Agencies In Arms Over Nielsen Local Ratings Move: Call TVB's High-Five A Low-Blow

In what is tantamount to a media trade association's high-five over a successful lobbying effort, the Television Bureau of Advertising has sent emails to the nation's TV stations congratulating them for influencing Nielsen Co.'s decision to scrap live audience ratings for the local TV advertising marketplace. "Congratulations! You did it!," reads the email, a copy of which was obtained by MediaDailyNews, and is reproduced here.

The email comes as Madison Avenue is up in arms over Nielsen's decision to pull the plug on its live local TV ratings, and to replace them with estimates that embed time-shifted viewing from DVRs as the new local TV advertising currency. Big spot TV buying agencies such as WPP's GroupM, and Publicis' SMGX, are particularly disturbed by the decision, because live audience ratings have been the basis of their negotiations with stations, and they have many advertising deals extending into next year that are based on them. But Nielsen will no longer supply live local TV audience ratings beginning in January.

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GroupM has already gone public with its frustration and its Chief Investment Officer Rino Scanzoni told MDN it is considering legal action against Nielsen to overturn its decision.

Other big spot TV shops are equally up in arms and are exploring their options, and the Media Policy Committee of the American Association of Advertising Agencies also is expected to come out with a position, and possibly a course of action, soon, according to agency executive familiar with those plans.

Meanwhile, agency executives say the TVB's communication effectively is a "smoking gun" pointing to a concerted lobbying effort by hundreds of TV stations, the primarily source of revenues for Nielsen's local TV ratings services, to sway Nielsen's decision to scrap the live audience data.

"Many of you took the time to contact Nielsen to express your opinions on this important issue; many of you did so several times, and in numerous forums. Thank you . . . all of your hard work paid off!," the TVB wrote.

Madison Avenue is now calling the TVB's lobbying effort a low-ball, because they focused their communication strategy through trade associations such as the AAAA and the Association of National Advertisers.

"We did talk to many agencies," a Nielsen spokesman said Thursday about the input the company used to make its final decision. "We weren't just talking to the trade associations. There were many conversations with parties across the spectrum of the industry."

He said that Nielsen is confident that it had "investigated this thoroughly and talked to all parties exhaustively. We made the decision based on the feedback that we've gotten. And we're committed to that decision."

Asked why Nielsen decided to limit the number of data streams available for local TV, and to exclude live-only estimates from its ratings reports, the spokesman said it was due to the fact that local stations and some local agencies said they "already had too much data."

But in the national TV marketplace, Nielsen makes many more streams of data available to buyers and sellers, even though the standard currency for national TV advertising deals is its so-called C3 ratings, which stands for live average minute commercial ratings, plus three days of time-shifted viewing.

Agencies say they were willing to compromise on the time-shifted standard - and scrap live-only ratings - for national TV deals, because of the shift to commercial audience ratings. When Nielsen credits commercial audience viewing, it edits out any viewing that includes so-called "trick viewing" such as fast-forwarding through commercials.

But that's not the case in local TV ratings, in which Nielsen does not report commercial exposure, but only average program viewing estimates, so media buyers say they have no way of knowing how much of their client's TV commercials local viewers are actually watching.

"They just raised the price of local TV advertising," said John Muszynski, chief investment officer of Publicis' SMGX unit.

Muszynski estimated that the shift away from live audience ratings would effectively inflate the costs of local TV advertising by "3% or 4%" initially, but that over time, as more local TV viewing occurs on a time-shifted basis, that number would grow.

"We've got deals that go through next year on live. Now what do we do," he asked rhetorically.

Muszynski said he and other big media buyers, and their trade associations, would continue to put pressure on Nielsen to appeal its decision, and that if unsuccessful, might consider using alternative methods and/or sources for valuing the basis of their local TV advertising buys.

Ultimately, he said, it is their client's advertising budgets that agencies like SMGX and GroupM are investing, and if they lose confidence in the value of the ratings currency, they would either shift to a different form of currency, or would shift budgets out of local TV and into media that are more accountable for the value they are delivering to advertisers.

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1 comment about "Agencies In Arms Over Nielsen Local Ratings Move: Call TVB's High-Five A Low-Blow".
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  1. Dave Woodall from fiorano associates, November 17, 2009 at 2:06 a.m.

    My God Mr. Nola, do you even understand what you're saying? Mr. Muszynski isn't talking about your rates. He's talking about the cost of TV advertising to YOUR ADVERTISERS! With time-shifted viewing, 3-4% of the total audience fast-forward through commercials. In its national ratings, Nielsen edits out these "skippers". However, Nielsen won't be doing this in the new local numbers. They will include the "skippers" so agencies will now have to manually account for them by REDUCING your ratings 3-4% (probably more in Palm Springs as I would guess DVR penetration is quite high there). Unless you reduce your rates a comparable 3-4%, this will INCREASE CPM's (hence Mr. Muszynski's comment about raising the price of local TV). Your support of Nielsen is tantamount to telling your clients you're proud to mislead them and sell them viewers that you know are not there. Now, about some of your other statements...
    "Agencies use their subjective standards to price a market that is ALWAYS too low."
    Really? OK, fine; then tell me how you scientifically and objectively price your inventory and I'll be happy to use the same system. In fact ironically, as Broadcast TV continues to bleed viewers, I have yet to notice an equal decline in rates. Seems to me that TV is actually over priced at the moment.
    "The agenciy (sic) side needs to start buying local TV with qualitative and not the archaic CPM/CPP method." Didn't you learn in Sales 101 to never pre-qualify a customer? You always let them tell you how much they can or cannot afford. If you're trying to sit there and tell me that you can pinpoint a person's socio-economic strata and brand preferences based on the entertainment they consume, brother, you're in the wrong business. My favorite example of this is from the 2002-03 TV season: Which show that season attracted the greatest number of $100k+ income Households? 60 Minutes? The West Wing? 24? Nope; it was the first installment of Fox reality show "Joe Millionaire". Go figure.
    "I have still yet to see a CPP buy an automobile."
    You're kidding right? You do understand that the "M" in "CPM" and the "P" in "CPP" represents "People" right? Have you ever seen a PERSON buy a car Mr. Nola? Well, congratulations, you've seen a CPP buy a car!

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