The launch next week of Nielsen's new local people meter (LPM) in New York will likely throw TV's biggest ad market into temporary turmoil. Total ratings will probably fall for TV stations, while cable ratings increase. Sweeps programming stunts will be downplayed if not eliminated. And ad sales will be thrown into chaos as buyers and sellers struggle with new pricing formulas.
That's what happened when Boston became the first market to adopt the new ratings method two years ago.
With the people meter, stations and advertisers get a full ratings report every day, not three times a year. Incentives to hype the ratings vanish, because advertisers no longer rely on specific periods in pricing and buying ads. For viewers, it may mean fewer sensational newscasts like "Salad Bars That Kill" during sweeps in May, November, and February—when prices are set for local ad sales under the old system.
"We no longer program and promote our TV stations to be successful in just three artificial sweeps months," says Paul La Camera, president and general manager of WCVB Boston. "We have to be sure to have a quality and compelling product on the air every day all year. It's far more rational."
If initial test results are any indication, ratings in New York will likely drop for some stations, like WNYW and WWOR, both owned by Fox, which has mounted an aggressive lobbying campaign to force Nielsen to delay implementation of the ratings service.
Fox's initial anger with the preliminary ratings, coupled with protests from minority groups, delayed the original launch in New York two days before its scheduled start. Those numbers showed Fox's New York stations down 25%-30% in the ratings, with sharp declines among African-American and Hispanic viewers. Fox claims that the new system undercounts African-Americans by 25%. Nielsen strongly denies it but postponed the rollout until June 3 in order to prove its case.
However, even some supporters of the local people meter think there's a problem that warrants more study in New York. They say the issue is not undercounting, but the fact that an unusually large percentage of African-American homes are producing unusable data. One theory: Household members aren't logging in and out of the people meter properly when they watch TV.
"We're not very happy with the New York sample right now," says Fred Reynolds, CEO of the Viacom TV Stations Group. He stresses, though, that he is supportive of the local people meter "if it's done right."
The New York problem, he says, is "very solvable" and can probably be accomplished if Nielsen returns to the African-American households in the sample and retrains viewers to use the meter correctly. Reynolds says there were similar problems in Boston with different groups of viewers and Nielsen solved it with retraining. "Now we love it," he says of the Boston people meter.
Nielsen confirms that more than 30% of the African-American homes in the New York sample were putting out unusable data until last month (compared with an average 14% fault rate across the sample). Nielsen says that rate is dropping and there is no need to postpone the new service again.
Last week, Univision became the sole holdout among broadcasters to buy the people meter service in New York. The company's gripe: not enough young Hispanics in the sample.
In Boston, viewing levels for TV stations remain significantly below what they were before the people meter was introduced in 2002. Both buyers and sellers say there has been a 15%-20% ratings drop overall, most of which has gone to cable. And TV ad revenue in the market is down—by 4.9% in 2003 versus 2002, according to the BIA Financial Network—but there's some debate about why.
Mark Fratrick, vice president of BIA, which tracks local ad dollars, attributes at least some of the drop to the local people meter. Others blame the economy. And BIA predicts Boston revenues will climb 8% this year.
The ratings dip for Boston broadcasters has resulted in higher prices for local advertisers. As a result, many advertisers are spending the same amount for fewer ads.
"People's viewing patterns didn't change; the ratings methodology changed," says Karen Agresti, director of local broadcast, Hill Holiday, a Boston-based ad agency. "So, if you had to buy 100 rating points to achieve your marketing goals before the LPM, you only have to buy 80 rating points now. You're converting to a different currency."
New England Cable News Network President Phil Balboni likes the conversion rate. "Ratings were up 29% in the first quarter for the Boston-based channel. He predicts 15% growth for the year. "Our ratings are dramatically better under the new system." No wonder he's a fan.
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