NBC's Smart Approach

NBC’s announcement today that it will work with TiVo to provide its advertisers with more precise data is both brave and smart.

In a world where viewership is declining – although TV is arguably more popular than ever – it takes a lot of chutzpah and vision to realize that you need to be as upfront and specific as possible about who is watching you. The way TV networks collect advertising dollars – in huge chunks each May, with the rest trickling in later – is definitely changing, but how exactly has yet to be determined. How advertising is measured also is definitely changing – it’s going to become far more precise and in-depth – and that process has only just begun as well.

I know that NBC has far more information about who is watching its programs than I have on a daily basis. I get ratings information from networks, but I don’t get a ton of detailed demographic information. I don’t get lists of the most popular shows among 18-to-49 year olds who make more than $100,000 per year and other specifics unless I ask for them, but NBC and all the other network ratings’ departments see such slicing and dicing of data every day. That’s why NBC might go ahead and renew a show like The Office or Friday Night Lights or 30 Rock even though the daily ratings the media see don’t justify that decision.

NBC also is using IAG’s engagement information to better understand whether viewers watch and retain information about the advertising sold within the shows. It’s great if Heroes attracts 12 million viewers and a 5.3 rating and 12 share among viewers 18 to 49 – which is what the show did last night, in fact, according to Nielsen’s fast nationals — but how many of those people watched the ads? How many more people watched the show later on their DVR? (Me, for example) And how many of those watched any ads at all?

NBC is brave because it’s bracing the inevitable future instead of putting it off until it absolutely has to make the switch. NBC is showing willingness to get paid for exactly what it’s providing, instead of on the possibility of what it’s providing. Advertisers are used to paying big bucks for big audiences, even though they’ve had no real way to measure whether that method is effective. In the near future, advertisers will know exactly who they are reaching and for what they are paying and their spending should be far more efficient. It’s the difference between carpet bombing a city and smart bombing a target, to make what is probably an unfortunate analogy.

 That difference is big, but that’s where the industry is rapidly heading. The switch might be painful at first, but ultimately just as profitable.