The Single Currency Myth: Why The Television 'Metric' Is In Need Of Some Company
While few would argue that there must be a currency, I must tactfully disagree on the current definition and the role it should serve in the television industry. First and foremost, I would argue that Nielsen's ratings are a jumble of various, sometimes unrelated "metrics" and do not constitute a medium of exchange. To be precise, Nielsen's panel-based ratings come in at least three flavors: (1) a people meter/tuner meter combination, (2) a diary/tuner meter abomination, and (3) diaries only. Purportedly, people meter/tuner meter audience estimates are better than diary/tuner meter audience estimates (and both are apparently better than diaries) but none of the three provide ratings for all networks or stations. Add to the mix quarter hour, minute by minute and average commercial minute data available with Live and Live Plus time horizons (with buyers wanting to use one metric and sellers another) and confusion reigns supreme. Nielsen's metrics do not serve the needs of all media buyers and sellers.
Further clouding the issue is the dubious quality of panel-based research as the error varies widely by geography, the quality of the sample and the network or station being measured. And lest we forget, if a panel were chosen poorly or if the bias associated with the recruiting process were unchecked, the quality of the research would be compromised-not that that ever happens. So, even the most ardent Nielsen supporter must agree that Nielsen provides anything but a "single" currency and the metrics it does publish are at the very best inconsistent-not exactly desirable traits.
Once free of the currencies vs. metrics debate, the other main problem with the currency is the idea that television advertising is a commodity business. Despite what Google (and Enron Media before them) is telling everyone who will listen, television viewers watch programs differently depending on the time of day, the program they are watching and their level of engagement with the content. Whether you believe the assertion or not, media buyers clearly do as illustrated when they value the ability to reach a male between the ages of 18 and 34 during Comedy Central's first run of "The Daily Show with Jon Stewart " much differently than they value the ability to reach the same viewer during a 3:00 am repeat of "Ninja Warrior" on the G4 network. A similar disparity may be seen when valuing a national or a local insertion. An ability to reach a specific viewer on television is not a commodity. While advertisers may be searching for particular demographic groups, advertisers buy spots on ESPN's Monday Night Football and ABC's "Desperate Housewives"for a reason: their client wants the brand to be associated with the program. And the last time I checked, ad inventory associated with linear television was finite. In industries where the product is a commodity, such as petroleum and corn, metrics can be very simple. Pricing is driven by basic measurements (such as sulfur content or volume) and the interaction of market forces. In contrast, television advertising is complicated, the programs have limited inventory, shelf lives are short and as a result, rudimentary metrics serve very few stakeholders well. So the metrics used to evaluate advertising on television should probably be tailored to both the content and the needs of the advertiser. Does one metric fit everyone's needs? I think not.
So how do other complicated markets operate? Believe it or not, many industries get by without any help from Nielsen at all. Great hordes of people eat at restaurants daily without so much as a rating to guide them. You might even be eating in a restaurant while reading this column. Was the decision you made to eat at the restaurant based on the fact that more people dine there than anywhere else? Perhaps. But the quality of the food or the location's ease of parking may have affected where you chose to eat as well. Then again, the decision may have been based on the ambiance, or the attractiveness of the waiter or waitress. Were the prices on the menu based solely on the color or caloric value of the food? Chances are your decision may have been affected by market forces, the originality of the menu, quality of the food or the consistency of the experience. For the restaurant owner, all of these issues affect the asking price because dining out is not a commoditized experience. My point is simple-there is no "one" metric for most purchases we make and television as an industry is much poorer for sticking with a single source for its metrics.
In my opinion we should drop the currency debate. The currency is the almighty US dollar, not Nielsen's panel-based ratings. We should embrace new metrics that shed light on some of the more pressing issues in advertising. Imagine being able to compare which news networks have the most loyal viewers as ranked by appointment viewing. Would anyone be interested in knowing what the audience turnover for a typical weeknight is on MTV and how it might compare to Comedy Central or G4? Is one network a reach vehicle and another better suited for building brand awareness? With new metrics, all these insights are possible. And we are just scratching the surface. As a start, research companies could develop metrics in the following categories:
At the end of the day it is insight we all seek, not a new currency. But without support for new entries into the metrics marketplace, buyers and sellers will be stuck with the same old shtick, remarketed with a price 25% higher than before. I think the Nielsen's panel ratings are getting a little long in the tooth. We should encourage researchers to give them with some company.