Rethinking Ratings: How Advertising, Programming Are Changing

• by Alex Petrilli , Op-Ed Contributor, March 16, 2018

Nielsen ratings have been the universal currency of television advertising and programming since 1950, the year Nielsen Media Research began applying its radio data collection to the blossoming television industry.

For nearly 70 years Nielsen data has been the deciding factor in cancelling TV shows and placing advertisements. It has become singularly embedded in the industry as the standard of measurement.

However, the rapid growth of internet-enabled smart TVs and devices enables  more options for data collection than diaries, set-top boxes and meters. Although Nielsen and others are attempting to catch up, new technologies are changing not just the measurement, but the content of television itself.

Changing Viewer Habits

Back when broadcast was the only game in town, demographic data was the dominant tool for focusing advertising. With no other data on a national scale, traditional ratings were omnipresent in every programming and advertising decision.

Now, there are more ways to watch television programming. As over-the-top (OTT) programming provides services direct to consumers, the viewing habits of Americans are changing in ways no one could have predicted.

AMC's “The Walking Dead” debuted in fall 2010 and became an overnight cultural phenomenon, with unprecedented ratings for a cable television program. Now promoted as event viewing, “The Walking Dead” is still broadcast in fall but consumed year-round, often by fans that wait until the entire season is available.

OTT technology has enabled binge watching, instead of viewing through regular weekly episodes.

New Systems With Sharper Vision

In 2017, there were an estimated 22.2 million “cord cutters” over the age of 18, per eMarketer, with that figure expected to increase. The use of smart TVs also increased sharply in 2017, with over 168 million viewing through internet-connected devices.

Better measurements are coming by leveraging the connectivity of smart TVs, as well as technology platforms from companies like comScore. This will enable programmers and advertisers to discover what audiences are watching at much closer focus than Nielsen ratings provide.

This allows content creators and advertisers to develop more in-depth viewing segments and determine what people want to see on a household level.

Nielsen is still the currency of television viewing data, but many of its systems -- diaries, for example -- are not providing the granular data that enables programmers and advertisers to understand viewer decisions.

Which is a possible reason Nielsen has vowed to eliminate their use after the May 2018 sweep. Nielsen is moving to updated systems like code readers, which also have potential demographic limitations.

The Death Of Sweeps Week

The idea of demographic ratings and programming by seasons is thoroughly ingrained; they will endure until something compelling enough supplants them. People will still be accustomed to important programming in November, February and May.

But that expectation of continuity will not stop the march toward year-round programming, as institutions like Sweeps Week become less important with each cord cut and video streamed.

It would be a mistake to correlate the decrease of traditional television viewing with a decrease in overall viewing. In fact, the opposite is true; internet-connected devices are driving viewership up, with a corresponding increase in ad spending.

However, as traditional seasons become supplanted by capsule-style launches, advertisers and broadcasters will need to understand and utilize a variety of measurements to determine success.

Using anonymized digital data to provide addressable advertising is a major element of this next wave.

Television remains one of the most effective mediums for advertisers, but how they find audiences is undergoing a profound shift. The ability to sharpen focus and identify specific targets will drastically increase the value of each ad to the consumer.

Combining granular data available through internet-enabled devices with addressable programs will allow companies to match their ad spending to targeted viewers, regardless of device.