The changes to technology that have rocked the media landscape in recent decades have accelerated into overdrive in the past ten years. Ever-expanding methods of media consumption – PCs, tablets, DVRs and smartphones to name a few – have led to increasing audience fragmentation and rating instability. In addition, the proliferation of consumer data now available to marketers has generated a demand for better targeting in media campaigns. These shifts have created both challenges and opportunities in the local marketplace and addressing them will require a pivot from the existing rating currency to one based on impressions.
But how did audiences become so fragmented in the first place?
How Did We Get To This Point?
Rating-based currency has been the gold standard for television viewership measurement in the local markets since Nielsen first began reporting on it in 1950. Buying off of ratings worked extremely well in the halcyon days of broadcast television when just three networks ruled the airwaves. Advertisers paid for programming that aired at a fixed day and time and that delivered massive audience scale. In such a stable environment, ratings were an ideal currency.
However cracks in the foundation began to appear in 1976 when WTCG, the country’s first basic cable network, was launched, marking the beginning of a massive thirty year expansion in cable and satellite growth.[ii] Today, cable subscribers have, on average, over one hundred different channels to choose from.[iii] The result has been a precipitous decline in individual program ratings as the audience pie has been sliced into smaller and smaller pieces. Household ratings for NCIS, the top program in 2012-2013 were a mere 39% of what the top program from 1976-1977, Happy Days, achieved.[iv]
In addition to cable’s expansion, time-shifted viewing came into wide use with the advent of digital video recorders (DVRs) in 1999 and viable video-on-demand (VOD) options a few years later, calling into question who was watching programs and ads that networks and advertisers were investing so heavily in and when were they watching them.[v] [vi] Since that time, audiences have steadily moved away from scheduled viewing habits towards an expectation of being able to choose where and when they will consume video content.
The latest and greatest challenge to traditional media is, of course, the internet and the technology that it has helped to foster. Providers such as Hulu, YouTube and Netflix have shattered the mold when it comes to appointment television. No longer are viewers tied to their living rooms at a set day and time if they want to watch their favorite program.
Nielsen, along with the rest of the industry, has spent the past several years playing catch-up. Time-shifted data streams, increased sample sizes, adjustments to HUT/PUT methodology in local people meter markets to better reflect time-shifting, OCRs (online campaign ratings) and integrating broadband-only homes into their local samples – all have been rolled out in the last several years. All of this illustrating just how much has changed in a relatively short period of time. To date, however, rating erosion continues and instability still reigns in the local broadcast world.
The viewing audience has been spread so thin, across so many channels, that many programs and stations are no longer considered for purchase by media buyers using a rating-based model due to a perceived absence of viewership. In reality, viewership exists in many of these areas. The ratings have just fallen victim to the rounding associated with a metric representing a share of audience rather than a whole number. Impression-based buying would bring those programs and stations back into play. Knowing that the difference between consideration and non-consideration can often be fractions of a rating point, that’s an important benefit when achieving communication goals requires going deeper into a market’s inventory than ever before.
The Silver Lining
All is not doom and gloom, however. As mentioned earlier, technological advances have brought both challenges and opportunities. If fragmentation and rating instability are the negative result of a changing marketplace, advances in targeting and automation are the flip side of the coin, making it possible to reach the right audience more effectively and efficiently than ever before.
Today, one solution to the problem of fragmentation is using data, overlaid with impressions, to hyper-target, essentially shifting from a one-to-many model to a one-to-one model. Addressable campaigns are impression-based buys that target individuals based on several key data points (i.e. income, interests, education, home ownership, and intention to buy to name but a few).
Once a strategy reserved for digital transactions, today many media companies are marrying consumer data with television set-top box data, automating the transactional processes while they’re at it, to provide true addressable capability on a local level. Impressions are a far superior metric for models such as these, ones where individuals behind the screens are the targets, not an entire demographic segment.
But Seriously, Why Impressions?
Still not convinced? Let’s dig deeper into a couple more of the inherent benefits local media would see from a change to an impression-based currency.
1. Alignment With Other Media – Impressions are the closest thing to a common currency between media that exists. Buying local media off of CPMs would ease the execution and evaluation of cross-platform opportunities. Television and digital are inextricably linked in today’s media environment. Popular programs beget social media activity and vice versa, so it only makes sense that campaigns strategically incorporating both will be pursued more and more frequently. [vii]
2. Efficiency – Impression-based buying enables greater cost efficiency, both in media pricing and in process improvements. As alluded to earlier, using impressions in place of ratings will lead to an increased supply of consideration programs for media buyers to purchase. As supply increases, demand and prices will decrease.
Addressable campaigns, which use impressions as their preferred buying metric, can eliminate message waste by targeting consumers that are in-market or highly likely to be a prospective customer. Clients pay only for the audience they want.
Buying programmatically, again a method that employs an impression-based model, automates the transactional processes involved in media campaign negotiations, leading to cost savings over time.
Where Do We Go From Here?
Recently, Billy McDowell, chair of the Center for Research Excellence’s Local Measurement Committee, was quoted as saying, “Local TV needs measurement to evolve, but we should also evolve the way current data are used”.[viii]After nearly sixty-five years of exclusively using ratings as its currency, local television stands at a crossroads. The time for that evolution is now.
Fragmentation, shifting, media consumption habits and advances in technology have all illustrated the need and the benefit of switching to an impression-based model. Doing so will help address declining and inconsistent ratings, create addressable campaign options, align all mediums with a common currency and ease cross-platform executions. It will allow local media to be more flexible at a time when one-to-one exchanges between advertisers and consumers are becoming a necessity.
The future of local media is bright. It is perfectly positioned to take advantage of the environment it lives in today. Local media can deliver the best of both worlds – large, scaled-up, upper-funnel, branding campaigns and hyper-targeted, addressable, lower-funnel, retail campaigns. It can do all of this while also delivering local talent, local programs, and local relevance to a media buy. Transitioning to an impression-based currency is a vital part of ensuring that local media takes advantage of the unique position that it is in and realizes its full potential in an ever-changing media world.
[i] “Celebrating 90 Years of Innovation”; http://sites.nielsen.com/90years/; accessed 3/27/14
[ii] “Cable television in the United States”; http://en.wikipedia.org/wiki/Cable_television_in_the_United_States; accessed 3/27/14
[iii] “Evolution of Cable Television”; http://www.fcc.gov/encyclopedia/evolution-cable-television#evol; accessed 3/27/14
[iv] “ Nielsen Ratings”; http://en.wikipedia.org/wiki/Nielsen_ratings; accessed 3/27/14
[v] “video-on-demand (VOD)”; http://www.britannica.com/EBchecked/topic/1019647/video-on-demand-VOD; accessed 3/27/14
[vi] Robert J. Thompson; “Television in the United States”; http://www.britannica.com/EBchecked/topic/1513870/Television-in-the-United-States/283658/The-new-technologies#ref1058917; accessed 3/27/14
[vii] George Winslow; http://www.broadcastingcable.com/news/technology/nielsen-twitter-activity-influences-tv-viewing/50180?rssid=20102; accessed on 3/27/14
[viii] “Local Measurement Mini-Summit”; http://researchexcellence.com/newsletters/online/issue9.html; accessed 3/27/14