The Commercial Value Index: Assessing TV Audience Value In The Age Of Dvrs

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Loyal viewers who watch our commercials: there’s not much more an advertiser can ask of a network.

Last year, when I was working as a consultant, I developed the Commercial Value Index, designed to rank cable networks on which were best at minimizing commercial avoidance among their viewers.  This year I added a viewer loyalty component.

The impetus for the CVI was my frustration when I was on the media agency side of the business. During numerous upfront presentations every year, there would invariably be a handful of cable networks that tried to sell me on some sort of value factors that went beyond Nielsen ratings.  In some cases they would come up with some nifty new name for their viewers based on psychographic or custom research to explain why their audience was better than everyone else’s.

While some of these presentations were interesting, most were fundamentally flawed, and not viable for measuring viewer involvement, engagement, or activation on any current or ongoing basis.  Creating a static audience picture from six months or a year ago is not particularly useful in a world where a network’s programming is often in a continual state of flux.

So what I tried to do was develop a better set of value factors that could be objectively used at any point during the season to evaluate all cable networks.  There are a few attributes I believe are essential for developing actionable value factors:

• The measurement should focus both on program engagement and minimizing commercial avoidance.

• The data should be transparent.  One should be able to provide the analysis to support how the factors were derived.

• The results should be easily replicated.  A buyer, planner, or researcher should be able to do the analysis at any time during the year, covering any period of time, daypart, or demo (using current data).

• The factors should be based on marketplace currency data, to avoid a claim that the value factors or indexes are based on metrics some people don’t believe in or use.

Last year, three element smade up the CVI:

Holding Power:  The amount of time the average viewer spends per viewing session.  Some refer to this as Length of Tuning.  The longer viewers are tuned to a network, the more likely they are to be exposed to the commercial.  This data is available from Nielsen’s NPower system.

Commercial Audience Retention:  Less channel switching during commercials means greater viewer involvement and a higher degree of commercial viewing.  This is calculated by dividing the Live Commercial Minute Rating by the Live Program Rating.

Live Viewing:  With DVR penetration approaching 50% percent of the U.S. (higher for demos under 50), commercial avoidance via fast-forwarding is more common than ever (often more than 50% for original scripted dramas).  Nielsen cannot fully measure this phenomenon (C3 misses a substantial amount of fast-forwarding).  Aside from minimizing channel switching, the best way to minimize commercial avoidance is to maximize the percentage of live viewing.  This is calculated by dividing the Live Rating by the Live+7 Rating.

This year, a fourth element -- a measure of viewer loyalty  -- has been added to the mix:

10+ Hours of Viewing Per Month:  There are a number of potential measures of viewer loyalty.  I chose to look at the percentage of a network’s audience that watches 10 or more hours of the network per month.  This gets rid of surfers and browsers, and hones in on viewers who watch more than just one or two programs -- the most loyal (regular) viewers.  This data is available through NPower.

The score for each category is divided by the average for all cable networks to arrive at an independent index for each network.  Then the three indexes are averaged to arrive at the Commercial Value Index.

Among Adults 18-49, the top 10 ranked cable entertainment networks during 4^th Quarter 2011 were: Adult Swim, ION, Nick at Nite, USA, BET, TBS, Food, Bravo, A&E, and ABC Family.

Among Women 18-49, the top 10 were: Adult Swim, Nick at Nite, ION, BET, HGTV, Food, Bravo, TBS, A&E, and TNT.

Among Men 18-49, the top 10 were: Adult Swim, ION, USA, BET, Nick-at-Nite, TBS, Discovery, Tru TV, History, and Comedy Central.

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7 comments on "The Commercial Value Index: Assessing TV Audience Value In The Age Of Dvrs".

1. Douglas Ferguson from College of Charleston
   

   commented on: April 10, 2012 at 3:06 p.m.
   If any commercial appears in the middle of a pod with low-CFI spots, what does its CVI matter?
2. Steve Sternberg from TV Analyst
   

   commented on: April 10, 2012 at 3:25 p.m.
   @Douglas - the purpose of CVI is not to compare individual commercials or pods, but to measure the relative likelihood that viewers will be exposed to and watch the commercials on one network versus another.
3. Ayala Cohen from TRA, Inc.
   

   commented on: April 10, 2012 at 3:58 p.m.
   Steve, is it fair to compare Adult Swim and Nick-at-Nite to the other networks using these criteria? Adult Swim and Nick-at-Nite have less hours of programming and are only during overnight hours. Both of these factors may be contributing to these network's high scores in the areas of holding power (length of tuning may be due to viewers falling asleep at the remote), and commercial audience retention (again, less hours of TV means less time to switch channels, and overnight hours when people tend to fall asleep will contribute to less switching channels during commercials). The true value of a commercial should be in its ability to deliver sales for the brand/product being advertised.
4. Steve Sternberg from TV Analyst
   

   commented on: April 10, 2012 at 4:14 p.m.
   @Ayala - My analysis here only focused on primetime - (I should have been more clear on that). Again, the purpose of the CVI is not to compare the value of individual commercials, but the relative valueh of one network versus another to deliver viewers to those commercials.
5. Doug Garnett from Atomic Direct
   

   commented on: April 10, 2012 at 5:41 p.m.
   Interesting approach. What I'm not certain is how important it is. From our experience, hard viewer response numbers through DRTV don't necessarily agree with these numbers. And that leads me to suggest there's far more influence by (a) your product/message; (b) the clarity/impact of your creative than; and (c) the importance of the product/message to the viewing audience. These are, of course, not things that are predictable through Nielsens.
6. William Hughes from Arnold Aerospace
   

   commented on: April 10, 2012 at 6:37 p.m.
   You want us to watch your Commercials? Two things need to happen. 1. Stop showing so many of them! Viewers have better things to do than watch 20 or more minutes of commercials per hour. Yrs, we know you exist, you don't need to remind us twice during every commercial break. 2. Improve your content. Stop presenting your product in the most obnoxious way possible. It is said you can attract more flies with Honey than Vinegar. Lately the Vinegar has been spewing by the Gallon!, and if your Commercial is for an "Adult Product" DON'T show it at times when CHILDREN ARE WATCHING! Until you do these two things, we will be using devices such as DVRs as well as Internet Sites and DVDs to consume our programming. Bye!
7. Susan Devlin from The Artemis Group
   

   commented on: April 26, 2012 at 2:55 p.m.
   I am a research statistician intrigued by your Commercial Value Index and have a few technical questions. 1. When combining the four indices to form the CVI, do you equally weight them. If not, how are they weighted? What is your rationale for the way they are combined to emphasize on advertising value? 2. The Commercial Audience Retention (CAR) was of particular interest. Have you thought about the possibility of the ratio getting too high to be considered good, i.e., from partial program viewing or if gaps between programs are included and there is partial program viewing? If this can be an issue, how does the CVI address this, e.g., is it part of the value of having the Holding power as part of CVI? Does the average % of ads generally give a sense of whether CAR ever gets too large? Please excuse my ignorance if the answer is too obvious here. 3. What precisely are Live Rating and Live+7 rating? I think I need to understand these definitions to better appreciate what Live Viewing captures.

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