• by David Goetzl  @dgoetzl, Joe Mandese  @mp_joemandese, July 17, 2006

Caught off guard by the broadcast networks' shocking announcement that they have asked Nielsen to move from program ratings to "commercial ratings," cable TV networks have been formulating their own plan, and hope to present it to Nielsen this week. The plan, which is the product of weeks of frenetic discussions among top cable network research executives, is being coordinated by Cabletelevision Advertising Bureau Research Chief Ira Sussman, who has been working with a disparate array of cable networks--many with divergent interests on the subject--to create a cable industry consensus on the "five to seven issues that need to be addressed" before the cable industry can call on Nielsen.

"Each of the cable networks are looking at it and analyzing it internally for their management. What the CAB is doing is collecting their concerns and issues and seeing what needs to be done," Sussman told MediaDailyNews.

Among the chief concerns is the fact that Nielsen's systems currently cannot identify which cable TV commercials are local and which are national. That could create a dilemma for cable networks seeking to generate average commercial minute ratings comparable with what the broadcast networks have requested from Nielsen.

Another big issue for the cable executives is how the data would be made public. "Would this be part of the three data streams? Does this incorporate same live, day, seven-day, something else? Would this be the three streams plus commercial minutes?" asks Tim Brooks, executive vice president-research at Lifetime Television, referring to the already convoluted nature of Nielsen's national TV ratings streams. Those streams currently include installments of live-only viewing, viewing including the same day of DVR playback, and viewing including seven days of DVR playback.

When Nielsen began releasing that data, it created confusion in the marketplace. Buyers and sellers haggled over which stream to use as the basis for their advertising deals. Ultimately, buyers chose live ratings data for their 2006-07 upfront ad negotiations with the networks, but the networks' announcement in late June that they had asked Nielsen to begin releasing average commercial minute ratings beginning this fall appears to be an effort to alter that position. The data the networks have asked Nielsen to process would include average commercial minute ratings with seven days of DVR playback incorporated.

That's something many agencies have objected to, and a decision one top Madison Avenue researcher, Magna Global's Steve Sternberg, blasted--among other aspects of the new commercial ratings--in a report released earlier this week.

In fact, the broadcast networks' move and the debates that have followed reveal how much dissension there is in the industry over how to deal with commercial ratings, what they are, how they should be processed, and what role as "currency" they should play.

It isn't simply a lack of unity among cable networks, but also on Madison Avenue, where agencies have been debating which way to go. Among the major media agencies, only WPP's Mediaedge:cia has been public in its support of the networks' plan for average commercial minute ratings incorporating live plus seven days of delayed viewing data. In fact, it was pressure from Mediaedge:cia's top buyer, Rino Scanzoni, and top researcher, Lyle Schwartz, that got Nielsen and the networks going.

When the Mediaedge:cia executives began putting pressure on Nielsen and the networks, Nielsen began holding a series of client meetings to see what they actually wanted.

"When we first met with the broadcast networks, they were all over the place," recalls Nielsen spokesman Jack Loftus. "We then met with the cable networks, and they were also all over the place. There was no consensus." However, Loftus said that within two days of the cable meeting, CBS Research Chief Dave Poltrack came back with a "unified" plan from the broadcast networks, which he announced publicly during the Advertising Research Foundation's Audience Measurement Symposium three weeks ago.

The one thing all parties appear able to agree on--agency executives, Nielsen executives and, begrudgingly, cable network executives--is how "brilliant" the broadcast network move was. It positioned the major broadcast networks as decisive leaders on the commercial ratings issue, and as innovators willing to take the bull by the horns and radically alter the TV advertising marketplace. At least, that's the way much of the consumer and trade press coverage has positioned it in the weeks following the announcement. The reality is that behind those headlines is an industry being torn apart by the issue, which is likely to explode as the next big debate of the 2006-07 TV season and beyond, as Magna's report reveals, and as the cable industry weighs in.

It also reveals that the long-time holy war between broadcast and cable still exists, even as the major broadcast networks and cable networks have been consolidated within multimedia parent companies, that theoretically should be coordinating their policies and strategies.

But even as cable and agency executives criticize the broadcast networks for shamelessly leveraging the issue by putting pressure on Nielsen to ramrod what they believe may be an inferior commercial ratings solution, they admit to being impressed by their ability to move quickly on the issue and seize the upper hand. Among other things, the brilliance of the timing--coming just as the broadcast networks were wrapping up their 2006-07 upfront ad negotiations, but just as cable's was warming up.

" It's tantamount to industrial sabotage," said one long-time cable executive, referring to the dust the broadcast networks' move stirred up while cable networks are trying to wrestle with a soft and protracted upfront advertising marketplace.

Now that the die is cast, cable network executives are putting a strong game face on the move toward commercial ratings, appearing to be resigned to the fact that they are an inevitable fact of life for TV advertising deals.

Joseph Abruzzese, president-advertising sales at Discovery Communications, suggested that the onset of commercial ratings could actually be a blessing in disguise by raising TV ad prices, if as some expect, they lower the supply of gross rating points but put greater pressure on demand.

He also said buyers might spend more since, in theory, commercial ratings provide them with a better gauge for advertising engagement and effectiveness. "This could actually throw more money into the marketplace because we'll be more accurate. We'll be able to show clients what they're actually buying, instead of estimating it," he said.

Unlike ABC President of Advertising Sales Mike Shaw, who suggested that some scatter business could be written based on the new ratings, Abruzzese believes it's too soon. The ratings would take center stage in the 2007 upfront.

"It's something that will be addressed for next year," said Bruce Lefkowitz, ad sales chief at FX, who also doubted that commercial ratings would play a role in scatter. "Hopefully, as an industry, we learn to address things not in May or June. I hope this resolution for commercial ratings will be agreed to by or before next May."

Abruzzese also raised some issues with the so-called commercial ratings from a seller's perspective. He said the new ratings turn attention to the quality of the creative and placement of individual spots. For example, a dud spot leading off a pod during a break could lead to viewer exodus, bringing the commercial ratings--which are derived from an average of all commercials during a show--down.

Meanwhile, researchers on all sides of the business will continue to lobby Nielsen to position the new commercial ratings data to their own best interests. And Nielsen appears to be amenable to that positioning. Nielsen's Loftus says the company will produce and release commercial ratings on any basis any Nielsen client asks for, provided that Nielsen has the ability to do it. "If Steve [Sternberg] wants it for live ratings only," it will be done.

Loftus also confirmed that these new data streams will come on top of the existing program rating data streams, meaning that the marketplace will be flooded with all sorts of new data. That makes the issue of defining which data is the market currency more difficult and more subject to individual interpretation than ever before.