Commentary

The Local Currency Debate

Despite some agency claims to the contrary, Nielsen's decision to replace the local Live program data stream with Live + Same Day ratings is a major step forward for local audience measurement and should be welcomed by the advertising community.

Assertions that L+SD ratings will overstate program ratings while driving up costs are based on erroneous assumptions that do not hold up under scrutiny.

Consider this: according to our calculations, including same-day DVR playback could potentially overstate commercial viewing by about 4%. Meanwhile, the standard error on the same data is 36%. That means that any possible change caused by DVRs is far below the swings that naturally occur in Nielsen's audience projections.

Well aware that viewing behavior shifts over time, Magna plans to perform this analysis on an ongoing basis to identify any changes in DVR playback patterns.

We have also heard assertions that Live Program ratings should remain the local currency because at the national level, it is the closest available proxy to Average Commercial Minute (C3) ratings. While that may have been true two years ago, increased DVR penetration has changed the landscape.

Additionally, Live + Same Day Program ratings were closer to C3 than Live Program Ratings were in more than half of the telecasts we analyzed, proving that the Live stream is no longer the closest substitute for C3.

Using a comprehensive data set provided by Nielsen, Magna has gauged the level of potential ratings overstatement caused by the switch. The analysis consists of program and commercial ratings for both data streams in 21 LPM markets, 10 demographics and 138 prime-time programs for a total of 115,920 data points.

Our analysis shows that while certain programs may see a bump, the relationship between program and commercial viewing would barely change. The differences would be so small, in fact, that it would be nearly impossible to tell if the cause is the new data stream or simple statistical bounce.

Even if we assume there will be across-the-board ratings increases, there are too many variables in the buying process to project a universal price increase. Let's not forget the role of negotiation.

Put simply, the way people view television has changed, and a ratings stream with DVR playback included is much more representative of today's audience. Rejecting the Live + Same Day program data stream because it might marginally overstate commercial viewing is a head-in-the-sand approach, especially given the variability that already exists in the numbers.

1 comment about "The Local Currency Debate".
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  1. John Grono from GAP Research, January 22, 2010 at 5:59 p.m.

    Ask the simple question, what happens if a person playing back a programme skips the ad? Is the 'minutage' recorded as viewing, and if so, does it count towards the ad campaign delivery (as opposed to the programme delivery).

    Here in Australia we have a simple rule. If the playback is in anything other than 'real-time speed' then it is ignored. So, if an ad is skipped, when we do the post-analysis on ad campaign delivery that time-shifted ad counts as a zero (even though there may be some residual impact). This does raise issues around how we plan the delivery to take this into account, but when we do the post-analysis clients are not paying for impressions they didn't receive. Pretty simple, eh.

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