New Ratings May Be Shaving Points for ESPN

A week ago, ESPN reported that its season-opening "Monday Night Football" game saw viewership increase by more than 800,000 after those watching outside the home were added to the traditional Nielsen tally.

It was actually much more. Maybe a lot.

Is ESPN getting short shrift? And does it matter? Maybe and maybe.

To recapitulate: For years, ESPN has argued that its viewership has been undercounted--since much of its programming is watched outside the home. Ratings didn't do it justice, the argument went--and perhaps advertisers should be paying more.

Along with other networks and advertisers, it nudged Nielsen for years to find a way to track out-of-home consumption. And earlier this month, Nielsen obliged, releasing a new out-of-home (OOH) ratings stream for the first time.

Ostensibly, now all those college students watching hoops in the common room, young professionals checking out "SportsCenter" at the fitness club, and rabid fans huddling at a bar to watch "Monday Night Football" can now be counted.

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Nielsen and partner IMMI (Integrated Media Measurement Inc.) derive the ratings from an effective panel of 2,500, where the participants carry a mobile phone that picks up audio signals wherever they go.

But the operative word is "audio." If the TV is on, but the sound off--viewing (or exposure) is not picked up. And it's not counted in the OOH ratings.

It's hard to argue that a mass amount (if not the majority) of viewing at bars is done with the sound muted. So, that's likely a huge chunk of audience that is not part of the OOH figures.

Last week, ESPN said the new OOH ratings showed that some 831,000 people (across all key demos) watched its first "Monday Night Football" game away from home.

Add that to the 8.4 million (ages 12 to 54) that the traditional in-home ratings recorded--and the network got a 10% bump in total viewing (to 9.2 million).

How much more the increase would have been if "sound-off" viewing in watering holes were attached is a guessing game, but a few hundred thousand may not be out of the question.

Toss in the number of people watching at the gym while wearing headphones--which also isn't picked up due to the audio signal issue--and the number increases again, albeit by surely a vastly lower amount.

Is ESPN frustrated by the ratings system it has sought for so long that still appears to have some under-counting?

"We are very happy with the methodology and the results," said Artie Bulgrin, the network's senior vice president of research and sales development. "Any measurement instrument will have limitations, but based on the years of work that we have done in OOH measurement, this measurement technology is clearly the best and most complete."

ESPN is the only network (somewhat surprisingly, broadcast networks with a heavy load of sports content have passed) that is subscribing to the new ratings service. The only other recipient is Zenith Media.

Zenith's president of strategic resources, Bruce Goerlich, said the OOH metric is not a "perfect" system, but it represents a significant advancement. "Certainly, we have a point of view of don't let the perfect be the enemy of the good," he said.

Nielsen says the ratings are "an accurate reflection of people who are watching television out-of-home with the volume on." Devising a system that can capture "muted" viewing would seem, if not impossible, then likely cost-prohibitive.

But is there even a need for it? TV advertising's strength has long been touted as the troika of sight, sound and motion.

"You lose the sound and the value of the commercial is significantly reduced," said Lyle Schwartz, director of national broadcast research and marketplace analysis at Group M.

"From our perspective, if the sound is off, it's not as valuable to us for the advertiser, so we're perfectly happy (that muted viewing isn't in the OOH ratings)," Goerlich said.

Networks do have a history of arguing that "muted" viewing has value. Several years ago, when they fought for advertisers to pay for DVR viewing even if commercials were fast-forwarded through--before the so-called "C3 Compromise"--they argued that the quiet-and-quick ads still delivered messages via exposure to logos and other brand images. Another argument was that if someone had seen an ad in full before, watching it again in high-speed would prompt recall.

Moving beyond the sound issue and focusing on the OOH ratings as they exist now, ESPN has given no indication that it intends to charge advertisers directly for the added OOH viewing, But clearly, it is hoping that the figures will serve as grist to demonstrate further value in its programming to advertisers.

"Viewing in hotels, on campuses, in bars and restaurants has always been a critical part of ESPN's delivery," said Glenn Enoch, vice president of integrated media research at ESPN, in a statement. "These data are going to lead to additional learnings about audience behavior that will ultimately help us better serve our fans and advertisers."

Schwartz said that sports deals already may be priced with an understanding on both sides that the ratings are not capturing a chunk of the viewing, so an added out-of-home cost may be baked in.

Jim Kite, president of connections research and analytics at MediaVest, said his agency is evaluating the new OOH data and may eventually subscribe. But it remains concerned about the broader issue of how to use the various new measurement streams that track consumption of video online, on-mobile and elsewhere.

"Our concern is we may find a methodology of somehow aggregating all these screens, but it's assuming the experience is like for like," he said.

Watching TV in a hotel room may somewhat mirror at-home viewing, but what happens in bars and fitness clubs--sound on or off--would seem to vary significantly.

[On the network side, CNBC would seem to be a natural to subscribers with its large number of viewers in offices and on trading floors. A network representative said the methodology is new and it's evaluating the data.]

Grant Prentice, director of connections research and analytics at Starcom, said his agency is also considering signing up for the OOH ratings. "We're intrigued by it--it's a step in the right direction in terms of gaining additional perspective on the size of the audience that exists out-of- home for particular programs or particular channels," he said. "But in terms of the absolute value of this particular type of data, we're not 100% sure of where we land on that yet."

But he suggested a scenario in which an ad seen in bars with the sound off may have some value.

"Just having the visual of the brand register within a captivating environment like that, where the product is being consumed and is certainly within arm's reach--that's an important moment to be able to deliver your advertising," he said.

Sports broadcasts, of course, are chock full of beer ads.

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