The Commercial Value Index: All Rating Points Are Not Equal

When I was on the media agency side of the business, and sat through numerous upfront presentations, there would generally be at least one or two cable networks trying to sell me on some sort of value index that went above and beyond just the Nielsen ratings.  While some of these indexes were interesting, all were fundamentally flawed.  Some networks incorporated MRI, IAG, or some other measure that certainly have their uses, but are not appropriate for measuring viewer involvement or engagement on an immediate or ongoing basis. 

A few years ago my buyers asked me to develop a better set of value factors that could be used for all clients -- value factors that I could not find fault with (and anyone who knows me understands how difficult that is) and that objectively examine all networks. 

 There were a few attributed I thought essential for developing value factors: 

·       The size of the audience is not a significant consideration.  Ratings, percent composition, or other such metrics are therefore not part of the equation.  The idea is to

·       The data should focus not only on program engagement, but rather on minimizing commercial avoidance as well. 

·       The measurement should be transparent and easily replicated.   One should be able to provide the analysis to support how the factors were derived.  No secret sauce or black boxes here. 

·       A buyer or planner should be able to do the analyses at any time during the year covering any period of time, daypart, program, or demo.  Analyses that can only be done once or twice a year do not allow for changing direction in mid-season (when the competitive TV landscape often changes dramatically).  This is particularly important to analyze cable networks that air original scripted programming only certain times during the year. 

·       The information should be based on currency data to avoid a claim that the value factors are based on metrics people don't believe in or use.

The following are the critical parts in the development of the Commercial Value Index (CVI)

Average Time Spent Per Viewing Event:  The more time you spend with a channel or program in a single sitting, the more interested you likely are in the content and the greater the likelihood you are exposed to the commercials.  The Average Time Spent Per Viewing Event provides a reasonable indication of viewer involvement.  The data is available from Nielsen's NPower system. 

Channel Switching:  Less channel switching during commercials means greater viewer involvement and a higher degree of commercial exposure. Channel Switching is calculated by taking the live commercial minute rating divided by the live program rating.  The only reason the live commercial rating would be lower than the live program rating is because the channel was changed.

Live Viewing:  With DVR penetration fast approaching 50% for key demos, there is no question that avoiding commercials is easier than ever.  The bulk of DVR playback includes fast-forwarding through commercials.  Nielsen simply cannot measure this phenomenon.  Even Nielsen's C3 measure misses a substantial amount of fast-forwarding through commercials.  Aside from minimizing channel switching, the best way to minimize commercial avoidance is to maximize the percentage of live viewing.  This is calculated by simply dividing the live rating by the live + 7 rating.

Calculating the Commercial Value Index Each element in the CVI is analyzed for all networks.  The average for all broadcast and cable networks combined becomes a 100 index.  Each network is then indexed to the average to develop a value factor for each category.  The three factors are then averaged to arrive at a Commercial Value Index for each network.   

I give each factor equal weight, but if you think one element is more important, you can weight them anyway you want.

The CVI for 4th quarter 2010 showed:

For adults 25-54 the Top 10 ranked networks were, ION, USA, ABC Family, TNT, CBS, Lifetime, Adult Swim, ABC, AMC, and Syfy. 

For adults 18-49: TBS and Nick-At-Nite joined the top 10 and ABC Family and Syfy fell out.  All the other networks remained, but the order changed somewhat.   

Looking at different demos, such as persons 12-34 or men 35-64 obviously yields different results.  Anyone can do this analysis and arrive at the exact same answers. 

Full disclosure: I am currently consulting for ION Media Networks.  The Commercial Value Index, however, was developed long before I started consulting for any cable networks.  The data holds up to scrutiny, and is as transparent as Nielsen data can be.

Tags: television, tv
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1 comment about "The Commercial Value Index: All Rating Points Are Not Equal".
  1. Brian Graham from OM , August 3, 2011 at 6:28 p.m.

    Thanks for your insights Steve! I found this interesting and I'd like to replicate this myself. Question: In the live viewing portion you mention dividing the live rating by the live +7, that's program live and program live +7, right?