TV: NUTS AND BOLTSMedia Sales in a Cross Platform World

Presented by: Tracey McCormack | UCLA Extension

BROADCAST CALENDAR

The Broadcast Calendar is a standardized calendar used primarily

for the planning and purchase of TV media and advertising.

Broadcast Calendar weeks are Monday-Sunday weeks. And every

month has either 4 or 5 weeks. Every month has 28 or 35 days.

The link between the Broadcast Calendar and Gregorian calendar is

that the first week of every broadcast month always contains the

Gregorian calendar first of the month.

Broadcast calendar years can either have 52 or 53 weeks.

The Broadcast calendar was really created for Accounting purposes

and to align with certain financial calendars.

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BROADCAST CALENDAR

MEDIA UNIVERSE

TWO BROAD WAYS TO ADVERTISE ON TV

NETWORK / NATIONAL TELEVISION:

There are over 2,000 affiliated television stations across the United States

which are fed the same programming throughout the broadcast day. Some

portion of the day will be local, original content.

A commercial on network television will be seen all over the U.S. on

networks like: ABC, CBS, NBC, Fox, UPN, CW, Ion, Univision and more!!

Or on national cable channels like: ESPN, USA, TBS, BRAVO, FOOD

LOCAL / SPOT TELEVISION:

Here, an advertiser can use selected markets to advertise without regard

to network affiliation.

Buys are made on a market by market basis and schedules may be

entirely different in each city.

THERE ARE MANY TV OPTIONS

NATIONAL TV OTPIONS: Network (ABC, CBS, NBC, FOX, CW, ION)

Syndication (Wheel of Fortune, How I Met Your Mother)

Hispanic Television (UNI, TM, Azteca)

National Cable TV (Discovery, ESPN, Comedy Central)

There are several TIERS of Cable TV

REGIONAL TV OPTIONS: Spot TV (Affiliates/Indies)

Regional or Unwired Networks (Fox Sports West)

Cable Interconnect (Adlink)

Local Cable Systems (Comcast, Cox, Charter, Time Warner)

Critical Nielsen Basics

NIELSEN HISTORY

The AC Nielsen Company was founded in 1936 by Arthur C. Nielsen as one of the first research companies to measure the audience for radio and advertising on radio.

In 1950, Nielsen was there again at the birth of the TV Broadcasting business.

Nielsen has remained as the leading, dominating measurement service of all media/advertising platforms for more than 75 years!!

Unlike a newspaper or magazine, who can count how many they have sold – there is no simple way to know how many people are are actually watching any given program.

The TV rating is only the simplest and most democratic measure of the audience: how many people watched.

Nielsen basically answers two questions: “Who is watching TV?” and “What are they watching?”

RANDOM SAMPLING

Census vs Sample

Nielsen starts its measurement by drawing a sample.

A pot of vegetable soup does not require eating the whole vat to know what’s in it.

Stirring the soup is a way to make sure that the sample you draw represents all the different parts of what is in the pot.

A representative sample doesn’t have to be very large to represent the population it is drawn from.

RANDOM SAMPLING

While it doesn’t need to be large, it does need to represent the population.

The larger the sample, the smaller the standard deviation of error of the ratings information released.

Nielsen TV Families are recruited in-person by Nielsen

The families are a cross-section of the households with TVs all across America.

They have households in all 50 states with all different economic and socio-economic profiles

Samples are designated to match the profile of each city, each demographic group and are “weighted” if the sample comes back short.

Participants in the Nielsen sample are compensated for their efforts

Sample Characteristics of what they are searching for

include:

Territory and County Size

Status of Cable, ADS, DVR, multiple-sets in the Home

HH Size, HH ages, Number of Kids, Pet Ownership

Internet access

HOH Occupation, Education and Income

RANDOM SAMPLING

RANDOM SAMPLING

RANDOM SAMPLING

UNIVERSE ESTIMATES

Universe Estimate: (UE) – Total persons or homes in a given population

Television Universe: Total persons or homes in a given population with at least one television set

Universe estimates are updated by Nielsen every year in September

Those UEs are the basis for the formulas we use to calculate TV ratings, impressions, shares and HUTS

HOW IS TV VIEWING MEASURED?

