June 3 - 6, 2024
Commentary
Linear TV Means Antiquated Media Planning
- by James Flynn , April 20, 2021
Over the decades both consumers and products have vastly diversified, and targeting capabilities have advanced dramatically, but the actual basis for buying and selling has remained unchanged. This disconnect between the target and the media buy has made the process of linear buying far less effective and efficient. However, the solve for it is difficult, and this type of valuation may be helpful when transitioning to the connected TV ecosystem.
This system originally worked because audiences were homogeneous enough that assumptions about consumers based on age and gender were reasonable to make.
Since then, consumers have diversified in terms of life stage timing, race, and net worth. Comparing the Silent Generation and millennials when these groups were between 18 and 33 years old, 64% of Silents were married, versus only 28% of millennials. Those who identify as only white has fallen from 78% of the population, to only 57% between these two time periods. Also, comparing finances, boomers held 21% of the nation’s net worth at a median age of 35 in 1990. When Gen X hit this mark in 2008 they held 9%, and millennials in 2023, will hold only 4%. These are all significant indicators that those same assumptions made based on age and gender, are no longer as valid.
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The reason media buying has not advanced beyond age and gender primarily lies with Nielsen, the de facto measurer of linear audiences. Nielsen’s panel only includes 45K of the 128 million households in the U.S., which makes extrapolation of advanced attributes difficult. Expanding into more homes would be very costly and possibly seen as backwards looking.
Unfortunately, at this size, age and gender are some of the only characteristics that can be extrapolated to a high degree of accuracy. Also, when considering the data points that will decide inventory value, age and gender are seen as more stable options than behavioral/contextual data and even other basic demographics.
The upside to this system has been its stability in CPM prices and transparency in methodology, two key aspects currently missing in the connected TV space. As advertisers begin to move larger amounts of budget from linear into OTT, they need a way to reconcile spot value between these two systems. In response, many OTT inventory providers have agreed to provide age and gender breakdowns in conjunction with Nielsen as a bridge between the old system and the new.
Though this current linear buying system has caused issues, change is unlikely on the measurement side due to the focus on measurement in OTT. In the meantime, most advertisers using the bridge of age and gender to evaluate TV will need to reassess when they get to the other side, where the majority of their investment is in non-linear video.
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James, two points. First, the fact that audience tonnage guarantees were and still are made based on age/ sex "targets" has little to do with how the brands position themselves ---especially when it comes to mindset appeals. When the time buyers forced the networks to provide audience guarantees it was obvious that a single, fairly broad metric was needed per buy. Also, at that time---the late 1960s-1970s---- the median age of the typical broadcast network viewer was very close to that of the population as a whole. So it was decided that three broad age breaks --18-49, 25-54 and 35+ were mutually acceptable to buyer and seller---with breaks by sex, as needed. But these absurdly broad "demos" were never seen by the brands as their "targets. It was simply a way for the buyers to protect themselves as it was evident that their ability to predict future TV show ratings was increasingly in question.
My second point concerns upfront coprporate time buying. In the good old days, the upfront represented a much smaller percentage of network ad dollars---only 50% versus 65-75%, currently. Increasingly, the advertisers have used the pooled budgets of their brands to demand CPM concessions by the sellers. The price they pay is very weak targeting for individual brands as these are all corporate sales. Until advertisers free their brands from their CPM-driven mania, you can forget about more precise targeting for most TV ad dollars.
In short, it's not Nielsen's fault---it's the fault of Nielsen's subscribers---both buyers and sellers.
Agencies should have abandoned Nielson decades ago. Tons of technology to get much better metrics, but Nielson arguably purchased many of those companies and then killed them off to maintain its monopoly. Agencies don't mind because it makes their job easier than holding linear TV to more accountability.
Dan, the advertisers and their agencies as well as the TV networks have all signed on to Nielsen for decades and in many ways they have called for and gotten improvements. When Nielsen began measuring TV in 1950, it merely took its existing thousand home ratio rating panel and converted it to TV as the homes acquired their first sets. Since then Nielsen has had to greatly increase the size of its panel and provide viewing data ---by many demos---not just age and sex. From time to time a competiotor arrives to do battle ---in one case SRI, which was funded by the three broadcast networks. But, so far, none of the challengers has shown that Nielsen is systematically producing bad data---of the sort that would affect how advertisers split up their buys by network and by program. So what was the point of changing services with all of the continuity problems that would entail?
The branding advertisers who rely on Nielsen do need some improvements in the kinds of data ( attentiveness measures, for example ) and the latest problem---not properly maintaining the panel during the pandemic----needs corrective action---which I'm sure will be soon in the works. But railing against Nielsen --as if it is some kind of con game operator is most unfair. If you have a suggestion for an alternative measurement system that can supply better viewing---not set usage ---data from a much larger and nationally projectable sample, at a cost that the various parties can justify, I'd like to hear it.
