Perhaps not since 1983 — when the entire advertising community applauded the landmark Cable Audience Measurement Study (better known as CAMS) — has the cable industry stood at such a crossroads in commercial audience measurement.
Today, those crossroads run right through Boston, where Nielsen Media Research has deployed its People Meter audience-ratings system — a technology that has been utilized nationally since the late '80s, but never before at the local level.
THE GREAT HICCUP
It would make for a very nice story to say the release of CAMS nearly two decades ago really shook up the ad community. It should have. It was the most comprehensive validation study of diary measurement, and we've never seen anything like it since and I doubt we ever will.
The results rendered the inadequacies of the diary system in bold relief, and also revealed that there was no other diary-like alternative that worked. CAMS gave those of us in the cable industry all the bad news we were looking for and more, including audience underestimates as high as 50 percent.
Did CAMS set off a chain reaction? Maybe a hiccup. In retrospect, the diary results were so horrific that the entire industry descended into a near-catatonic state. Perhaps the only real tangible result was that CAMS spurred Nielsen to introduce passive local household set-tuning meters into as many markets as possible, so we didn't have to digest raw diary data.
What we have today is a half-baked combination of meters and diaries, so the bottom line is we still have the same old terrible, discredited diary in all 200-plus Nielsen DMAs.
WILL WE PAY?
But that is about to change, at least in Boston. Within the next 12 months, Nielsen will pull the plug on its meter/diary system and generate TV audience estimates exclusively from the People Meter.
Here are the crossroads at which we stand: Will our industry fund the People Meter expansion beyond Boston? If major-market MSOs do not, it is inconceivable that broadcasters would, despite the pleas of agency personnel who fully support local People Meters but will not be asked to pay the lion's share of their deployment costs.
Without major cable support, the People Meter will wither on the Beantown vine, and local cable audiences will be grossly understated and undervalued.
WHAT'S IN IT FOR NIELSEN?
The short, crass answer is "money." But don't underestimate the internal embarrassment at Nielsen over local diary measurement.
On the one hand, local measurement is a very profitable business. On the other hand, it is hardly the type of measurement device that a first-class worldwide research organization wants to be known for — especially when it has a significantly more accurate People Meter system operating in so many other countries and in the U.S. national television market. Try as they may to fix the diary Nielsen can't get that "old dog to hunt."
Ultimately, it is Nielsen's goal to achieve sampling synergies between the national and local People Meter. For example, roughly more than 100 meters from the national sample can be found in the Boston DMA. These will be combined with another 400-plus People Meters deployed locally.
Similarly, the locally deployed meters will be properly weighted so that they can be rolled into the national sample. Nielsen's goal is to cross-fertilize their People Meter sample in the top 10 DMAs.
WHAT'S IN IT FOR US?
At one level, it seems obvious that our industry should embrace the People Meter system. It is the answer to the severe diary understatement of cable as revealed by CAMS. But MSOs are going to have to take a hard look in the mirror and ask themselves a number of questions before they pay for local People Meters.
Here's one question: What kind of sales operation do they want to run — ratings-based, conceptual sell or some combination of the two? Nationally, every cable network sells both ways, but at the end of the day ad revenues are tied to People Meter ratings.
The People Meter system is like the U.S. Treasury, but MSOs won't have any control over the denominations and quantities coming off the presses. But once you agree to turn them on, the ratings are the currency, and whether you like it or not, you will be in the ratings business.
WHAT YOU SHOULD DO
If you haven't already done so, now is the time to take out a very sharp pencil and perform a few cold calculations. For example, for each cable network on which you insert, multiply the national People Meter coverage rating by the insertable sub count for that network. Factor in the number of avails and your historic sell-out rates for each network, and you can derive an unbiased estimate of the total local impressions available for sale. Then apply TV marketplace CPMs to your impressions, and you'll get an estimate of ad revenues.
There are two caveats: The first is that the People Meter will confer a level of legitimacy to your inventory that has never been experienced before. That should translate into higher overall demand, and this is especially true for secondary and tertiary networks, which are penalized the most by diary measurement. Higher demand, coupled with geographic selectivity, may also allow you to price beyond broadcast-level CPMs; thus, it is advisable to create several CPM scenarios for the exercise suggested above.
BEYOND THE TOP-10
It would be no small achievement for Nielsen to achieve its stated goal of deploying People Meters in the top-10 major markets. But maybe the effort won't stop there.
Twenty years ago, no one ever thought Nielsen would deploy household set-tuning meters in 50 DMAs. As a result, there's a reasonable expectation that Nielsen can push beyond 10 markets with the People Meter, but ultimately there will be well over 150 markets that will never see People Meter measurement, at least in the context of current technology and cost trade-offs.
In these non-People Meter markets, we welcome anything that doesn't have a paper diary attached to it. That can take the form of numerous approaches, including AdCom's set-tuning meter sample, coupled with modeled demographics, or NCC's fusion techniques. Indeed, even in People Meter markets, there will be numerous small-sized cable systems that cannot directly utilize the People Meter data and will need to apply one of NCC's fusion equations.
Local broadcast affiliates have raised all sorts of red flags about People Meters, including sample sizes, the efficacy of active button-pushing and out-of-home viewing and guest viewing — not to mention disproportionate cooperation levels, fault rates and a host of other issues. Even our own industry has raised red flags, including the fact that People Meters will conform to DMA lines, a 50-year old geographic viewing definition that has everything to do with broadcast and nothing to do with the geographies served by cable systems.
Undoubtedly, there should be an ongoing dialog and action plan to improve People Meter measurement, and that is a role capably handled by the Media Research Council. But I wouldn't let these legitimate concerns slow the momentum we've gained on local People Meters.
Context is everything, and the goal here is to replace a terribly flawed diary system with a People Meter system that actually works. There is, of course, an issue that transcends ad sales: Our industry's No. 1 priority is providing local subscribers with the programming they want to see.
Failure to do so is unthinkable. We can (and do) make educated guesses about viewing every day, based on national ratings. But there is such a thing as regional viewing preferences, and there is only so much channel capacity to go around.
How can MSOs possibly make rational carriage decisions with local diary measurement? We are indeed at a crossroads.
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