National Broadcast and National Cable are Measured as a part the National Sample 20,000 Homes in the National Sample All homes Have People Meters 364* Days of Household and Demographic Data (*Broadcast Calendar)

Local Broadcast Measurement DMAs: Designated Market Areas as defined by Nielsen 210 DMAs 56 Metered Markets

31 are Metered by HH Audimeters 364* days of HH information only 4 Rating Books – Feb, May, July and November

25 are Metered by Local People Meters 364* days of HH and Demo Information 12 Rating Books – 1 per month

Audimeters tell us that a HH has the TV “on” so we know if the TV is on or

off

What we don’t know is …. WHO is watching

People meters are remote controls that are only found in the National Sample and the 25 LPM markets.

Each TV in the HH gets a box and a special remote control with a “check-in” button designated for each person in the family.

People Meter Service launched in the national sample in 1987 and it took Nielsen until 2001 to launch it in the local markets

Markets with Audimeters (31 of them) get 364 days of HH overnight data

Markets with People Meters (25 of them) get 364 days of HH and Demo Overnight Data

PEOPLE METERS

PEOPLE METERS and DIARIES

SWEEP PERIODS

The top 25 LPM markets get 12 books a year (one in each month) and 364 days of overnight data. The “sweep” months are largely unimportant any longer due to 364 days of

data and competition from Cable with original programs all year long

Most of the TV markets still use viewer diaries on a spot TV basis. The 31 non-LPM markets use diaries to support audimeters and get 365 days

of HH overnight data. They also get 4 books a year in the major sweep months

The 154 non-metered markets use only diaries for all measurement and get no HH overnight data They also get 4 books a year in the major sweep months.

The four major sweep periods are: February, May, July and November Some markets also get data in January, March and October Sweep dates are always Thursday-Wednesday weeks

SET TOP BOX DATA

Set Top Box Data is a relatively new phenomenon in national and local television whereby companies such as – Rentrak Kantar Media Ti-Vo And others are using the set top boxes that already exist in your home via

cable or satellite to have a larger sample and theoretically have a lower standard deviation of error.

Today, Rentrak is probably the biggest of all the companies that offer this service and it has been bought by a number of small, un-rated by Nielsen networks and ad agencies.

STB data has had many challenges to over-come but have done so one by one (in some cases) including the likes of – It is not a representative, random sample of the US Population Integrating into the Donovan Data System Having enough homes in the sample Having Demo information as well as HH Getting the ad agencies to begin to use it

There are still great skeptics to STB data but it appears that Nielsen is getting into the game of STB data as an addition to their sample which will help the cause tremendously.

RESEARCH:Definitions, Formulas &

Terminology

HOUSEHOLDS USING TELEVISION (HUT)

HOUSEHOLDS USING TELEVISION is the PERCENTAGE of total television households having their sets tuned on at a particular time.

Example: The first two homes are viewing Black List on NBC on Monday from 10-11p The next home is viewing Hostages on CBS on Monday from 10-11p And the next home, Castle on ABC from 10-11pm on Monday. Of the 5 homes owning television sets, four are viewing (or USING

television) 4 TV homes watching television from 10-11pm DIVIDED by 5 total homes

that own TV sets = 80%. Expressed as a percentage, the HUT at this time is 80%. When the same calculation is done with PEOPLE, it is referred to as

PERSONS USING TELEVISION or PUT.

NBC NBC CBS ABC NOT USING TV

HUT LEVELS VARY BY DAYPART AND BY SEASON

Daypart Fall/Winter Spring Summer Avg Year

Daytime 27 26 26 27

Early Fringe 50 43 40 46

Prime 64 57 40 59

Late Fringe 28 28 28 28

SHARE

A SHARE refers to the PERCENTAGE that a program or station has of the total viewing audience. Share is NOT projected to the total households owning a set, but only those households that are viewing at a particular time.

