How Local Cable Advertisers are Getting Shortchanged

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How Local Cable Advertisers are Getting Shortchanged
by Chris Rohrs, TVB President

A version of this essay first appeared in the April 16, 2001 Mediaweek. This online edition has been updated with the latest figures.

Imagine your reaction if you discovered that the pump at your local filling station rang up 10 gallons of gasoline but your car only got seven. Or if the dozen eggs you thought you bought at the grocery store actually was a package of eight. How about getting billed for daily home delivery of the local newspaper but you didn't get Mondays and Thursdays?

Well, something similar is happening to local cable advertisers when they use their local market Nielsen books to get a handle on cable delivery in their DMA. The penetration of alternative delivery systems (ADS), mostly due to the growth of direct satellite transmission, is accelerating and is cutting into wired cable's delivery for local advertisers. But the Nielsen books do not reflect this reality, and so many local advertisers are paying for eyeballs that just aren't there.

There is no question that we are talking about bigger and bigger numbers. More American TV households are receiving programming via ADS than ever before, according to a TVB analysis of Nielsen Media Research data for November 2006 (the most recently available figures). According to Nielsen, ADS penetration reached 24.5% of all homes in November, up from 20.8% a year earlier.

Direct broadcast satellite (DBS) delivery is the largest component of ADS and represents over 95% of alternative delivery.

According to the November 2006 Nielsen numbers, 45 markets now have ADS penetrations of 40% or more. And here is the problem. Local advertisers, if they want an accurate feel for actual eyeballs delivered, need to deduct the ADS percentage of the audience if they are included in the cable systems' submissions.

In some markets the disparity between Nielsen-reported audiences and the reality is extreme. Here are two examples of the magnitude of the phenomenon: in Springfield, MO, 55.3% of subscription TV homes are receiving television programming via ADS, and in the No. 7 Dallas/Ft. Worth market, a local advertiser's delivery is cut by 45.3%.

TVB has been talking to Nielsen for some time about publishing the local numbers in their component parts: wired cable, on the one hand, and ADS, on the other. In November 2003, Nielsen began making available hard-wired local cable numbers and excluding ADS homes via its Total Viewing Sources DVD. But some third-party processors are still adjusting their software products to use the new DVD and the printed Nielsen books do not break out the numbers separately, so advertisers will need to make ADS deductions manually for some time.

In my conversations with advertisers and agencies, I have found there to be mixed awareness of this problem. Some make the deductions as a standard procedure, some do it irregularly, and some are not yet aware of the situation. TVB has been spreading the word because our station members deserve a level-playing-field audience comparison and because advertisers who buy local cable need correct data.

The best solution, of course, is for third party vendors to fix their software. And fast. Because if local advertisers are getting less than a full tank of gas, the meter shouldn't be telling them otherwise.


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