After four-months of testing, Nielsen has taken the "evaluation" label off its new TV commercial ratings, which become the official currency of the TV advertising marketplace effective this week. But evidence is mounting that the new ratings are not quite ready for prime-time, even though national advertisers have already invested billions of dollars in upfront TV buys based on the data. The new ratings have yet to receive an official stamp of approval from media industry ratings watchdog the Media Rating Council, and new evidence has come to light that the data being released by Nielsen has had some serious flaws, inaccuracies and omissions that could cause major problems when advertisers and agencies begin posting their media buys. The latest revelation came in the form of a letter circulated last week by Star Media Enterprises, a major re-processor of TV ratings for Nielsen clients, which asserts that there have been systemic problems with the new commercial ratings ever since Nielsen began releasing them in May. Nielsen has repeatedly claimed that while there have been periodic problems discovered in with its new average commercial minute ratings, it has fixed those and the estimates are now ready to be used as market currency. But according to a copy of the Star Media letter obtained by MediaDailyNews major new problems were discovered as recently as last week. "The latest error found this week is duplicate reprocessing records," states the letter, dated Aug. 21. "For the last three weeks certain program telecasts have been reported with duplicate telecast information." Star Media said the glitches affected ratings for a variety of cable TV networks, including Lifetime, Fox News Channel, ESPN Classic, Noggin/The N, and Versus, and said Nielsen had been notified and said it was investigating the matter. Since May, Star Media claims to have found continuous problems with the new Nielsen data affecting a variety of areas, including: * Demonstration data being reported incorrectly. * Programs omitted from Nielsen's average commercial minute "MIT" tapes. * Obvious inconsistencies in the data for certain programs spanning several weeks. * Certain record types being omitted. * Records duplicated. * Missing proprietary program data. * File name issues. * Duration values not matching the file specifications. Following the release of Star Media's letter, Nielsen issued a communiqué to clients claiming the matters have been taken care of and there are no further problems with the commercial ratings data. "While this letter was a surprise to us, the details of it were not," Nielsen wrote. "Over the past few months, during the evaluation period of the Average Commercial Minute MIT, we have been working very closely with Star Media and other processors to correct and improve this new deliverable. "We would like to point out that most of the issues outlined in the letter have been addressed and fixed. Many of these issues occurred back in May when we began releasing the file. The few remaining issues are being addressed by our MIT specialists and will continue to be a high priority to correct." Asked to comment on the latest revelations, a Nielsen spokesman told MDN the problems were "small potatoes," and described them as a "handful of minor formatting errors" that have mostly been resolved. "We regret the inconvenience this has caused for any third-party processor but it's important to note that these formatting issues are small potatoes given the overall scope of the undertaking and have nothing to do with the accuracy of the data," he said, adding, "We expect to have the few remaining formatting errors fixed in time for the beginning of the TV season." One knowledgeable Nielsen client asserted the problems are not simply formatting errors, and that the commercial minutes ratings are far from ready to be used as market currency. "Nielsen never suffers from statistical and computer processing errors like its clients do because its products are not rated," the executive said. "Of course, it's all small potatoes to them, as there is no financial price. It also seems to be smoke and mirrors when it comes to pre-testing. If it were rated, Nielsen ought to be given an IFR: insufficient for reporting." Other executives said the problems are not relegated simply to the new commercial minutes data, but are part of a broader, systemic issue with Nielsen's overall processing of data, and the fact that it has taken on too many things at once. "They are beginning to fray at the fringes," said another third-party processor, who recently uncovered similar data and formatting flaws in Nielsen's recently released 2006 Cume Study. The revelations uncovered by the processor required Nielsen to reissue the entire report, which is an important piece of data used by agencies to set their media plans for buying television. The Nielsen spokesman described the reissuing of the cume report "even more small potatoes," noting that there was a "small human error" in Nielsen's production department that contributed to it. "This data was sent to three third-party processors and we were able to easily fix this when it was called to our attention," he said. The fact that third-party processors are discovering the glitches, and not Nielsen itself is a bit ironic if also disconcerting. It's ironic, because a few years ago Nielsen began charging third-party processors substantial fees for the right to access and reprocess data on behalf of Nielsen clients that had already licensed and paid for the data.