Example: The first two homes are viewing BlackList The next home is viewing Hostages. The next home is viewing Castle. The fifth home is not viewing any television program and therefore

is not counted in the share equation.

BlackList = 2 out of 4 homes viewing = 50 share (2/4) Hostages = 1 out of 4 homes viewing = 25 share (1/4) Castle = 1 out of 4 homes viewing = 25 share (1/4) ALL SHARES SHOULD ADD UP TO 100%.

NBC NBC CBS ABC NOT USING TV

RATING

A RATING is expressed as a PERCENTAGE of individuals or total television households tuned to a particular television program. Rating is projected to the universe of all TV homes, viewing or not.

Example: Assume a total television population (those owning a set) of five

homes. Two of five homes are viewing BlackList on NBC. One of five homes is viewing Hostages on CBS. One of five homes is viewing Castle on ABC. One of five homes is NOT viewing television at that time.

BlackList = 2 of 5 homes = 40 rating (2/5) Hostages = 1 of 5 homes = 20 rating (1/5) Castle = 1 of 5 homes = 20 rating (1/5) ALL RATINGS SHOULD ADD UP TO THE HUT LEVEL (80).

NBC NBC CBS ABC NOT USING TV

IMPRESSIONS

IMPRESSIONS are the RAW NUMBERS of individuals viewing a particular program, usually attributed to a demographic and expressed in thousands (000).

Example: Assume there are five homes viewing Hostages on CBS. In one home there are 2 women 18-49 viewing for a total of 2

impressions against W18-49. In two homes there is 1 woman 18-49 in each viewing for a total

of 2 impressions against W18-49 viewing. In two homes there are no W18-49 viewing although some other

demographic is viewing. The grand total of women 18-49 impressions is 4.

CBS CBS CBS CBS CBS

VPVH

VPVH (Viewers per Viewing Household) is a calculation that quantifies the concentration of a particular demographic within viewing homes.

As in our prior Example: There are five homes viewing Hostages on CBS. Within those 5 viewing homes there is a total of 4 women 18-49

viewing. Therefore we have 4 Viewers (W18-49) per 5 viewing

households. This is calculated as 4 divided by 5 and described as a

decimal .800

CBS CBS CBS CBS CBS

GROSS RATING POINTS (GRPS) TOTAL IMPRESSIONS (000)

GROSS RATING POINTS and TOTAL IMPRESSIONS: A mathematical expression of total media weight generated by an ad campaign. The sum of all ratings and impressions for all commercials in a given media schedule.

Example:

Jello Pudding aired spots in the following programs:

PROGRAM UNITS RATING IMPRESSIONS GRPs (000)

Katie Couric 7x 3.0 2.1 21.0 14.7

News 5x 5.0 3.5 25.0 17.5

The Tonight Show 5x 2.5 1.8 12.5 9.0

CSI: Miami 1x 4.0 2.8 4.0 2.8

TOTALS: 18x 62.5 44.0

TIME SHIFTED VIEWING

National Broadcast and Cable includes “time-shifted viewing” (DVR usage) in their equations

National Broadcast and Cable have 4 Different Nielsen Audience Data Streams From Which to Choose: Nielsen measures the national sample and releases audience

information in 3 feeds of “program rating” data: Live, Live +Same Day, Live +7

Nielsen also releases audience information in 1 feed of “commercial rating” data called the “C3” C3 = Commercial Pod Ratings PLUS 3 days of Time Shifted

Viewing

Generally, the agencies that buy national broadcast and cable buy off of the C3

MEDIA FORMULAS TO KEEP IN MIND

Rating Share X HUT

Share Rating / HUT

HUT Rating / Share

VPVH Viewers/Viewing Homes

GRP Reach x Frequency

STATS: “Key Stats on Key Players”

