Cable’s Dirty Little Secret—Exposed!

The business of buying and selling television commercial airtime is a game of numbers and lately, I’m seeing more games than truthful numbers out of the cable TV camp. Advertisers are getting fleeced, broadcasters are unfairly losing revenue, and it’s time to set the record straight.

First, the basics. Data collected by Nielsen Media Research assists both buyer and seller. It provides a uniform quantification (a rating point) of the product that is on the table: the delivery of TV viewers.

For those not familiar with this side of the business, here’s a primer on the process. One rating point equals 1% of the total television-owning population, regardless of the size of the market where you live. Demographic qualifiers such as “Adults 25-54” within the total population are often examined, but the principle remains the same:

The salesperson presents to the buyer a document that lists the following:

- TV program titles
- Day and time they air
-Projected rating, (or viewing in 1,000s)
-:30 commercial rate

We sell airtime that will occur in the future, not the past. Therefore, two variables combine to comprise the viewing estimates that we are “projecting”: the number of People Using Television (or “PUT”), and each station or cable channel’s portion of that viewing (share). Since a rating equals the PUT divided by share, and the rating is our agreed-upon quantifying tool, it’s important that both buyer and seller are in agreement on each of those audience measurement variables.

That’s why the definition of the viewing universe should be on every buyer’s radar screen. When the seller manipulates the universe, or fails to point out that they can’t reach part of it, they gain an unjust advantage that leads to over-inflated viewing estimates, and incorrect, artificially low CPPs/CPMs.

Accordingly, the existence of Alternative Delivery Services (ADS) has been a hot topic. This addresses the fact that many people watch programs delivered to their home via a satellite dish service (usually DirecTV or Dish Network) rather than cable, and cannot receive the commercials that are run on the local cable system.

At first, these homes were just a tiny portion of the overall TV viewing universe. Today, these ADS households now comprise as much as 35% of all homes in a local market! When the cable TV ad rep INCLUDES those satellite TV viewers in THEIR audience delivery numbers, it’s not a true representation of the facts.

Nielsen has implemented a new tool to correct this misrepresentation, but agency buyers and direct clients need to know how to use it. Effective with the most recent “sweeps” period, Nielsen’s reports are available electronically in three different ways, each defining a different universe:
- Report 1: Broadcast stations and hard-wired cable homes (no satellite, etc).
- Report 2: Broadcast stations and ALL viewing of “cable” channels (INCLUDING homes with satellite service).
- Report 3: Hardwired cable homes ONLY within the hardwired cable universe.

In order to make a clear apples-to-apples comparison between broadcast stations and local cable TV, the buyer must use Report #1 as their source. A quick check of the numbers proves my point; I encourage you to do the same.

If the cable rep is sourcing Report #2 for their proposals, then the advertiser is paying for viewers never delivered...NEVER. If #3 is sourced, then you can’t make an apt comparison; the hardwired cable universe is usually at least 25% smaller than Report #1’s, thereby artificially inflating cable’s real-world shares by +25% (or more).

By the way, you can’t rely on the printed “Viewers in Profile” “book” for accurate local cable commercial delivery; its numbers include ADS sources mentioned above.

More than 2,400 years ago, Plato said, “A good decision is based on knowledge and not on numbers.”

Wow, some things never change! Now that you’ve got the knowledge, I encourage you to take a closer look at the numbers. The cable rep’s empty promise of delivering audiences that he can’t reach is coming to an end, thanks to Nielsen’s new reports.