A new study from SNL Kagan details the investment cable networks are making in original programming, looking to peel viewers away from broadcast networks. Cable networks on the whole have increased spending on originals 66% over the last five years, compared to 21% in the broadcast area. As the gap further narrows, Kagan predicts cable spending will be up 43% between 2006 and 2009--with broadcast increasing 12%, according to the "Economics of Networks: Original Programming." While the growth rate is greater for cable, broadcast, of course, still invests considerably more--some $7.6 billion last year, compared to cable's $5 billion. And that total is for far fewer networks than the ever-growing cable fleet. Kagan says HBO's success started with "Sex and the City" in 1998, followed by "The Sopranos" in 1999. These were seminal moments, inspiring cable networks to dive into original scripted programming themselves with major investments. "HBO changed the landscape for cable networks forever," the research firm said. Kagan's cable figures do not include pay networks, such as HBO and Showtime. Both, with award-winning series like HBO's "Entourage" and Showtime's "Weeds," have experienced a 32% increase over the last five years to $853 million. That growth rate is expected to ebb over the next three years to 13%. The high cable growth rates are not surprising, given that major media companies, such as NBC Universal and Disney, are increasingly looking to their cable outlets as growth engines. In June, NBCU chief Jeff Zucker told analysts that the company's entertainment cable channels, such as USA and Bravo, account for one-third of profits. And ESPN is a crown jewel for Disney. Examples of heavy cable investments in expensive original-scripted fare are mounting, highlighted by offerings such as TNT's "The Closer," FX's "Rescue Me" and AMC's "Mad Men," not to mention a slew of reality shows: History Channel's "Ice Road Truckers"--and Disney's "High School Musical 2" film. Traditionally, cable networks have sought to capitalize on broadcasters running a bevy of reruns during the summer to showcase their originals, but cable networks are increasingly going head-to-head with broadcasters during the season. This fall, USA will carry original episodes of "Law & Order: Criminal Intent" on Thursdays against heavy competition, and a second season of Lifetime's strong "Army Wives" is slated for next spring.
The Television Bureau of Advertising (TVB) drew major support for its ePort electronic data exchange system, signing up all major TV sales rep firms to the service. ABC National Television Sales, Blair Television, Fox Station Sales, HRP, Katz Media Group, MMT Sales, Petry Television and Telerep have joined previously announced rep groups CBS Station Sales and NBC Station Sales. Starting in November, any ad agency can place its TV orders on the ePort system for any media deals that begin in first-quarter 2008. According to one TV executive, getting the rep firms "was the lynchpin." To some they were the "gatekeepers" that control the bulk of national spot revenue dollars. TVB also announced that Cox Television stations, and Fox's KTTV Los Angeles and WNYW New York, also signed on to the ePort system. Until recently, no Fox stations were even TVB members. The rest of the Fox station group expects to become members of the trade-advertising group in the coming months, as well as ePort members. There are now some 28 TV station groups committed to ePort. The project, announced on Feb. 21, comes with financial support from the National Association of Broadcasters, as well as other funding from broadcast groups and rep firms. Unlike the new controversial eBay auction system for national TV advertisers and networks, the ePort system isn't a system for price negotiation. It is a system that helps clean up massive back-office TV paperwork that comes after a TV ad order has been placed.
