The changes to technology that have rocked the media landscape in recent decades have accelerated into overdrive in the past ten years.\u00a0 Ever-expanding methods of media consumption – PCs, tablets, DVRs and smartphones to name a few – have led to increasing audience fragmentation and rating instability.\u00a0 In addition, the proliferation of consumer data now available to marketers has generated a demand for better targeting in media campaigns.\u00a0 These shifts have created both challenges and opportunities in the local marketplace and addressing them will require a pivot from the existing rating currency to one based on impressions.<\/p>\n
But how did audiences become so fragmented in the first place?<\/p>\n
How Did We Get To This Point?<\/b><\/p>\n
Rating-based currency has been the gold standard for television viewership measurement in the local markets since Nielsen first began reporting on it in 1950.\u00a0 Buying off of ratings worked extremely well in the halcyon days of broadcast television when just three networks ruled the airwaves. \u00a0Advertisers paid for programming that aired at a fixed day and time and that delivered massive audience scale.\u00a0 In such a stable environment, ratings were an ideal currency.<\/p>\n
However cracks in the foundation began to appear in 1976 when WTCG, the country\u2019s first basic cable network, was launched, marking the beginning of a massive thirty year expansion in cable and satellite growth.[ii] Today, cable subscribers have, on average, over one hundred different channels to choose from.[iii]\u00a0 The result has been a precipitous decline in individual program ratings as the audience pie has been sliced into smaller and smaller pieces.\u00a0 Household ratings for NCIS<\/i>, the top program in 2012-2013 were a mere 39% of what the top program from 1976-1977, Happy Days<\/i>, achieved.[iv]<\/p>\n
In addition to cable\u2019s expansion, time-shifted viewing came into wide use with the advent of digital video recorders (DVRs) in 1999 and viable video-on-demand (VOD) options a few years later, calling into question who was watching programs and ads that networks and advertisers were investing so heavily in and when were they watching them.[v]\u00a0 [vi] Since that time, audiences have steadily moved away from scheduled viewing habits towards an expectation of being able to choose where and when they will consume video content.<\/p>\n
The latest and greatest challenge to traditional media is, of course, the internet and the technology that it has helped to foster.\u00a0 Providers such as Hulu, YouTube and Netflix have shattered the mold when it comes to appointment television.\u00a0 No longer are viewers tied to their living rooms at a set day and time if they want to watch their favorite program.<\/p>\n
Nielsen, along with the rest of the industry, has spent the past several years playing catch-up.\u00a0 Time-shifted data streams, increased sample sizes, adjustments to HUT\/PUT methodology in local people meter markets to better reflect time-shifting, OCRs (online campaign ratings) and integrating broadband-only homes into their local samples \u2013 all have been rolled out in the last several years.\u00a0 All of this illustrating just how much has changed in a relatively short period of time.\u00a0 To date, however, rating erosion continues and instability still reigns in the local broadcast world.<\/p>\n
The viewing audience has been spread so thin, across so many channels, that many programs and stations are no longer considered for purchase by media buyers using a rating-based model due to a perceived absence of viewership.\u00a0 In reality, viewership exists in many of these areas. The ratings have just fallen victim to the rounding associated with a metric representing a share of audience rather than a whole number.\u00a0 Impression-based buying would bring those programs and stations back into play. Knowing that the difference between consideration and non-consideration can often be fractions of a rating point, that\u2019s an important benefit when achieving communication goals requires going deeper into a market\u2019s inventory than ever before.<\/p>\n
The Silver Lining<\/b><\/p>\n
All is not doom and gloom, however.\u00a0 As mentioned earlier, technological advances have brought both challenges and <\/i>opportunities.\u00a0 If fragmentation and rating instability are the negative result of a changing marketplace, advances in targeting and automation are the flip side of the coin, making it possible to reach the right audience more effectively and efficiently than ever before.<\/p>\n
Today, one solution to the problem of fragmentation is using data, overlaid with impressions, to hyper-target, essentially shifting from a one-to-many model to a one-to-one model.\u00a0 Addressable campaigns are impression-based buys that target individuals based on several key data points (i.e. income, interests, education, home ownership, and intention to buy to name but a few).<\/p>\n
