NBC Tells Wall Street 25-54 Demo, Not 18-49 Is Its Bottom Line

For years, NBC's central marketing pitch to advertisers, agencies, TV critics and the trade press alike has been the value of the network's adult 18-49 audience. It has even gone so far as to proclaim it is the only demo that really counts on Madison Avenue. But on Wednesday, the peacock network revealed its real demographic bottom line to Wall Street: adults 25-54.

During a conference call discussing its merger with Vivendi Universal Entertainment (see related story in today's MediaDailyNews) with analysts and investors, NBC management chose used the older demographic break to illustrate what the General Electric unit termed the "Ad Sales Opportunity" in the merger. The presentation included a slide presentation highlighting the relative adult 25-54 cost per thousands on NBC's broadcast and cable TV units, as well as its newly acquired USA Network and Sci Fi Channel assets.

That those cable networks index at 27% to 30% of the advertising value of NBC is not as surprising as the fact that NBC chose to use the adult 25-54 break to illustrate the point (see below).

Demo Graphic: What NBC Touts To Wall Street

--------------------CPM 25-54----------------------

27 30 34 40 77 100

Source: NBC's Oct. 8 presentation to Wall Street analysts. Index base = 2002-03 season.

The presentation showed a different face than the one NBC normally portrays to the ad industry and the difference may not simply be hypocrisy. It may signal and fundamental shift in the company's positioning.

If so, NBC sales management will have a lot of explaining to do. As recently as its 2003-04 upfront sales pitches, the network was still harping on the notion that adults 18-49 are the ruling demographic buy, something NBC would often chide the relatively older skewing CBS about. During its upfront presentation NBC late night talk show host Jay Leno quipped CBS' idea of 18-49 meant viewers who were born between 1918 and 1949.

CBS executives routinely report on total households and adults 25-54 rather than the adults 18-49 favored by NBC, Fox and ABC. NBC, which has led the season ratings in adults 18-49 as well as 25-54 while at the same time ceding total households and viewership to CBS, has in the past focused on 18-49.

"Everything they usually talk about with NBC is 18 to 49," acknowledged Sam Armando, director of television research at Publicis' Starcom Worldwide unit. But he noted that when talking about the diverse nature of the group of networks that will come under the wing of NBC Universal - not only NBC, CNBC, MSNBC and Bravo but also Sci Fi, USA Network and Trio - the adults 25-54 demographic might make more sense.

"The common thread of these networks is [adults] 25-54," Armando said.

Steve Sternberg, senior vice president and director of audience analysis at Magna Global USA, said the 25-54 demo is just as important as 18-49.

"It makes sense for a network, whose cable properties include the older- skewing CNBC, MSNBC and Bravo, would look at 25-54 on a corporate basis," Sternberg said.

Sternberg noted that with the exception of its Thursday primetime lineup, NBC has been skewing older anyway. According to a Magna Global analysis of Nielsen Media Research data, NBC's median age was 46.2 between October 2002 and May 2003, compared to 52.2 for CBS, 43.6 for ABC and 35.0 for Fox. But NBC has trended older in recent years, moving from a median age of 43.4 in 1998-99. Importantly, so has the United States population.

"The median age is the oldest it's ever been. That's where the people are. Maybe that's where the [network's] target should go," said Brad Adgate, senior vice president of research at Horizon Media. He and other media people observe that the baby boom generation is boosting the population of 25- to 49- year-olds.

Media agency people say NBC has traditionally hawked its position among adults 18-49 but that it could have done that too, since it has led in the adults 25-54 demographic, as well. With a strong challenge from Fox in adults 18-49 last season and another one expected this year, buyers say it might make sense for them to start talking about other demos.

"It will likely drop out of first place among 18-49 well before 25-54, so it wouldn't be surprising to see them jump on the 25-54 bandwagon at some point," Sternberg predicted.

If NBC is becoming a recent convert to the wisdom of targeting adults 25-54, they're going to find stiff competition from CBS, which has been staking its position there for several years now. One of the hottest topics at the summer's Television Critics Association conference in Los Angeles was CBS presentation of a study of media planners and buyers it conducted with MediaPost Communications, publisher of MEDIA Magazine and MediaDailyNews. The study found planners and buyers see the adults 25-54 demographic as the most important target when purchasing commercial television. Buyers and planners believe the aging of the population - the number of Baby Boomers who are in the demographic - is having a major impact.

David Poltrack, executive vice president of strategy and research at CBS, said realizing the impact of the Baby Boom generation is key. And as the Boomers age, their power in the marketplace is reflected in the older demo. Poltrack thinks a better measure of the marketplace is to stop focusing on adults 18-49 and either measure 25-54 or perhaps adults 18-54.

Poltrack said NBC had its reasons for touting adults 18-49.

"It serves them better to continue to talk about 18-49 as opposed to 25-54 because that's the demographic where they can distance themselves to the greatest degree with CBS," Poltrack said. He said other networks, like Fox and ABC, are both stronger in adults 18-49 than they are in 25-54 and it's in their best interests to focus on 18-49.

Yet given strong challenges to NBC's dominance among adults 18-49, Poltrack believes NBC might change its tune.

"They're starting to lose some of that 18-49 advantage," he noted. "They may now realize that, 'Gee, we should talk about the fact that we're number one in 25-54.'"

Horizon's Adgate doesn't see a seismic shift in TV toward 25-54, even if NBC moves toward that as its main measure. "I can't see Fox or The WB going after adults 25-54 just because NBC does," he said.

In the future, said Adgate, the demographic squabbles might be moot. He sees a future, with more sophisticated research and database marketing technology enable media buyers to focus on media targets that go well beyond age and sex.

"Maybe we'll see less of an emphasis on demographics because we're going to have information that's going to show buyergraphic," Adgate said. "That may change the model a bit."

Poltrack agrees, and he's championed that idea in articles he's written for the Journal of Advertising Research.

"Age is not the right demographic. Forget what age," Poltrack said. "There are other demographics such as income, or household size. Income is a more relevant demographic than age for higher impact." NBC executives were not available for comment.

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