Revised Guarantees On Who's Watching
IF you receive test results you don't like, you should: A) Change the way you measure them.
B) Change the way you interpret them.
C) Change the promises you made about how high they would be.
D) A, B, and C.
If you answered ``D,'' you have the same idea as America's three major TV networks, which don't like their viewership test results for the first quarter of this year.
Faced with the first drop in overall TV viewing in the history of the medium (4.5 percent lower compared to 1989), each network is looking for ways to protect itself from the loss of millions in advertising revenue - $360 million in one year - if the 4.5 percent drop continues.
Using a complex formula that ties its promises of delivered viewers to three-year averages, ABC last week announced it will be ``instituting a new basis for audience assurances'' for the fall season.
NBC, ``troubled by the unexplained [ratings] aberrations,'' said in a statement that the ABC plan looked ``actionable and equitable.'' NBC too, will modify its formula.
CBS, at this writing still assessing the fallout from ABC's announcement, said the current form of measurement is ``not one we can expect our sales force to base negotiations on without accommodation.''
``The networks don't like the rules, so they're changing them,'' says Betsy Frank, a senior vice-president at Saatchi & Saatchi Advertising. ``We're very, very angry.''
``For the networks to change the system to fit their needs is very difficult to swallow,'' says Bruce Heim, vice-president of the Bozell, Jacobs, Kenyon, and Eckhardt ad agency. ``If the figures for something else don't pan out the way they want, are they going to say, `Oh, we don't like these numbers. We're going to use another method'?''
The ABC plan that is causing the furor concerns ``make-goods.'' When networks sell commercial time, the rates they charge advertisers are tied to guaranteed levels of viewership. If ratings show that that level wasn't reached, the network compensates by rerunning the commercials (without additional charge) in time slots that make up the guaranteed number of viewers; the free reruns are known as make-goods.
ABC now says it won't provide make-goods if the program rating shortfall is less than the overall decline in people using TV.
Thus, if an advertiser buys time on ``MacGyver,'' and ratings show an audience 10 percent below the network's guarantee, ABC will provide a make-good only if Nielsen figures for people using TV during the month in question don't show a decline of more than 10 percent against three-year averages.
``Basically we're trying to make ABC accountable for our program performance, without bearing the liability we feel is caused by the Nielsen `people-meter' methodology,'' says Larry Hyams, director of research for ABC. ``We feel that using a three-year average will tend to smooth out irregularities we've been seeing lately.''
Make-goods have already cost networks between $150 million and $200 million this year.
David Poltrach, senior vice-president of research at CBS, said, ``We agree with ABC and NBC that to use the current system in the traditional way, despite mounting evidence of deficiency and instability with the people meter, would be to assume a very great risk.''
People at Nielsen and in the advertising community say they have examined and reexamined both sampling technique and technology and found there is nothing wrong with the people-meter system.
``This is just a smoke screen for the networks to cover up higher cost increases,'' says Saatchi's Frank, adding that networks will have a hard time keeping profits up this year because of fall-offs in car advertising and higher paid by the networks to cover sporting events.
The issue is particularly hot now, because over $4 billion in prime-time advertising will be negotiated in the next few weeks for the fall TV season.