Much doom and gloom has been spread in recent press reports about “cord cutting” and the impact of digital audience trends on broadcast and cable TV viewing. Some of this stems from the short-term focus of Wall Street analysts and TV trade and business journalists on “overnight” ratings data, which, as we now all know too well, fail to capture the extent and diversity of viewership of long-form, non-sports and non-news programming on all screens.
Many of my colleagues involved in the business of selling local and national TV advertising consider the legacy ratings data providers to be lagging in their efforts to adapt measurement to newer viewing habits. Newer entrants are challenged to provide apples-to-apples measurement that is industry-accredited.
These developments may have shaken confidence in the state of ratings in our business.
Some have even likened the situation in our industry to that depicted in the Oscar contender The Big Short — which, like the Michael Lewis best-seller on which it is based, addressed the much-maligned oversight of the then-shaky mortgage-backed securities market by the debt-ratings agencies Moody’s and Standard & Poor’s.
It would be a troubling comparison. Audience ratings are the currency of advertising and, just as with debt ratings, they need to be seen as trustworthy, reliable and unbiased.
But I’d like to debunk any such comparison, for these reasons:
• While many of the principals in The Big Short felt the debt-ratings agencies weren’t heeding their concerns, TV ratings providers such as Nielsen and comScore/Rentrak are listening closely to both the buy-side and the sell-side of advertising and are focused on making substantial investments in developing a greater understanding of where and how people are watching “TV”– whether big screen, small screen or mobile. People throughout the industry may argue over the speed of progress, but they can’t argue that the issues aren’t being debated frankly, openly and vocally.
• The debt markets of The Big Short may have been disproportionately influenced by the Wall Street ratings agencies – but the growing availability of viewing data, from set-top boxes and elsewhere, is providing both a counterbalance and a supplement to legacy ratings methodologies in the planning and buying of TV. In other words, like the fixed income market which has evolved to see ratings as a supplement, and which now uses data to inform pricing and allocation decisions, the media industry will similarly evolve such that the ratings are only a component to media pricing and allocation decisions.
• Some might argue that, much as real estate became overvalued in The Big Short, so too is some TV inventory. However, TV is still the best platform to reach the right audiences. Yes, there is more content than ever; but with smarter media planning and buying, marketers can apply targeted advertising to realize appreciable growth.
• In The Big Short, the big banks dominated the economy and small community banks seemed diminished. But in the TV ecosystem, consumers are persuaded by locally relevant advertising for the simple reason they want to shop locally. According to Screenwerk, consumers would rather shop at local businesses versus a national outlet because it helps support the community and the local business may be better equipped to personalize services. And local television reaches nine out of 10 U.S. adults, according to a State of the News Media study.
All this being said, there is one point of comparison I’d endorse: the aftermath of The Big Short. Banks have been forced to become more accountable, albeit not as much as some would like. The TV industry also has been forced to change, and measurement is evolving in order to compete with the perception that digital advertising is more accountable.
This change toward greater accountability will continue to take time and effort. True marketplace price equilibrium between the supply and demand of total linear and digital video gross rating points may not entirely be achieved until the industry can capture and count rating points in an apples-to-apples fashion across all video content and across all screens. But, unlike the protagonists (and others) in The Big Short, people throughout the advertising and television industries understand the challenges and are dealing with them forthrightly in an honest, open dialogue. Cynics toying with the idea of “shorting” the TV advertising ecosystem just might get burned.
Mark Lieberman joined Viamedia, the country’s largest independent TV advertising management solutions company, as president and CEO in January 2014 after an extensive career in the media and technology industry. Prior to Viamedia, Mark was the cofounder, chairman and CEO of TRA, a leading media analytics, software and research technology firm sold to TiVo.