Over the past two years, we have seen a decline in traditional live TV ratings, first starting among younger demos. Beginning in April, that decline began to accelerate to include most demos, leading broadcast and cable networks to ask questions about their missing viewers.
These questions come at the same time we are witnessing a real-time evolution of the broadcast and cable industry. Today, consumers have more control than ever before — and media companies are being forced to adapt to the new realities of what people watch, and when they watch it.
The growing penetration of new devices and the popularity of subscription-based streaming services, time-shifted and over-the-top viewing — as well as cord-cutting and cord shaving — are fundamentally changing the TV industry.
At the same time, the industry continues to trade on C3/C7 ratings for national TV. Nielsen recently made smartphone and tablet viewing eligible for inclusion in the ratings. However, this does not solve the dilemma that the underlying industry trading metric has not kept pace with consumer behavior or the business models being adopted by today’s media companies.
The C3/C7 ratings reflect the average audience of commercials within a specific program, and are based on eligibility rules, which were originally defined and agreed upon by the industry in May 2007. These rules require that the national advertising load be the same in all versions of a program viewed within playback mode up until three or seven days, in order to get Nielsen Commercial Ratings credit. Under industry definitions, the ads cannot be changed or delivered differently to various audiences in that window. They must all be the same.
While much of the television program and ad viewing today meet that criteria, more and more video content is being viewed outside of the C3/C7 window via different devices, including connected TV technologies like Apple TV or Roku boxes, gaming consoles and digital devices, PCs, tablets and smartphones.
In many of these cases, ads are being dynamically inserted and changed from the original broadcast, which means neither the program content or the ads are being included today in the “Nielsen ratings” for traditional TV — even if Nielsen is measuring that viewing.
We believe that the decline in traditional TV ratings can be attributed to the following four factors. Of these, three are real declines and one is due to a Nielsen methodology change:
In September 2013, at the behest of the industry, Nielsen expanded the definition of what constitutes a television household to include any home with a TV set that can receive video on that TV via a broadband source, but without a broadcast antenna or cable subscription.
This definition change artificially increased the denominator (the total number of households that our measurement represents) upon which the ratings are based. However, because much of the television video content viewed by broadband-only homes is not encoded by our Nielsen watermark, this broadband-only activity did not contribute to traditional TV viewing.
At Nielsen, our charter is to deliver comprehensive measurement — to follow consumers wherever they go, and however they view, across all platforms and devices. Today, we are measuring a wide variety of video content and advertising viewed on the TV set and on digital devices.
Our goal is to create a total measurement of all content and all ads — regardless of how they are accessed and the ad model that they’re supporting. Nielsen’s vision is to create an environment where all video content can be consistently measured with ratings for both the content and the advertising.
We believe that the fundamental changes occurring in today’s viewing landscape call for the industry to adopt a new set of ratings standards:
The television industry is the custodian of the greatest professionally produced content available. But as viewers continue to shift to digital devices, competition for time and attention is intensifying.
The challenge is to retain and build audiences and to prove their value to advertisers. To do this, Nielsen is prepared to present the total picture of the consumer — one that fully reflects their viewing of all content available and delivers a proven return to our clients on their investments. Nielsen is committed to measuring the total audience.