From the Desk of VIDIRO

TV Ratings are the Emperor’s New Clothes of the Media World.

There’s no perfect way to advertise but we’ve accepted the TV model for decades. The problem is it is flawed too.

If you really want to understand the Digital Boycott and what went wrong for Google, then you need to understand broadcast metrics and why TV Ratings are so important.

What are TV Ratings?

Ratings are statistical measures developed to evaluate the popularity of TV programs, in order for program broadcasters to maximize their advertising income. Originating as a non-profit activity with radio audience in the 1930s, audience measurement has been dominated by Nielsen’s as the commercial industry standard.

How are Ratings Calculated?

Audience measurements, i.e. Ratings, are calculated using a statistical sampling method, which includes demographic information found in the general population. The ratings population is the number of households that own a TV set in the US and the rating is calculated by measuring the number of households out of the population, that are watching a specific program e.g. if there are 100 households and 10 are watching HBO at 10pm, then HBO’s rating would be 10. These measures are also known as gross ratings points (GRP).

Extrapolated from this data is Ratings Share, determined by the percentage of households watching a particular program, out of all the households with a TV switched on – this figure is always higher than the gross ratings point (unless everyone in the country is watching TV). To establish a truer measure of audience watching, the Cume (which is a cumulative total of people tuned into a specific network over a particular time period e.g. if the same program is aired at different times through the day) gives an aggregated figure which evens out viewership figures, a measure valued by cable networks due to their lower viewer numbers

Why are Ratings so Important?

Ratings are used by networks to drive advertising incomes. The rates of advertising are calculated in two ways – Cost per Thousand (CPM) i.e. how much it costs to reach a thousand people; and Cost per Point (CPP) i.e. how much it costs to buy one rating point. These ratios provide an easy metric for programmers and advertisers to compare and negotiate the cost of advertisements – the ratings thereby create a currency value, and the currency is the audience.

How are Ratings Used?

Ratings are a pure measure of viewership and provide objective numerate information which forms the standard for the buying and selling of audiences. To be clear, Ratings measure exposure to programs - not ads. Ratings companies are buying and selling ‘ratings numbers’, providing a critical role in the economic exchange of these ‘ratings numbers’ in a ‘three way marketplace’. So, the marketplace comprises the advertiser, the producers and the brokers.

Ratings thus determine the market price of adverts, the cost and selection of program production, cast salaries, profitability derived from advertising income for the program/network and also determine the audience size, market rank and an industry hierarchy. The tension that exists in this three way marketplace springs from the pre-purchase of advertising, based on an assumed goal; dissatisfaction arises when there is failure to meet the agreed criteria. So the deal struck depends on audience facets – that is the actual audience, the measured audience, and the predicted audience.

For TV ratings, eyeballs count. This results in a constant ‘need to know’ related to performance in an industry preoccupied with a ‘need to know’ the audience.

As the ratings determine the price of ads, based on an assumed number of viewers, the advertisers want to know they have got value for their money; and the network wants to make sure it can keep those sponsors. The reliability of the ratings matters and so, marginal discrepancies in audience measurements create discontent – the ratings don’t just provide a currency value, ratings represent a logical information flow that portrays what that currency will buy. In essence the ratings denote trust.

How is Validity Ensured?

Audience measurement is not a perfect instrument. There are flaws in the methods due to a variety of factors (sample composition, sample size, representativeness and diversity etc). Despite these imperfections, the current ratings methods provide the most reliable method of measuring broadcast audiences with Audience Measurement methodologies and collated results rigorously scrutinized and audited by an independent industry watchdog, the Media Ratings Council.

Where do TV Audiences come from?

For markets to function there needs to be reasonable consensus about how audiences are defined. In broadcast, the industry finds its audiences bound by time and space, within the reliable confines of domestic life. Programming schedules then are designed around domestic habits (e.g. drivetime, primetime, etc) – thereby, ratings are actually based on units of households, not individuals.

Households are difficult to quantify as they aren’t distinct units of measurement so to counter this, audiences are structured into segments of demographic information, devoid of identity. These reliable, streamlined audiences calculate the relative success or failure of a broadcaster to attract audiences becoming the simple way to package advertising spots.

What about Targeting?

Using data already collected and collated to form an intended audience, production companies produce content for specific demographics. Advertising spots are then sold to advertisers on this known content for an idealized audience. The content becomes a vehicle for targeting; in essence, the content becomes a proxy for demographic info.

As TV spend is spent on mass audiences, the assumption is that every viewer has an equal value within that demographic which is in reality untrue (an 18 year old does not behave the same way as a 35 year old). TV buyers and advertiser sellers ignore this and continue to replicate the same sales cycle.

The one clear thing we can conclude from analysis of Ratings is that Ratings are the Emperor’s New Clothes of the media world – nobody dares to highlight the naked truth. We agree that Ratings are indeed ‘real’, that big demographic swathes of audiences are ‘real’, distinct units of demographic information, equally valuable yet devoid of personal identity. But the dissenting voice is the newer way to approach audience construction and measurement, the digital audiences of one….and yet the audience has always been an audience of ‘ones’, as individuals we exhibit preferences, emotions and behaviors, both different and the same to anyone else. In TV land, this is conveniently glossed over, as Media Dynamics Inc 2017 posit:

But what would happen if advertisers convinced TV sellers that targeting 18-49s and 25-54s was no longer acceptable, and demanded that much finer demographic segmentation be used as the basis for their TV buys and audience guarantees? Would the sellers accept this? Indeed, could they implement it, even if so-inclined?

Well, you only have to look at the Google YouTube boycott to see exactly what happened next.

This article originally appeared here: https://www.linkedin.com/pulse/selling-air-tv-ratings-highlight-naked-truth-digital-ciara-henderson

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