Paramount Demanding A 50% Nielsen Price Reduction: Sources
- by Wayne Friedman , November 14, 2024
Paramount Global is looking for a 50% reduction in the price for Nielsen measurement services -- a deal the measurement company says is “unsustainable,” according to a letter written to clients, obtained by Television News Daily.
“We have heard loud and clear that the current lack of an agreement has created unfortunate turbulence for many of you,” Nielsen CEO Karthik Rao writes to media agency and advertising executives.
Rao adds: “Contrary to what Paramount has shared, we are not seeking 'substantial price increases' in our proposal. We are simply aiming to maintain fair value for the quality of our services—services that are empirically better than at any point in our history.’
He says: “Unfortunately, Paramount is demanding a nearly 50% reduction in the price of our service. This not only undervalues our substantial investments, but makes it unsustainable to provide the support and quality that all Nielsen clients rely upon.”
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Nielsen representatives had no comment in reference to the current situation.
Paramount and Nielsen have been at odds over a renewal of a long-term contract that ended in September.
Paramount Global dropped Nielsen -- its main viewer measurement currency -- at the end of September, due to what it says are the measurement company’s soaring pricing demands.
At that time, a Paramount statement said: “Nielsen has severed our long-standing measurement partnership with its unacceptable demands, including substantial price increases that are inconsistent with the realities of a changing industry.”
Paramount has a current deal with VideoAmp to offer advertisers alternative viewership data. For the last four months, it has been ramping up that company’s efforts for its advertiser clients in anticipation of a possible Nielsen stalemate.
Nielsen is the longtime third-party TV data-measurement company that advertisers have counted on for decades to finalize their media schedules.
Let's not forget that the agencies all get Nielsen data so it doesn't matter to them if the Paramount sales force lacks the information that it needs to deal with audience guarantees. The agencies will supply the needed information. There are no walled gardens in Traditional TV Land----including CTV.
A couple of things.
1. I suspect (actually it's somewhere between a ssuspicion and an assumption) that Paramount cannot renew a Nielsen deal until the Skydance sale closes. (So the longer that takes, the bigger the opportunity for VideoAmp.)
2. All the programmers (that's the current in-vogue term for "TV networks") have to be watching Paramount with keen interest. Can they get by with VideoAmp and not Nielsen? If it turns out they can... that'll be a sea change.
3. But can Paramount get by without Nielsen? The math to answer that question is simple.
Let X = revenue loss from not subscribing to Nielsen;
Let Y = savings derived by replacing Nielsen with VideoAmp;
If Y > X, the answer is yes.
Josh, you pose an interesting question. Of course, if VideoAmp charges less than Nielsen then Paramount can save money on its research costs. But what if this decision costs it more ad revenue than is saved by dumping Nielsen? How do you calculate that?
For example, if most, or even all of the agencies use Nielsen and they are the ones who know how the Nielsen ratings are tracking --not the folks at Paramount---couldn't this give the agencies an edge in demanding make goods before they are really justified---with no givebacks later? How would the Paramount numbers crunchers counter that for already existing upfront buys made last summer based on Nielsen? Also, re packaging their current deals, pricing, etc. how will the Paramount deal makers control their ad revenue flow if the agencies are using Nielsen and this data is not known to the selling teams?Will they accept whatever the agencies say the ratings are based on Nielsen?
The only way this works for Paramount is if a large percentage of the buyers accept VideoAmp as the currency for CBS buys---but is that liklely when they will be using Nielsen for all of the other networks?I wish VideoAmp the best and think that it is probably one of the best of the alternative sources out there, but Paramount has a lot of trade-offs to consider so long as Nielsen ---and I refer to the new Nielsen 'big data" service---is about to become the new national TV rating standard and is being utilized by most buyers.
Ed, 2 things.
1. One piece of this puzzle is that while the agencies have been reluctant to look beyond Nielsen for traditional linear age/gender, they seem to be willing to embrace alternative currencies for "advanced TV." So that experience could be relevant in assessing their ability to do business with alternative currencies for the traditional linear transactions. In other words, Well I appreciate the fact of switching costs, the agencies wouldn't be starting entirely from scratch here.
2. I don't know the answers Think to the questions you raise. But that's what I think we're about to find out.
Josh, as you know, I track the upfront and have watched with interest as it expanded into streaming three years ago. You are right, that some brands, when they go their separate ways and are not bundled into big corporate upfront or scatter buys, do use a combination of metrics-----usually Nielsen plus something else. But most of the upfront buys I see in streaming, when they involve traditional TV sellers are being exectued the same old ways. And even when they cut deals with non-traditional sellers--You Tube, Amazon, Netflix,etc.---as often as not its 18-49 GRP---or"impression"---- tonnage and very little targeting.
As with addressable TV and all other forms of refined targeting, the enemy is corporate time buying, which accounts for something like 75-80% of national TV ad spend in linear TV and CTV combined. Until this system---playing the upfront "futures market" CPM guessing game and its extension into scatter---is defeated there won't be enough fexible ad dollars available to drive a major switch to targeted TV time buys. Which means that a single, standard "audience" source will remain dominant as that's the only way the players can tell whose winning or losing.
Whether upfront buying is justified is another issue I won't try to address here--but suffuce it to say that it's probably not going away for some time---if at all.
Hmmm.
What if the viewers demand a 50% decrease in their subscription?