What's the next big industry? Follow the talent. Place-based video is expanding its base. Shortly after the formation of the Out-of-Home Video Advertising Bureau, and the launch of an initiative to create a new measurement currency, some of the nation's biggest place-based video networks are bulking up their ad sales forces. One key move: hiring senior executives away from TV and big ad agencies. The most recent hire brings Chris Kager, formerly president of The Media Group, to ProLink Solutions, which delivers advertising to 10.4-inch GPS video screens on golf course carts. At The Media Group, Kager led the development of a sales and marketing strategy for the EchoStar/Dish Network. Previously, he was executive vice president of NBC Universal TV Distribution, with responsibility for media sales. ProLink's GPS-enabled video screens--which display three full-color ads in sequence while the golf cart drives to each hole--have been installed on more than 35,000 carts around the country. The effort reaches a desirable demographic: men with an average household income of $185,000 and net worth over $1.5 million. This year, ProLink has signed, among other advertisers, General Motors, Citibank, RE/MAX and Toyota. Past advertisers have included Jaguar, Lexus, British Airways, HBO and Visa. Kager, however, is just one new hire at place-based video networks. On the agency side, in March, Captivate Network, a pioneer in place-based video, hired Sheri Taylor Gilchrist as vice president of marketing and programming. Taylor had previously served as senior vice president at Harte-Hanks and before that, was vice president of relationship marketing for Hill Holliday Connors Cosmopoulos. With digital displays installed in the elevators of hundreds of office buildings nationwide, Captivate reaches about 2.3 million business professionals a day. Then in May, Reactrix Systems--which installs interactive video advertising displays in public places--hired Sue Danaher as president, with responsibilities that include recruiting national advertisers. Reactrix has already carried out ad campaigns for AOL, Clorox, Coca-Cola, DaimlerChrysler, DirecTV, Hilton, Sprint and Visa, and is poised to expand in the U.S. and abroad. Danaher had previously served as executive vice president and general manager of advertising sales at MTV Networks. Also hiring is Premiere Retail Networks, which operates in-store video displays for big national chains like Wal-Mart, Best Buy, Circuit City and Costco. It tapped David Goldstein to head its advertising sales team based in Santa Monica, Calif. Formerly an executive at Walt Disney Pictures and MGM/UA, Goldstein will be responsible for all feature film, television, home video, video game and music advertising. Goldstein joins two other recent hires: Alicia Cachuela, formerly of National Cinemedia, and Stephanie Leitner, formerly of MTV Networks. PRN's content typically includes a mix of short-form lifestyle and do-it-yourself tips, with promotions by packaged-goods and electronics manufacturers whose products are available in the store. All considered, the network claims to reach about 250 million viewers a month in a total of 6,000 "big box" retail stores.
Alloy Media and Marketing has a new ally--a partnership with BlueBlastMedia. It's combining out-of-home advertising in New York City nightlife venues with Bluetooth technology that allows consumers to download content to their mobile device, including movie trailers and ringtones. The new partnership is promoting two new movies from Paramount Pictures: "Hot Rod," starring Andy Samberg, and "The Heartbreak Kid," starring Ben Stiller. The out-of-home element of the campaign includes restroom displays and backlit ads in nightclubs and bars around New York, which feature a call-to-action encouraging users to download the digital content. It can then be shared with friends via Bluetooth. Derek White, an executive vice president at Alloy, says sharing messages with consumers "within a social environment and where they're comfortable is an impactful way to interact with audiences, and has proven to be effective in promoting further discussion of the advertised brand with friends." Eventually, Alloy plans to extend the interactive technology to a network of 2,000 bars around the country. The company has already created thousands of these out-of-home digital interactive displays nationwide. Recently, several studies have shown bars to be particularly effective advertising venues. In March, Arbitron released a study which found 50% of American adults over the age of 21 had visited a bar within the last month--about 105 million people. Moreover, 31%--or 65 million people--had been to a bar in the last week. According to Arbitron, they include a higher percentage of self-described "early adopters" than the population at large. Some 27% of monthly bar-goers consider themselves "early adopters" versus 18% generally--while 26% say they frequently recommend new products to friends, compared to 19% overall. Another study from Arbitron, performed for place-based video network Ecast, found that bar-goers had a 43% recall for advertising delivered via Ecast. Arbitron's study canvassed bar patrons in New York, Seattle and Columbus, Ohio, in the summer of 2006.
