A TVNewsCheck webinar on optimizing spot TV in this COVID-challenged economy last week found spot revenue picking up in some places, with steady rises since April’s low point. But concerns are afoot about Nielsen’s sample base and problems that may stem from its addition of broadband-only homes to the local TV currency.
By Janet Stilson
Source: tvnewscheck.com, July 2020
While nothing is certain in the strange new world of COVID-19, there are signs that local television advertising revenue is rising in fits and starts. At the same time, there are concerns about the Nielsen sample base related to the coronavirus and problems that could arise when broadband-only homes are added to the local TV currency.
Those were some of the major points raised during TVNewsCheck’s “Optimizing Spot TV in a Challenging Economy” webinar last week.
Recently, some publicly traded companies with station groups put the second-quarter spot TV revenue decline in the 40% ballpark. But some of the webinar panelists said that things are looking up. “April was definitely the low point. May was much better than April, June better than May. And we’re expecting third quarter to be even better than June,” said Frank Comerford, chief revenue officer and president of commercial operations at NBCUniversal Owned Television Stations.
“We’ve had double-digit growth from second quarter towards third, as a percentage of [same time] last year. But it’s been really uneven [from station to station],” Comerford added.
The wide variety of revenue results for individual stations was also noted by Mark Gorman, CEO of Matrix Solutions. The company’s forecasting tool for advertising revenue shows that “there’s a real difference in performance, even among people [i.e., stations] you’d think would be apples to apples,” Gorman said. On average, Matrix’s client base was up 10% in revenue during June, versus the same month last year, including political revenue.
Gorman noted that when advertising clients started postponing campaigns in the April timeframe, the stations that made the most out of a lousy situation were those that were able to transfer some of those dollars into digital buys.
Some markets also are experiencing an influx of new advertisers. “In Washington, D.C., we’re starting to see a lot more local advertisers who typically couldn’t get on the air or didn’t. They’re starting to compete for time,” Comerford said.
Kathy Doyle, EVP, local investment, for the agency conglomerate IPG/Magna, said she’s expecting 8% growth in dollars allocated to spot during 2020’s last two quarters, compared with same time last year, including political. Next year, when all the campaign dollars disappear, “we are projecting a minus 15%,” Doyle said.
“Our projection is similar to Kathy’s for third and fourth quarter. We’re projecting a plus 2%, but that’s without political,” said Heather Gundry, SVP and group media director at Dentsu Aegis. “For 2021, we’re projecting 10% down.”
As for individual advertising sectors: “Political has been stronger than we expected. And categories like legal, insurance and health care have been pretty good. Automotive hasn’t fully come back, but it’s starting to build back to where we expected it to be,” Comerford said. “We’re coming off a couple of years of very big auto numbers, and there was going to be a flattening out of that uptick.”
A different perspective was offered by Will Offeman, chief product officer at WideOrbit. “We built a COVID-19 impact analysis dashboard in our analytics tool so we could isolate pacing data by product category. We excluded the increase in political spending. While Q3 and Q4 are down, they aren’t as far down as Q2. The one product category that has a slight uptick right now is telecommunications,” he said.
It’s only rational for many advertisers to hold back spending. “Some of the fast food and some of the restaurants are only at 50% capacity. They don’t need more customers to come it their doors; they can’t manage it,” Gundry said. “They’re saving their ad dollars until when they can be open to everyone.
“With automotive, production is not to full-power yet. They’re not producing as many vehicles, so they’re not as many on their lots. So of course that affects the advertising budgets,” Gundry added. “I think we’ll get there, but closer to fourth quarter and 2021.”
One of the big question marks hovering over spot advertising relates to Nielsen’s plans to add broadband-only homes to the audience sample next year. One attendee noted that the change could lower ratings by 20%-25%, and impressions will also decline in many markets.
“Nielsen hasn’t definitively decided how they’re going to include broadband-only homes next year. So there’s nothing we can do at this point,” Doyle said. She noted that buyers have adjusted their calculations when methodologies have been changed in the past to compensate for differences between old and new currencies — such as the introduction of local people meters. And they’ll do so again.
“If it goes down or goes up, I don’t care. I just want it to be more accurate. So we’re chomping at the bit for the final call on how those homes get added,” Doyle said.
“Undeniably, Nielsen has certain issues about accuracy in their measurement,” Comerford said. “Every time they change and put a new part of the measurement system in, it’s like building Frankenstein’s monster; the errors magnify each other.” He noted that Steve Lanzano, president and CEO of TVB, and other interested parties, are trying to work with Nielsen and understand its plans.
Sometimes when Nielsen audience data is weighted to compensate for differences between old and new currencies it “distorts accuracy,” Comerford said. “If you weight something incorrectly, or if you have a certain kind of home that’s weighted incorrectly, it can throw a sample into a terrible situation.”
Comerford noted that because of COVID, Nielsen hasn’t been able to upgrade the samples. “In some of these markets, [the sample base] is really falling apart. So the idea of adding broadband-only homes is terrifying. We have to have business rules that apply to change. And that’s hard because we don’t know what the change is going to be,” he said.
“Nielsen has been vocal about saying they’ll attempt to do the right thing. If they do it right, I’ll be happy. But if they don’t, we’ll have a big, big problem, especially with impressions-based pay-per-performance buys,” Comerford added.
The local TV industry’s increasing move toward impressions, rather than ratings, along with performance-based guarantees, are both critical for spot TV, the panelists noted.
Impressions guarantees make it easier to transact across media platforms. And pay-per-performance can move the industry away from makegoods. In speaking of makegoods — and the importance of reducing them — Doyle noted: “Anybody that’s worked in local for any amount of time knows how much time we spend chasing past under-delivery [of audience guarantees]. It can go on for months and months, and in some cases years.”
With pay-per-performance, a seller guarantees a certain number of impressions or ratings points for a given flight. And if the spots fail to reach their agreed-upon goal, the stations credit the buyer for the cost of the flight or give them cash back.
“Automation and pay-per performance have a huge impact on the amount of makegoods we’re processing, and how we’re processing them,” Doyle said.
IPG/Magna is hoping to have 40%-50% of all local video transactions involve pay-per-performance guarantees by the end of the year, according to Doyle.
As for automation: “If you’re on a system that can create rules-based acceptance or decline of a proposed makegood, that takes it off the associate’s desk and the buyer’s desk. And the system can just process it one way or the other,” Doyle said.
WideOrbit has been working on a number of refinements to take the friction points out of its entire automation system, impacting everything from the pre-buy through to collections. “COVID-19, in some ways, has actually helped. People have had more time to go through tests and experiment” Offeman said.