HOURS OF WEEKLY MEDIA CONSUMPTION

MediaHours

(weekly)

Traditional TV 35.1

AM/FM Radio 14Internet on a

Computer 5.1Video on the

Internet 1.5

Game Console 1.5

Video on Mobile 1.3

DVD/Blu-ray 1.3

*Nielsen Media Research released its Cross Playform Q3 2013 report. Weekly media usage by platform, as reported by Multichannel News:

AVERAGE TIME SPENT PER DAYWITH MAJOR MEDIA BY U.S. ADULTS (2010-

13)

Category Media 2010 2011 2012 2013 EST.

Digital Total 3:14 (29.6%) 3:50 (33.8%)4:31

(39.1%) 5:09(44.4%)

Online 2:22 (22.0%) 2:33 (22.6%)2.27

(21.0%)2:19

(19.5%)Mobile (non-

voice) 0:24 (3.6%) 0:49 (7.1%) 1:33

(13.5%) 2:21

(19.8%)

Other 0:26 (3.9%) 0:28 (4.1%) 0:31 (4.5%) 0:36 (5.1%)

TV Total 4:24 (40.9%) 4:34 (40.4%) 4:38

(39.8%)4:31

(38.1%)

Radio Total 1:36 (14.9%) 1:34 (13.9%)1:32

(13.2%)1:26

(12.1%)

Print Total 0:50 (7.7%) 0:44 (6.5%) 0:38 (5.4%) 0:32 (4.5%)

Newspapers 0:30 0:26 0:22 0:18

Magazines 0:20 0:18 0:16 0:14

Other Total 0:42 (7.0%) 0:36 (5.5%) 0:20 (2.5%) 0:14 (1.0%)

Total - 10:46 11:18 11:39 11:52

* Hours: Minutes

MEDIA CONSUMPTION REPORT: ETHNICITY

Nielsen's Cross Platform Media Consumption Report (2013) *Monthly Usage by Platform & Ethnicity

Hours/Minutes

MEDIA TOTALAFRICAN-AMERICAN HISPANIC ASIAN

On Traditional TV 152:08 211:10 127:18 93:49Watching Time-Shifted TV 12:31 9:40 8:21 9:01Using a DVD/Blu-ray Device 5:30 6:22 5:22 4:30Using a Game Console 6:39 7:53 7:20 5:03Using Internet on a computer 28:32 30:17 24:21 37:01Watching Video on Internet 6:20 8:46 8:03 11:57Watching Video on Mobile Phone 60:42 62:51 60:07 N/A

Source: Multichannel News

TOP BROADBAND PROVIDERS (3Q13)

Category Provider Subscribers

Cable Comcast 20,283,000

Time Warner 11,550,000

Charter 4,535,000

Cablevision 2,774,000

Suddenlink 1,039,100

Mediacom 956,000

WOW (WideOpen West) 725,000

Cable ONE 469,296

Others 6,530,000

Sub-total 48,681,396

*Source: Leichtman Research Group

SALES: “Terminology, Currencies,

Marketplace”

TERMINOLOGY

UPFRONT: The marketplace for buying TV commercial time well in advance of the

telecast date and usually for an extended period, such as for a year, typically 4Q-3Q.

Usually begins in May.

SCATTER: The marketplace for purchasing TV commercial time closer to telecast date, for

a quarter at a time or less. Usually purchased the quarter before or during the quarter of

telecast.

GUARANTEE: An assurance by the selling network that the advertiser’s commercial

schedule will be viewed by a specific total of audience (Gross Impressions).

UNDER-DELIVERY: The amount of audience (Gross Impressions) that an advertiser’s

schedule falls short of the guaranteed amount.

ADU & RECAP: Free commercials units given to an advertiser either in anticipation of

audience under-delivery or after the fact. A Recap my be “recaptured” by the network and

may be booked at the time of the order.