All that TiVo gained in the first quarter of this year--reporting its first profits--was lost in the second quarter. TiVo took a hit, losing $17.7 million in its second-quarter earnings period. Back in April, the decade-old company eked out its first-time profit of $835,000 for the first quarter. Worse still, the second-quarter drop was lower than the same period of a year ago, when the digital video marketer suffered a $6.4 million drop. Much of TiVo's problem this quarter was due to an inventory write-off charge of $11.2 million from its supply of standard-definition DVRs. TiVo has now made a big move to manufacturing and selling HD DVR boxes. On a positive note, revenues rose 6% to $62.7 million. The 7-cents-a-share loss was a bit more than Wall Street analysts were expecting at 5-cents-a-share decline. For the future, TiVo has struck a deal with big cable operator Comcast to bring TiVo service to some of its platforms, including Scientific Atlanta set-top boxes. It is also in agreement with DirecTV to give users who have DirecTV DVRs the ability to add on TiVo software to those units. Overall, TiVo-owned subscriptions totaled 1.71 million--up 136,000 on an annual basis compared to the year ago-period. TiVo had additions in the second quarter of 41,000, compared to 74,000 a year ago. Subscriptions were impacted as retailers switched from the standard-definition DVR TiVo product to the HD DVR TiVo product. All subscriptions--those owned by TiVo or distributed by providers such as DirecTV--were at 4.2 million as of second-quarter 2007, down 5% from a year ago. Much of that loss came at the expense of DirecTV, which is now selling DVRs under its own brand name to users.
The outdoor advertising industry is still booming, maintaining a 7.9% growth rate in the second quarter, according to the Outdoor Advertising Association of America. That equals $2.2 billion in total ad dollars. The growth is especially noteworthy as the industry has now sustained an 8% annual growth rate for several years in a row, with each quarter building on a growing base dollar amount. Taking the longer view, outdoor revenues have increased every year except one (2001) for almost 15 years in a row, increasing from $2.64 billion in 1992 to $6.81 billion in 2006. The second quarter of 2007 saw increases in seven out of 10 categories--led by communications, which rose 38.5%, thanks to the booming business in mobile phones, PDAs and other personal devices, as well as competition between telecoms and cable companies. Automotive accessories and equipment grew 17.3%, while auto dealers and services rose 5.9%. Interestingly, outdoor continued to enjoy strong growth in the insurance and real-estate category with 13.9% growth, despite the slump in the housing market. The OAAA attributed the outdoor medium's gravity-defying performance to builders that turned to billboard ads to publicize unsold inventory as the market began to decline. Housing woes, fueled by the subprime mortgage crisis, have taken a bite out of other media that previously benefited from the housing boom, including online advertising and newspaper classifieds. The real-estate classified category, in particular, fell by double digits at most major newspapers in the second quarter. (Industry-wide figures aren't yet available from the Newspaper Association of America).
The proposed merger between XM and Sirius got a boost with the dismissal of an unrelated antitrust case brought by the Federal Trade Commission, according to The Wall Street Journal, which reported the legal reversal for the FTC on Wednesday. The issue for both the dismissed Whole Foods case and XM/Sirius is market dominance. The antitrust suit attempted to block the merger of Whole Foods Market and Wild Oats Markets. However, a federal judge dismissed the FTC's claim, citing its too-narrow definition of the market where the deal is supposed to take place. Essentially, the judge ruled that their merger would not constitute a monopolistic action in the larger context of the supermarket and grocery store industry. The FTC had argued that the relevant market definition was in fact a subset of that industry: the "premium and natural organic food markets." The ruling becomes relevant to satellite radio because the grounds for dismissal cited by the federal judge hinge on the same issue as the Sirius-XM merger: the relevant definition of the market where the deal is taking place. While opponents of the satellite merger, like the National Association of Broadcasters, argue that it would create a monopoly in a discrete satellite radio market, Sirius CEO Mel Karmazin contends that the definition of the relevant market includes all terrestrial radio, as well as MP3 players and streaming radio on the Internet. In testimony to Congress, Karmazin cited the growing competition from these new media--which were virtually nonexistent when Sirius and XM launched--as reasons to allow the satellite broadcasters to merge. He argued that satellite radio is now "a small part of a highly competitive and ever-expanding market for audio entertainment." The merger faced an uphill battle from the first, as the FTC's legal charters for the two companies include a specific provision that they never be allowed to merge. Karmazin has made the case for waiving this provision in testimony to Congress and members of the FTC and FCC.
In keeping with the latest efforts by kids' networks to address kids' health concerns, Cartoon Network has named an executive to oversee those efforts. Alice Cahn has been named vice president of social responsibility as part of the network's commitment to the new food-and-beverage ad nutrition guidelines. She had been vice president of development for kids entertainment programming. Cartoon Network, along with other kids' networks, such as Nickelodeon, agree to limit snack food ads in kids' shows and create programming that promotes healthier lifestyles. Previously, Cartoon said it would "limit the use of its original characters related to its company-owned original series targeted to children under the age of 12." Scores of food marketers and media companies have agreed to restrict food commercials to kids' networks in the face of a growing childhood obesity health crisis. In addition to her positions at Cartoon, Cahn also worked for Sesame Workshop and PBS.
