Skeptical Buyers Await DVR Stats

Nov 21, 2005  •  Post A Comment

The broadcast networks are insisting that viewers do watch commercials when they play back shows on digital video recorders. But what that means to advertisers-if anything-remains to be seen.

Some ad buyers who suspect they will be asked to pay for reaching those DVR viewers are saying they won’t pay for viewers who don’t watch shows live. Buyers feel they are already paying for programs that are recorded but not watched on VCRs, and they are not eager to buy more eyeballs that may not be seeing their commercials.

In anticipation of new Nielsen Media Research measurements due next month that will include delayed program viewing via digital video recorders, the six broadcast network research chiefs held a rare joint press conference last week in New York to tout the latest Nielsen data, which they said show that the DVR is not a doomsday device for ad-supported television. In DVR homes, they said, more people watch the top-rated shows, and some of them even halt their fast-forwarding to take a better look at interesting commercials.

“I cannot remember a situation where so many pundits, forecasters and analysts have been so wrong for so long so much,” said David Poltrack, executive VP of research and planning for CBS.

“Now that the first results are in, it is confirming what our proprietary research has shown us for the past two years, and that is that the DVR is going to increase the viewership to the major network television programs and it is going to increase the amount of advertising exposures in those programs,” he said.

Alan Wurtzel, president of research for NBC Universal, said that even using what he called overly generous assumptions of 10 percent to 15 percent DVR penetration-and assuming that in those homes, 10 percent to 20 percent of viewing is done on the DVR and that three-quarters of the ads are fast-forwarded through or skipped-DVR use will reduce commercial exposure during network shows by 1 percent to 3 percent.

But he added that “this doesn’t include the fact that there’s an audience lift.” Research shows network prime-time shows getting 4 percent larger audiences, thanks to DVR playback. “The reality is that some of this 1 [percent] to 3 percent decline winds up being ameliorated by the fact that there’s more viewing and exposure to commercials,” Mr. Wurtzel said.

Some advertisers have begun shifting money away from 30-second television ads, partly because of the commercial-skipping issue, which has been aggravated by the influx of DVRs.

“We don’t like to say that advertisers are wrong, but we think they’re getting a lot of wrong advice,” Mr. Poltrack said. He said marketers have been told that DVRs will drive people away from their commercials.

“I would anticipate they will change their mind when they see the actual results. They have been misguided,” he said. “No matter how much you discount those new viewers coming in from playback, the bottom line is for the top programs: As DVRs roll out, there will be an increase, not a decrease, in real advertising impressions.”

Up to this point the networks have declined to say whether they will insist on basing their ad rates on one of the new measurements. But will advertisers, already complaining about the high cost of TV advertising, pay more for playback viewing?

Mr. Wurtzel said antitrust issues made it inappropriate to discuss business issues during the joint press conference.

“We’d be more than happy to talk to people individually about how each of the networks decides to proceed,” he said.

But after the conference, almost all of the networks wanted to discuss how much those DVR eyeballs are worth or whether they will use the new Nielsen Media Research streams, including DVR streams, as the basis for future ad sales.

Nielsen will continue to report “live” viewing but will also report “live plus same day DVR playback” ratings and “live plus seven-day DVR playback” ratings.

“We’re not going to declare a standard or a timetable for that standard until we have a chance to talk to our customers about it,” a CBS spokesperson said.

The exception was Michael Mellon, senior VP of research for ABC. He said each sale is based on a negotiation, but added, “I believe that if I was the agency and my job is to reach the most people the most amount of times, the seven-day number makes the most amount of sense.”

He said he didn’t know how much extra revenue the added viewing from DVR playback will generate for the networks.

Mr. Mellon acknowledged that certain advertisers, including Disney’s movie studio, will have issues with that because spots seen on Sunday on a DVR won’t be as valuable to them as those seen live the previous Thursday. “But it’s not worth zero, so it’s a mater of negotiation,” he said.

Buyers are resisting the new Nielsen DVR numbers, partly because they all already include VCR recording as live viewing.

“We just don’t feel that adding DVR playback into the ratings makes any sense, primarily because we’re already paying extra for VCR recording,” said Steve Sternberg, executive VP and director of audience analysis at Magna Global.

Shari Anne Brill, VP and director of programming for Carat USA, said shows like “Lost” and “Grey’s Anatomy” get a full ratings point from VCR recording.

Ms. Brill, who expects Carat to make a formal statement this week about how it plans to handle the new ratings with DVR playback, said, “I think most advertisers want their message delivered at the time it’s been inserted or very shortly thereafter,” and that there may not be much value to playback viewing.

“To a retailer who has a sale coming up on Saturday who is advertising Wednesday and Thursday and Friday, Monday and Tuesday viewing isn’t really helping them that much,” Mr. Sternberg said.

For those reasons, Ms. Brill said, same-day viewing might be acceptable for some clients. “I don’t want any numbers after that, because to me, as the days progress my message becomes less and less meaningful.”

These issues might be negotiated client by client and network by network for a while. “I think that because of market forces, down the line there will probably be a standard,” Ms. Brill said. “But right now, every agency is going to have a different thought. The networks are going to be in a fight because they will get together and they are looking for the full program number.”