Sometimes, Viewers Don't Skip Ads

New data says DVR users see 40% of the commercials
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Nielsen figures confirm what broadcast network executives have been saying all along: A lot of viewers really do watch commercials on DVR playback.

Last week, the ratings giant released standardized data of DVR usage and commercial ratings. “A lot of buyers really were counting on this data as the key reference point for the upfront negotiations,” says Dave Poltrack, CBS research chief.

With 95% of viewers watching DVR playback within three

days (“live-plus three” in Nielsen parlance) networks are jockeying for a measure of credit from advertisers for DVR viewing.

According to Poltrack, up to 40% of those live-plus three viewers watch commercials, even though the DVR allows them to skip through.

But advertisers are far from reaching a consensus on the upfront currency. For them, the new Nielsen data, actually a snapshot of the first week of May, only adds more variables to consider.

“We're a distance away from having anything that is known as a standard,” says Aaron Cohen, senior VP of broadcast at Horizon Media. Nielsen's commercial minute data streams and the issues surrounding DVR playback, says Cohen, “is confusing the sellers a lot more than they anticipated it would. There is no marketplace as yet and normally, by the week after Memorial Day, somebody is in negotiation for something.”

Andy Donchin, director of national broadcast for Carat USA, predicts his agency will push for a commercial ratings system rather than the currently-used program ratings benchmark since, he believes, the commercial ratings will eventually be a more “precise” measurement.

The Nielsen data had some quirky surprises, though. The Office, a series with high DVR viewing, actually gained commercial ratings points in the live-plus three measurement.

The fact that millions of viewers actually sit through commercials is not a huge revelation, however having standard data to illustrate it is, at the least, intriguing.

The broadcast networks are hoping it's worth additional money from advertisers. “We're not averse to giving networks credit for DVR playback, as long as people are watching the commercials,” Carat's Donchin says.

Poltrack's not surprised that many viewers don't skip the commercials. “You're watching a show, and the commercials come on and you may be having a conversation about what happened in the last scene with your spouse, and a couple commercials run while you're doing that,” Poltrack says.

Nielsen didn't add DVR households into their national sample until December 2005 when the devices became too numerous to ignore. Next year, Nielsen expects DVR penetration to reach 23%, and 40% by 2011.

“Change is hard,” says Alan Wurtzel, president of research for NBC Universal. “This is a big change that billions of dollars and jobs rest on, so people are going to be anxious. What this is doing is acknowledging that the way TV is consumed is different, and the way we measure it has to be different. 'Live' is an irrelevant currency.”

Live-plus-three will not suit all buyers. Movie studios need viewers to see their trailer ads on Thursdays before big Friday openings. Networks have said they will accommodate those concerns.

If the broadcast networks get credit for some DVR viewing, it could mean millions of dollars in revenue. For cable networks, the DVR picture is fuzzier.

According to Nielsen, in homes with DVRs, 42% of all primetime broadcast network programming was watched later, in comparison to only 15% of cable programming. Turner Broadcasting research chief Jack Wachslag says that's because DVR users tend to record original programs and broadcast has more of them.

But the new ratings will eventually play a big role. “In the end,” says Wurtzel, “to the extent that we can measure audience and the advertisers' effectiveness of reaching that audience, I think that's ultimately the holy grail.”

E-mail comments to marisa.guthrie@reedbusiness.com

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