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Ad revenue count hurt by fuzzy math

Apr 2, 2001  •  Post A Comment

The Discovery Channel made $179 million in ad revenue in the fourth quarter. Or was it $100 million? The Food Network brought in $39 million from advertisers in the fourth quarter. Or was it $11 million?

Lifetime Television brought in a respectable $269 million in the fourth quarter from ad sales. Or was it just $139 million?

The numbers for CNBC, which itself specializes in financial news, are equally confusing. Did the network make $59 million in ad sales in the fourth quarter, or was it $116 million?

Unfortunately, Electronic Media can’t tell you which of these numbers are correct. The first number cited in each of the above paragraphs is the ad revenue figure supplied by Nielsen Media Research’s Monitor-Plus service. The second ad revenue figure in each paragraph above comes from CMR. Both services are widely used-and quoted-by marketers, ad agencies, broadcasters, cablecasters and the media-including Electronic Media.

“The situation is outrageous,” said Larry Goodman, president, CNN sales and marketing. “The cable industry is way too mature to allow this fluctuation in revenue reporting.” The Time Warner Turner networks have long advocated that cable networks report real ad revenue figures to both Nielsen and CMR.

In comparing fourth quarter Nielsen and CMR numbers, out of 35 cable networks, the ad revenue numbers of only 17 networks are within 10 percent of each other. That includes the Turner networks. For example, CNN’s ad revenues, according to both Nielsen and CMR, was $91 million for the quarter.

“I took this issue to the Cabletelevision Advertising Bureau at one time and said this is something that needs to be fixed,” Mr. Goodman said. “But there wasn’t enough support among my fellow cable programmers to do anything.”

As Dave Poltrack, executive vice president, planning and research, for CBS, noted, “This disparity is certainly not helpful to anyone trying to plan the economics of the business. There is such a large difference in some of these numbers that both of them cannot be right.”

But executives at both CMR and Nielsen stand by their tallies.

Both services said about 20 cable networks report actual ad revenues to them. Neither would identify which networks those were. And both services said about five cable networks don’t provide any numbers to them.

The remaining 10 cable networks report some data to the services. Karen Grinthal, senior vice president, advertising sales, for the Food Network, told about the huge disparity between Nielsen and CMR for Food’s fourth quarter revenues, said, “The truth is closer to the Nielsen number” of $39 million than CMR’s $11 million. Though Food Network is owned by the publicly traded E.W. Scripps Co., she declined to say what the actual ad revenues were.

Ms. Grinthal said she has never been asked about ad revenues by either Nielsen or CMR.

For cable networks not reporting actual ad revenues, Nielsen said it uses rate card data and then extrapolates ad revenue numbers. For those networks that don’t give data to Nielsen, the service uses a formula based on average rate card and ad spending from other cable networks.

Similarly, CMR uses rate card data to extrapolate ad revenue numbers. But CMR also includes in its formula data from advertising agencies.

In a side-by-side comparison of 35 cable networks for fourth quarter 2000, Nielsen places total ad revenues at $3 billion. CMR places that figure at $2.6 billion. The difference between the two figures is 16 percent.

Nielsen claims fourth quarter ad revenues increased from 1999. CMR numbers indicate a decrease when comparing the two quarters.

The CAB has numbers that clear up the situation-somewhat. The trade group does not have ad revenues for individual cable networks. But it does have an audited number for 25 cable networks. That number is $2.9 billion for fourth quarter 2000, an increase of 3.9 percent over fourth quarter 1999. The CAB said its figure comes from a BCFMA/PricewaterhouseCoopers survey of cable network ad revenues.

In fourth quarter 2000, those 25 networks received about $2.4 billion according to Nielsen, and $2.2 billion according to CMR.

Cable is not the only place where Nielsen and CMR disagree. For syndication, in fourth quarter 1999, CMR said ad revenues totaled $821 million. Nielsen said that figure was $614 million. Again, both services stand by their figures.

One major media buying agency that is troubled by the disparity between Nielsen and CMR numbers is MindShare. MindShare is a media agency unit of WWP Group, which includes such powerhouse ad agencies as J. Walter Thompson, Ogilvy & Mather and Young & Rubicam.

“We had become concerned with the Nielsen numbers in the spot TV arena,” said Debbie Solomon, MindShare’s Chicago-based senior partner and group research director. “We think the CMR numbers in that arena are more reliable.”

MindShare reports on an ongoing basis about clutter on TV. “We were also concerned about the numbers that Nielsen reported at the time of the Olympics in September,” Ms. Solomon said. “It just seemed to us that the CMR and [Nielsen] numbers were so different that [Nielsen’s] Ad*View missed a lot of activity.”

Thus, MindShare recently decided to drop Nielsen and become a client of CMR.