Respectfully disagree with this perspective. Linear can be bought with data-driven points such as age, gender, HHI, ethnicity, household size, geo-based, and more. The limitations of a Linear TV buy are simply because of those doing the buying. Those with expertise are well skilled in leveraging fine data points across broadcast and cable properties. We certainly do at my agency DirectAvenue.com
There is more of a difference between 'old methodology agencies' and data-driven ones that measure linear with KPIs in mind. Nielsen is only one of several measurement systems that an agency must employ to fully serve client TV advertising needs, and essential to providing true attribution measurement. I agree that Linear TV CPMs are stable, and less costly than CTV/OTT options, however CPMs with localized Linear TV buys, just like their OTT counterparts, will be more expensive as you stack data and target. At the end of the day, it's always going to be about performance marketing. A general Linear TV strategy focused on GRP or upfronts strategies offers no advantage in attaining performance. It is only guaranteeing a large audience.
I did not refer to Nielson as a "con game." Look at how many competitive services Nielsen has acquired over the last 20 years - take a look at these companies. In any other industry, Nielsen is considered a monopoly and when you look at the technologies they have acquired but have not implemented in their targeting, it is obvious that Nielsen is killing competition vs. innovating - http://mandasoft.com/acquisition/?Source=segmentView&SearchID=C102960661
The reason why they get away with this is because agencies allow them to and nobody is holding them to innovate more quickly.
With the technologies that Nielsen has acquired, they can easily show how audiences are probably lower than they are already reporting, and then what happens to the billions of linear dollars? Agencies will have to work harder to place that money in more digital platforms. It's to easy to spend chunks of budgets on linear.
Dan, the agencies don't rule Nielsen, if anything, it's the sellers that pay by far the most and they are the ones that Nielsen, understandably, is more attentive to. For your information, advertisers do not invest in TV campaigns simply as a function of Nielsen audience projections. I happen to believe that Nielsen is not really measuring average commercial minute "viewing" but, rather, is measuring average minute content-on-screen and assuming that claimed program viewers are watching the ads . This is not Nielsen's fault as the system was never supposed to produce average minute----or second ---viewing data. Nielsen has simply been pushed to provide numbers that it's system can't really produce. That said, since audience guarantees are made for entire ad schedules on a given network, not individual shows or episodes of shows, Nielsen's sample size---providing the panel is properly maintained---is quite adequate to give a worthwhile reading on gross audience delivery in most cases.
Returning to the issue of Nielsen's monopoly status, that's simply becasue the buying and selling system can't function if each seller gets to choose what rating service it uses to supply its audience "currency". If there were, say three Nielsens, all churning out daily ratings with different results, there would be chaos. So the challengers have had to prove that they can do it better and unseat Nielsen---and, so far, they haven't supplied such proof.
Finally, branding advertisers continue to rely heavily on "TV" despite various flaws as well as their own poor time buying practices, not because of Nielsen's audience projections but because they believe that it works. That's why there is so much interest in AVOD. It's simply "TV" offered in a new venue, with different metrics, targeting capabilities, etc. ---as well as problems such as ad visibility, fraud,etc. Over time many advertisers will use both types of "TV", not just one. And most viewers will get their "TV" one way or another---or several ways. The ads will follow the audience. It's not an either or situation.
Thank you Ed. You saved me lots of typing.
In Australia was use the term 'currency'. So in Australia our TV 'currency' is OzTAM. It is primarily funded by the major broadcasters and is subscribed to by agencies, production companies, regulatory bodies etc. There are 'tech committees' that oversee the system, and ensure that it changes and grows to meet how the market changes and grows. The tech committees are made up of OzTAM, broadcasters, buyers, advertising associations etc. and an auditor.
The system has worked in a collaborative and collegial way for the past few decades meaning that 'the market' has little need to query results. For example, there are some very minor 'community' or 'local' TV channels. Smaller entities are WAY harder to accurately report on, and they do not have the means to fund the additional cost, so pragmatically they are not included in the reported data. Similarly, accurately measuring TV viewing in public places is also very problematic, so the 'universe' to be measured is in households. The market therefore also accepts that the reported viewing is less than the actual viewing, knowing that chasing the last few percent of viewers would cost the same as the mass of viewers.
That is, we have a 'currency' that can be accepted as a tradeable measure with little if any qualms. We have over 150 demographics available, but over time, one single demographic accounts for around a quarter of all buying - at the marketers request. While the current end-consumer may be more precisely reflected by a 'tighter' cohort of demographic variables, it is from those viewers outside of the tighter cohort that new consumers can be found resulting in brand growth.
Today we do have highly diversified audience targeting for linear. Well beyond Nielsen, but including them along with cable box data, and a lot more.
Performance/DRTV/DTC agencies have never solely relied on Nielsen to deliver on their clients KPI's. They have many other tools in their tool box that allow them to buy and measure performance on different media platforms without heavily relying on Nielsen and/or waiting around for one measurement to be established.
James, you make important points about the shortcomings in TV media planning, but it's not fair to blame them on Neislen. The TV ad sellers own the currency and pay Nielsen to support it. The TV ad buyers, for the most part, have been pretty content to operate in the sex/age demo tonnage world, thus have not forced the sellers to change.
I don't think that there is any question that the future of TV meedia will be about more granularity, a tighter connection between planning and buying, more automation, and more closed loop attrbitution. Nielsen isn't the problem, but is just a sympton of a marketplace that never felt things were broken enough to fix.