MAKE-GOOD: A commercial unit given to an advertiser to compensate for a commercial

that was missed.

PRE-EMPTION: A commercial unit that was scheduled to be telecast but is not, typically

because a program that was originally purchased has been changed, or a technical error.

TERMINOLOGY

REGISTRATION: An RFP from an agency. Includes client name, brands, target

audience to be guaranteed, budget, flight dates, dayparts and audience mix for

each and other terms & conditions.

PROPOSAL: Prepared by the network to include units and projected audience

delivery within each daypart and a schedule of either ROS and/or programs, all

for a total gross cost.

HOLD: After negotiations are complete, the agency in good faith requests that

the network “holds the inventory out of sale” until the agency can get final

approval of the proposal.

ORDER: Once the proposal has been approved by the client it becomes an

order.

CANCELLATION OPTIONS: On long term deals such as upfronts some portion

of the order may be agreed to be cancelable with sufficient notice.

FIRM: The portion of the order that is not cancellable is considered Firm.

DAYPARTS

Because Traditional Television viewing is linear, the time of day that the viewing occurs is important.

Audience viewing during different times of the day have different implied values

For instance, women viewing during Primetime are worth more than women during Daytime

The different times of day are called DAYPARTS

Broadcast and Local Affiliate Dayparts are based on network’s schedule

Local affiliates sell short breaks during network programs and in adjacencies and own 100% of the time during their own local programming, like local news.

Cable Network Dayparts are defined by (and different) for each Network

Cable Networks schedule 24 hours a day, so their affiliates (cable systems) get 2 or 3 minutes every hour to sell.

Typical Broadcast Dayparts are:Early Morning 5a-9a Daytime 9a-4p

Early Fringe 4p-7p Prime Access 7p-8p Prime Mon-Sat 8p-11p / Sun 7p-11p

CURRENCIES

COST PER POINT (CPP): The amount of money an advertiser pays to

deliver one GRP (1 rating point) of people or homes.

Time Period Cost / Time Period Rating = Cost per Rating Point (or CPP)

COST PER THOUSAND (CPM): The amount of money an advertiser

pays to deliver 1,000 people or homes.

Time Period Cost / Impression = Cost per Thousand (or CPM)

GROSS VS NET

A contract is negotiated for an amount of money and the TV station or network bills the agency for that entire amount, known as “Gross”.

In theory, the agency would collect the entire “Gross” amount from the client to pay the station, but would receive a 15% discount from the TV station or network.

Known as the agency commission, it was originally considered to be the agency’s compensation. The TV station or network receives the “net” amount, 85% of the negotiated money.

Only the most foolish of clients now allow their agency to keep the full 15% discount that stations and networks give.

CURRENCIES FROM THE AGENCY’S POV

Agencies determine what CPMs they want to pay for their clients by using the following types of data:

Internal Cost History

Competitive CPMs paid on Like-Sized Nets

Collusion

Available Market Data Such As:

SQAD reports

Nielsen Data Reports on CPMs

Kantar Media Reports on Competitive Spending

CURRENCIES FROM THE NETWORK’S POV

Television time is both finite and perishable.

There is a fixed number of commercials that can run in any given hour.

Unsold units cannot be moved to another day.

Demos in the network’s sweet spot yield a higher CPM

Stations decide what their selling cpp will be based on some of the following factors:

Ratings/Demand

What the Market Will Bear

In Some Cases Volume Discounts Apply

It is the responsibility of the Sales Manager to sell every spot, each day for the highest CPM possible and most of it is sold months in advance

FACTORS EFFECTING THE MARKETPLACE

Economic Downturn or Upswing

Olympics

Politicals (Major Election Year)

Propositions

Disasters (Plane Crashes)

Major News Coverage (Car chases)

Content of a Show (American Idol)

Major Sporting Event Coverage (World Series)

The Pace of the Automotive Industry

UPFRONT SALES

Upfront Sales (billion)

