Planners Watch DirecTV-Nielsen Deal

Aug 4, 2003  •  Post A Comment

DirecTV’s deal with Nielsen Media Research to create a satellite TV ratings service has several important media planning implications.
First and most obvious, ad agency executives say it will help legitimize DirecTV as a component of national TV advertising plans, something that should help its ad sales rep, Sony Pictures Television, make greater headway on Madison Avenue. Second, the deal indirectly casts new doubts on the ad industry’s long-sought-after goal of creating a new TV audience measurement service to cover digital set-top households.
With 11.5 million households, DirecTV represents a key component of the critical mass that would be required for Madison Avenue’s so-called digital set-top box initiative. While its deal with Nielsen does not necessarily preclude its participation in a digital set-top box ratings alliance, the agreement is the latest in a deftly executed series of business arrangements Nielsen has struck to help bring a potential digital set-top box marketplace under its control.
The ad industry already was having a hard time convincing cable operators to join the initiative, and Nielsen’s early deals with TiVo and Ucentric Systems appeared to co-opt other crucial players.
“It’s not dead, but it certainly isn’t very lively,” said Denman Maroney, master of words-yes, that’s his real title-for the Advertising Research Foundation and head of the digital set-top box initiative. “When it comes to digital set-tops, cable is the biggest component, and we just haven’t been able to light a fire under the cable industry.”
“It’s a very intriguing idea. It will be developed through the years, but we’ll have to wait and see,” said David Mumford, executive VP of planning and operations for Sony Pictures Television. Meanwhile, he said, it was imperative for Sony and DirecTV to become a part of the official industry currency: Nielsen ratings.
He said Sony Pictures Television has been using a combination of Nielsen telephone coincidental studies, custom research and extrapolations of Nielsen ratings for the cable networks on which it has inventory. “This moves DirecTV into this category of measured media,” Mr. Mumford said.
Agency execs agree. “Nielsen legitimizes them as a national TV buy,” said Chuck Bachrach, executive VP, director of media resources and programming, at Rubin Postaer Associates.
“Nielsen ratings are still the bible of the industry. You’re never going to be able to sell yourself well without Nielsen ratings,” said Steve Sternberg, senior VP, director of audience analysis, at Interpublic’s Magna Global USA unit. “The other stuff is good. It gives us supplement information. But when it comes to buying and selling, the business is still based on Nielsen ratings.”
Micro-Analysis Tools
The “other stuff” Mr. Sternberg is referring to is the kind of second-by-second clickstream data that would enable media planners to micro-analyze the viewing patterns of digital set-top box households in ways that are not imaginable with conventional Nielsen ratings.
While agencies have managed to estimate the audience value of DirecTV’s subscribers, it has required some judgment calls and a bit of faith.
“Basically, we’ve had to extrapolate an audience estimate off of the average ratings from the networks they were carrying. This will be a bit more granular,” said Bob Flood, senior VP, director of national broadcast, at Zenith Optimedia.
Despite such difficulties, buyers such as Mr. Flood have been attracted by the upscale nature of DirecTV households to purchase the satellite service. DirecTV, for example, was an integral part of the agency’s media strategy for the BMW Films campaign of its client BMW.
Boosting National Sales
In fact, there has been so much interest that Sony Pictures Television claims to have boosted DirecTV’s national ad sales by 2000 percent since it took over as national ad sales rep in 1999. Company executives declined to reveal the amount on which that increase was based, but industry sources estimate DirecTV now takes in close to $100 million a year in national advertising sales.
Meanwhile, the consumer insights gleaned from its new Nielsen deal may also help DirecTV’s consumer marketing efforts, which will in turn help its pitch to Madison Avenue.
“It’s kind of like a chicken-and-egg thing. This should help them build their subscriber base, which will help them grow their advertising base,” said Rubin Postaer’s Mr. Bachrach.
Joe Mandese is a longtime editor and writer covering the advertising business. He is a former media editor of Advertising Age and a former senior editor of Marketing and Media Decisions.