• by Joe Mandese  @mp_joemandese, December 15, 2009

Interestingly, this is the first explicit editorial I've written since joining MediaPost more than six years ago, or for that matter, in my 30 years of covering this business. As a journalist, I don't really feel comfortable telling readers what I think, or how I think they should think. But I think it's time I do, because I've been watching - and chronicling - what I think is a serious industry SNAFU unfolding. Normally, I'd just report on it, but I figured it might help if I told you what I actually think about it. Which of the many industry SNAFUs am I referring to? Nielsen's decision to remove live-only ratings from the local TV advertising marketplace beginning Jan. 1, 2010. I know what some of you might be thinking, that Mandese is simply siding with the ad community. But I'm not. I actually think this could be the worst thing ever, at the worst time ever, for local TV stations. Let me explain.

I completely understand why local broadcasters - the main source of revenues for Nielsen's local TV ratings services - lobbied Nielsen so heavily to get rid of the live-only ratings. TV stations have been hemorrhaging advertising budgets more than most other media during the recession. They've been losing budgets, and share, for both cyclical and secular reasons. The cyclical reasons simply have to do with macro economics, and in normal times, would rebound when the economy begins to expand again, and with industry stimuli like Olympics, elections, and the emergence of new TV advertising categories. The secular shift is more vexing, because it relates to broader changes in the underlying philosophy of marketing and the media mix. Marketers, and most agencies, are zero-basing what they think the role of various media are, and they are moving toward ones that are demonstrably accountable, and have provable, measurable methods of ROI. And here's where the Nielsen decision really comes into play.

Why in the world would local TV stations push so hard to remove a metric that their clients believe represents a higher measure of accountability on the performance of their medium? And why would they seek to do it a time when other media - especially online, mobile, and soon, local cable TV systems - will be able to prove themselves even better via superior return path data? It just doesn't make any sense. At least not to me. So if you've got some thoughts on this one, please steer me in the right direction, and post them here. I'm trying to be open-minded about this one, but I think the local broadcast TV community is dead wrong on this one. I think Nielsen is wrong too, and is playing way too heavy a role in exercising its judgment on this call. And I think the real loser is going to be local broadcast TV advertising share. If advertisers and agencies lose more confidence in the medium, they're simply going to shift budgets to other, more accountable media. Don't you think?

I know that's what John Muszynski, the chief negotiator at Publicis' SMGX unit is thinking, and why he's reached out to local station execs to organize some kind of summit before this Titanic ship leaves the dock and crashes into an iceberg. He's hoping he can explain this issue to them, so they can go back to Nielsen and convince the researcher to get the live audience data back into the mix.

And frankly, I'm a little surprised that it's only been Muszynski and GroupM's Rino Scanzoni, who've been so vocal on this issue, because there is some much at stake. And so much to lose. Sure the Four As and the ANA have issued strongly worded statements condemning Nielsen's decision, but that's just paper tiger striping. What the ad industry has to do, is put its money where its mouth is, and that's what Muszynski and Scanzoni - the two biggest buyers of local broadcast TV - are doing. The question is whether local broadcasters have their ears unplugged and are actually listening. And whether it's not too late to get Nielsen to listen too.

If not, I'm going to do something I also don't like doing as a journalist. I'm going to make a prediction. I'm going to predict that over the next two years, local TV ad spending is going to plummet by at least a couple of share points each year for the next several. And it's not just because of the ratings change, but because of so many other factors that it has working against it. The underlying secular shift I've already referred to, and a few other things too.

What are those other things? Well, there's one I'm about to write about soon that should wake a lot of people up about how much the infrastructure of the local TV advertising business has actually changed. Stay tuned for that one. But there are other things that may be less transparent to people plying in the field of local TV advertising buying and selling. And one of them is the fact that agencies are suffering too, and they are looking for better internal operating margins, and more efficient ways of doing business. So watch for them - especially the really big ones - to begin overhauling their spot buying groups. And I use the term overhaul lightly. They're going to be decimated.

Watch for Interpublic to be the first to implement this strategy. Interpublic's Mediabrands team - led by Nick Brien, and Tara Commonte - have quietly been trying to revolutionize the thinking and operations of the modern day media services agency, and how to redeploy their resources from "low-margin" operations to ones with higher yields. And let's face it, spot buying has become a low margin business for agencies, and sucks up way too much of their resources, time, energy, etc., at a time when higher yielding ones - especially digital media - could generate a higher ROI for them. That's what Interpublic has been doing, and it's one of the reasons we picked them as our Media Agency Holding Company of the Year for 2009. But I think all of the big shops are thinking the same thing: How can they leverage technology - especially automated buying exchanges - to reduce or do away with big, margin-sucking operations like spot broadcast buying groups. Duh, that's a no-brainer.

So why, may I ask, are local broadcasters backing a move to reduce the accountability of their medium in the eyes of advertisers and agencies, at a time when they should be raising the bar instead? It's short-sighted, dumb, and if you ask me, simply suicidal.

If the local broadcast TV industry has one ray of hope, I think it's the fact that former MPG chief Steve Lanzano is about to take the reins of their trade advertising group, the Television Bureau of Advertising. But that isn't set to happen until Jan 1, the same day Nielsen is set to drop live ratings from local television. Let's hope Lanzano's arrival doesn't come too late to influence this decision, because I have a feeling he has a few accountability tricks up his sleeve for the local broadcast TV advertising community, but he needs to get off on the right foot. Not an acrimonious one.

Meanwhile, it's possible this stalemate will end before Lanzano steps into his new office. Nielsen executives tell me they've been in talks with top agency executives about some sort of compromise solution, which would ameliorate both sides, and could be announced as soon as the next day or so. As they say in the TV business, stay tuned.