Networks 2012-13 2013-14

ABC $2.1 $2.2

CBS $2.5 $2.6

FOX N/A $1.8

NBC $1.9 $2.0

CW $0.400 $0.420

*This chart delineates broadcast network TV sales during the upfront for 2013-2014 as represented in the trade process

AD AGE’S 10 BIGGEST MEGABRANDS IN 2012

RANK BRAND PARENT EXPENDITURE

1 AT&T AT&T $1.59 billion

2Verizon Verizon Communications $1.43 billion

3Chevrolet GM $958.0 million

4McDonald's McDonald's $957.0 million

5Geico Berkshire Hathaway $921.0 million

6Toyota Toyota $879.0 million

7Ford Ford $857.0 million

8T-Mobile T-Mobile $773.0 million

9Macy's Macy's $762.0 million

10Walmart Walmart $690.0 million

FASTEST-GROWING AD SPENDERS IN 2012

# ADVERTISERAMOUNT SPENT IN

2012

PERCENTAGE GROWTH FROM

2011

1 Samsung $881 million 58%

2 Amazon $1.1 billion 47%

3 IAC $547 million 43%

4 Lions Gate $418 million 43%

5 AbbVie $481 million 41%

6 Discover $603 million 30%

7 Dish Network $469 million 29%

8 Honda $1.2 billion 29%

9 Kia $637 million 27%

10 T-Mobile US $1.1 billion 27%

LARGEST GLOBAL MARKETS

Advertising Age's 10 Largest Global Markets (2013)

Rank Market Major Media Spend (Millions) Change vs.

20121 United States $166,905 3.50%2 Japan $52,838 2.10%3 China $40,948 10.10%4 Germany $23,184 -1.10%5 United Kingdom $20,345 5.00%6 Brazil $15,859 3.70%7 Australia $13,072 2.00%8 France $12,145 -2.80%9 Canada $11,589 -0.40%10 South Korea $10,612 -1.20%

*Source: ZenithOptimedia

Post BuyAnalysis

Post Buys are done with what is called “exact time posting” via a

combination of data from the media buying software, the network

trafficking system and invoices of the exact time that a spot has run.

Programs are sold/purchased in rotation format with an average

impression from the daypart but are posted via exact time that the spot

ran.

Often in national TV, third party companies are hired to handle the post

buys. In local TV, the post buys are done by the local station and the

local rep.

Most national agencies require that networks guarantee and deliver 100%

of the promised audience impressions.

Most local buys are required to post at +/- 10%, depending on the market

and due to less available, daily audience data and information.

Under-posting and over-posting are equally bad business for the ad agency

POST BUY ANALYSIS: HOW??

POST BUY ANALYSIS WHY??

Post Buy Analysis is a controversial issue.

It is an invaluable tool for Ad Agencies

To ensure that buyers are highly scrutinizing estimates.

To prove to their clients that they did in fact do their job in

delivering the promised audience.

To assist in pitching new business to illustrate the reliability of

the media dept.

To keep networks honest and working to achieve ratings success

It is an important tool for the Clients To ensure that their media agency is doing a good job To evaluate and make decisions on media spend and purchases

It is a complicated issue for the Networks Adding ADU’s makes it very complicated to manage the inventory “Selling Out” in part due to increased ADU’s can be disastrous for

networks There is no added benefit to a network for over-delivering

BUT DID THE CASH REGISTER RING??? Does posting at 100% mean sales went up? If sales went down, can it be pin-pointed to the media post? Is the ultimate job of the agency and station partners to post? Or to

move product?

POST BUY ANALYSIS: WHY??

Tracey McCormackPhone: 323-977-TMACEmail: Tracey@McCormackMedia.netWebsite: www.McCormackMedia.netTwitter: @TraceyMacTweetsLinkedIN: Tracey McCormackFacebook: McCormack Media ServicesYouTube: Tracey McCormackGoogle+: McCormack Media Services

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