying to tweak their approach to the upfront as well. Paramount Global, owner of networks including CBS and MTV as well as the streaming platform Paramount+, this year said it would hold smaller meetings with major ad agencies and marketers in April instead of its usual big presentation onstage at New York’s Carnegie Hall.

The upfront isn’t likely to disappear soon, despite years of predictions to the contrary, because the annual process still provides discounts for buying ahead and other benefits that appeal to brands.

But the industry at large may be moving further away from the upfront model, where buyers commit a large portion of their ad spending at once, said Mr. Morgan of Simulmedia.

“I can imagine the future is going to be making constantly rolling commitments that aren’t constrained by, ‘When are we going to be in Carnegie Hall?’” he said.

Write to Megan Graham at [email protected] and Patrick Coffee at [email protected]

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