The Federal Trade Commission will not block Rupert Murdoch's acquisition of Dow Jones on antitrust grounds, the companies reported late Tuesday, in an important milestone for the much-publicized deal. The deal is expected to close in the fourth quarter of this year, once it receives approval from Dow Jones shareholders. While many opposed the deal for reasons of journalistic integrity--including some employees of The Wall Street Journal, Dow Jones' flagship publication--few observers anticipated regulatory obstacles. Although Murdoch owns the New York Post, he was confident throughout that buying Dow Jones would not violate the FTC's rules against industry concentration in general. While the FTC gave its blessing, Murdoch may still have to assuage concerns of the Federal Communications Commission, which has specific rules again cross-media ownership within a particular region. Murdoch also owns the Fox network, Fox News and WNYW-TV in the New York City area. His ownership of the station and the Post is technically a violation of the FCC rule prohibiting cross-media ownership--but this concern was waived in 1993 because the Post was labeled a "failing" newspaper.
In January, California-based fast-food chain El Pollo Loco sought to use the national reach--albeit a diminished one due to faltering ratings--of NBC's "The Apprentice" to convey its major expansion initiative. After a long time peddling grilled chicken on the West Coast, the company had moved to Chicago and all the way to Virginia. And it opted to use Donald Trump to essentially shout out: "Coming to a location near you!" No, El Pollo Loco didn't go with subtlety--what some say keeps product placement from turning off an audience by avoiding overt commercialism. Here's how part of it went down: Trump rides in a car with ELP CEO Steve Carley and asks: "So how's business?" (Yes, believe it, The Donald is riveted by how the new chicken crunchy taco is selling.) Carley obliges: "Business has been terrific! And not only are we doing well in California, but we're expanding across the country." Another chain, Red Robin Gourmet Burgers (with about the same number of locations as ELP), went with a similar idea--using a reality show to showcase products and cue the public that "we're ramping up and making our way to a strip mall near you." As late as 1980, the self-professed "gourmet burger" chain was only in Washington state, where it was founded in the 1940s as a Seattle tavern. It's still not in Florida, the Gulf Coast, most of New England and a swath of the Upper Midwest. Last year, it opened its first South Carolina location; there's only one in Tennessee and seven in New York state. But it has been beefing up in Illinois, North Carolina and elsewhere. Enter Bravo's "Top Chef: Miami," where Red Robin played a role in the Aug. 15 episode as the basis for a challenge among the would-be Gordon Ramsays (well, hopefully not). The contestants are asked to view the Red Robin menu and prepare their "own unique take" on, or new option for, the Adventuresome burger section. A close-up of the Red Robin menu is shown, while host Padma Lakshmi calls Red Robin "the restaurant chain specializing in gourmet burgers." Later, a contestant weighs in on how broad Red Robin's menu is, making it tough, he says, to concoct something the chain doesn't already offer--"a pretty extensive menu, and it's hard not to pick some of the things that are on it." That contestant comes up with a "surf and turf" option, another with a "scallop, shrimp and sea bass ... with sweet chili glaze" delight. Red Robin doesn't deserve one of its own "ultimate margaritas" for creativity. The close-up--the shout-out from the host, probably influencing a contestant's dialogue--is common fare as brand integrations go. But the strategy is sound on two fronts. An association with a high-end Bravo cooking show popular with its upscale audience could deliver a message that Red Robin isn't a run-of-the-mill burger chain. And, with low-brand recognition in many parts of the country--even where it has a significant presence--the integration could prompt some people to try it if it opens nearby. For Red Robin, the integration likely gave people something to chew on.
ProductShowQ-Ratio Esurance Who Wants To Be A Superhero? 2.8971 Motorola Monk 1.6540 Cheetos Psych 1.4066 Red Robin Top Chef: Miami 1.0792 Chili's My Boys 0.9586 Click here to view these placements. Data and analysis provided by iTVX.