• by Wayne Friedman , March 30, 2010

The Nielsen Company is going ahead with its controversial plan to eliminate live-only local TV program ratings, which covers around 70% of local U.S. television homes.

This comes after a four-month delay from the original date, Dec. 1, when the TV research company intended it to go into effect. The change begins April 1.

Now, TV advertisers and stations will only have overnight access to data for three different data streams -- live program-plus-same-day time-shifting of programming, live-plus-three-day time-shifting, and live-plus-seven-day shifting -- to account for their media buys.

Live-only data will still be available, but on a delayed basis.

For the better part of 50 years, advertisers have used live-only as their currency. In the last few years, Nielsen has added new streams of program data to account for time-shifting. But few, if any, advertisers made deals on these other metrics.

Two major media agency groups -- Starcom MediaVest Group Exchange (SMGX) and Group M -- protested loudly over the elimination of the live-only program ratings. They said it will result in an instant 7% viewership boost in local TV stations, as well as a potential increase in ad dollars.

One of the main reasons in dropping live-only was the issue of capacity; Nielsen can only feasibly maintain three streams of data, not four streams. But the decision wasn't just from Nielsen's viewpoint.

"We've heard it from both sides, that 'we cannot handle another stream of data,'" says Dave Thomas, president of global client services for The Nielsen Company. "I've also heard people say it's a red herring." He added that there was no consensus among media agency executives as to what changes should be made.

TV station groups pushed Nielsen for the change because its advertising deals do not account for time-shifted programming, which continues to grow.

From a TV station's perspective, Thomas says, live-plus-same-day viewing "is more reflective of the way people are consuming TV these days." About 60% of time-shifted viewing occurred during the same day, usually within a few minutes of the live airing.

Media agencies say time-shifted programming includes 55% to 60% TV commercial-skipping, something clients should not pay for.

Rino Scanzoni, chief investment officer at Group M North America, has been mulling a plan that would account for commercial viewing -- using Nielsen's national commercial ratings plus three days of time-shifting (C3) metric. That's something media buyers and sellers agreed on back in 2007 as a new currency.

"There is a degree of consistency when you are talking about specific demos when it comes to commercial-skipping," says Thomas, of Group M's plan. "But when you start looking at different demos, different dayparts, different markets, the notion of one single skip rate doesn't work."

Plus, he says considering each variation creates a problem that Nielsen was trying to avoid in the first place. "When you start looking at what level of adjustment is necessary," he says, "you are almost providing another [data stream] tape, which was the problem in the first place."

Giving some comfort to the media-buying agencies. Thomas adds: "Live-plus-same-day comes the closest to equating to C3."

For example, in looking at some November 2009 local TV program data, for viewers 18-49, 91% of the time, live-plus-same-day ratings were within a 20% range of C3 ratings. This compares to 84% for live-only program ratings.

In a summary sent to its clients, Nielsen concludes: "Live-plus-same-day in local markets is roughly comparable to national C3."

However, John Muszynski, chief investment officer of SMGX, has complained that this data just analyzes a too-narrow window of programming in November.

There is a possibility the story doesn't end here. Going forward, Thomas says Nielsen is looking to address its capacity issues, but this won't happen in the near term. "We are working on greater capacity," he says. "Then we will be looking to our clients, asking questions: Is live-only still relevant? Is other data more appropriate?"