Once a strategy reserved for digital transactions, today many media companies are marrying consumer data with television set-top box data, automating the transactional processes while they\u2019re at it, to provide true addressable capability on a local level.\u00a0 Impressions are a far superior metric for models such as these, ones where individuals behind the screens are the targets, not an entire demographic segment.<\/p>\n
But Seriously, Why Impressions?<\/b><\/p>\n
Still not convinced?\u00a0 Let\u2019s dig deeper into a couple more of the inherent benefits local media would see from a change to an impression-based currency.<\/p>\n
1.\u00a0<\/b>Alignment With Other Media \u2013<\/b> Impressions are the closest thing to a common currency between media that exists.\u00a0 Buying local media off of CPMs would ease the execution and evaluation of cross-platform opportunities.\u00a0 Television and digital are inextricably linked in today\u2019s media environment.\u00a0 Popular programs beget social media activity and vice versa, so it only makes sense that campaigns strategically incorporating both will be pursued more and more frequently. [vii]<\/p>\n
2.\u00a0<\/b>Efficiency \u2013<\/b> Impression-based buying enables greater cost efficiency, both in media pricing and in process improvements.\u00a0 As alluded to earlier, using impressions in place of ratings will lead to an increased supply of consideration programs for media buyers to purchase.\u00a0 As supply increases, demand and prices will decrease.<\/p>\n
Addressable campaigns, which use impressions as their preferred buying metric, can eliminate message waste by targeting consumers that are in-market or highly likely to be a prospective customer.\u00a0 Clients pay only for the audience they want.<\/p>\n
Buying programmatically, again a method that employs an impression-based model, automates the transactional processes involved in media campaign negotiations, leading to cost savings over time.<\/p>\n
Where Do We Go From Here?<\/b><\/p>\n
Recently, Billy McDowell, chair of the Center for Research Excellence\u2019s Local Measurement Committee, was quoted as saying, \u201cLocal TV needs measurement to evolve, but we should also evolve the way current data are used\u201d.[viii]After nearly sixty-five years of exclusively using ratings as its currency, local television stands at a crossroads. The time for that evolution is now.<\/p>\n
Fragmentation, shifting,\u00a0 media consumption habits and advances in technology have all illustrated the need and the benefit of switching to an impression-based model.\u00a0\u00a0 Doing so will help address declining and inconsistent ratings, create addressable campaign options, align all mediums with a common currency and ease cross-platform executions.\u00a0 It will allow local media to be more flexible at a time when one-to-one exchanges between advertisers and consumers are becoming a necessity.<\/p>\n
The future of local media is bright.\u00a0 It is perfectly positioned to take advantage of the environment it lives in today.\u00a0 Local media can deliver the best of both worlds \u2013 large, scaled-up, upper-funnel, branding campaigns and hyper-targeted, addressable, lower-funnel, retail campaigns.\u00a0 It can do all of this while also delivering local talent, local programs, and local relevance to a media buy.\u00a0 Transitioning to an impression-based currency is a vital part of ensuring that local media takes advantage of the unique position that it is in and realizes its full potential in an ever-changing media world.<\/p>\n
<\/a>[i] \u201cCelebrating 90 Years of Innovation\u201d; http:\/\/sites.nielsen.com\/90years\/<\/a>; accessed 3\/27\/14<\/p>\n [ii] \u201cCable television in the United States\u201d; http:\/\/en.wikipedia.org\/wiki\/Cable_television_in_the_United_States<\/a>; accessed 3\/27\/14<\/p>\n [iii] \u201cEvolution of Cable Television\u201d; http:\/\/www.fcc.gov\/encyclopedia\/evolution-cable-television#evol<\/a>; accessed 3\/27\/14<\/p>\n [iv] \u201c Nielsen Ratings\u201d; http:\/\/en.wikipedia.org\/wiki\/Nielsen_ratings<\/a>; accessed 3\/27\/14<\/p>\n [v] \u201cvideo-on-demand (VOD)\u201d; http:\/\/www.britannica.com\/EBchecked\/topic\/1019647\/video-on-demand-VOD<\/a>; accessed 3\/27\/14<\/p>\n [vi] Robert J. Thompson; \u201cTelevision in the United States\u201d; http:\/\/www.britannica.com\/EBchecked\/topic\/1513870\/Television-in-the-United-States\/283658\/The-new-technologies#ref1058917<\/a>; accessed 3\/27\/14<\/p>\n [vii] George Winslow; http:\/\/www.broadcastingcable.com\/news\/technology\/nielsen-twitter-activity-influences-tv-viewing\/50180?rssid=20102<\/a>; accessed on 3\/27\/14<\/p>\n