“TV Nuts and Bolts”Media Sales in a Cross Platform World

Tracey McCormack I UCLA Extension

• Broadcast Calendar

• Critical Nielsen Basics

• Nielsen Measurement

• Set Top Box Measurement

• Research: Definitions, Formulas & Terminology

• Time-Shifted Viewing and Recent Changes Within Nielsen Measurement

• Stats: Key Stats on Key Players

• Sales: Definitions, Currencies, Marketplace

• Media Spending Trends

AGENDA

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 Weeks or 53 Weeks

• The Broadcast Calendar Was Really Created for Accounting Purposes and to Align With Certain Financial Calendars

BROADCAST CALENDAR

BROADCAST CALENDAR

THE MEDIA UNIVERSE

THE MEDIA UNIVERSE

THE MEDIA UNIVERSE

THE MEDIA UNIVERSE

• Network Broadcast / National Cable Television

• There are Over 2,000 Affiliated Television Stations Across the U.S. That are Fed the Same Programming Throughout the Broadcast Day. Some Portion of the Day Will be Local, Original Content.

• Today, There are 116,400 Million U.S. TV Households, According to Nielson

• A Commercial on Network Television Will be Seen All Over the U.S. on Networks Such as ABC, CBS, NBC, Fox, UPN, CW, Ion, Univision and More!

• Or on National Cable Channel Like ESPN, USA, TBS, Bravo, or Food Network

• Local / Spot Television

• Here, an Advertiser Can Use Selected Markets to Advertise Without Regard to Network Affiliation

• Buys are Made on Market by Market Basis and Schedules May be Entirely Different in Each City

TWO BROAD WAYS TO ADVERTISE ON TV

• National TV Options

• Network (ABC, CBS, NBC, Fox, CW, Ion)

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

• Hispanic Television (UniMas, 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)

THERE ARE MANY TV OPTIONS

Critical Nielsen Basics

• 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 the Leading, Dominating Measurement Service for All of Media/Advertising Platforms for More Than 75 Years!

• Today, Nielsen is Owned by Dunn and Bradstreet and is One of the Largest Research Companies in the World With the Largest Set of Servers of Any Company in the World

• Nielsen is the “Gold Standard” in Our Business

• They Buy Up Other Research Companies (Like Arbitron for Example) All the Time

• They Have Several Different Divisions and Today They Measure Everything That Can Possibly be Measured: Every Platform, Every Language, Every Age and Every Moment of Every Day

NIELSEN HISTORY

• Unlike a Newspaper or Magazine, Who Can Count How Many They Have Sold, There is No Simple Way to Know How Many People 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?”

• “What are They Watching?”

NIELSEN HISTORY

• 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’s 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 and Each Demographic Group, and are “Weighted” if the Sample Comes Back Short

RANDOM SAMPLING

• 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

• From All This Collected Data in the Samples, Nielsen Creates the 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

UNIVERSE ESTIMATES

Nielsen Measurement

• There are 210 DMA’s (Designated Market Areas) That Make Up the U.S.

• A DMA is Defined as “ A Collection of Counties as Described by Nielsen Where the Population Can Receive Television and Radio Stations’ Offerings”

• Nielsen has TWO Types of “Samples” to Cover the U.S.

• One National Sample to Represent the U.S. TV Households and All the People Within the U.S.

• One Local Sample Within EACH of the 210 DMAs to Represent Each DMA and All the People Within Each DMA

• Nationally (and in Many Local Markets) Data is Delivered to Stations and Agencies 364* Days a Year

• Household Data

• Demographic Data

• Overnight Data

• Some Markets Get Less Regular Data Than Others

NIELSEN MEASUREMENT

• Nielsen Uses a Variety of Technology and Methods to Accurately Reflect the Viewing Habits of People Both Nationally and Locally

• Set Meters (Previously Called Audi Meters)

• People Meters

• Code Readers

• Diaries

• Set Meters: Digital Boxes Attached to Each TV in the House

• Tells Us if the TV is ON or OFF

• Does NOT Tell Us “WHO” is Watching

• People Meters: Remote Controls Attached to Each TV in the House

• Tells Us if the TV is ON or OFF

• Tells Us WHO is Watching

NIELSEN MEASUREMENT

• Code Readers: A Newer Technology Being Used by Nielsen for Measurement

• Attaches to Each TV in a Household But Reads “Code” From the Shows

• Tells Us if the TV is ON or Off

• Does NOT Tell Us WHO is Watching

• Diaries: Totally Manual Form of Measurement

• No Technology Used Here

• Humans “Write In” What Shows They Watched, When

• Used to Understand if the TV is on AND Who is Watching in One Booklet

NIELSEN MEASUREMENT

PEOPLE METERS AND DIARIES

• Even Though Many Markets Get 364 Days a Year of Data, it’s Important for You to Note That There are Many Markets That Only Receive Data in the Four Major “Sweep” Periods

• The Four Major Sweep Periods Are:

• February, May, July and November

• The Sweep Periods are 4 Weeks in Each of Those Months

• Sweep Starts on a Thursday and Ends on a Wednesday

• The Sweep Periods are Largely Unnecessary in Many Markets Because There is So Much More Available Data and Many Markets Get 364 Days of Data a Year and 12 Books a Year

• HOWEVER, for the Majority of the Markets, Sweep Periods Still Matter and the Networks Have a Responsibility to Those Markets to Air Highly Rated Programs in the Sweep Months

SWEEP PERIODS

HOW IS TV VIEWING MEASURED?

Local Samples (210 DMAs)

56 Metered Markets

25 LPM Markets

31 Set Meter Markets

154 Non-Metered Markets

14 Code Reader Markets

140 Diary Only Markets

National Sample (Covers the Whole USA)

• National Sample

• Used to Measure Network Broadcast and National Cable

• Nielsen Homes Have Set Meters With “National People Meters” (NPMs) Attached

• Currently There are Approximately 23,000 Homes in the National Sample

• Starting September of This year (2015) the National Sample Will Grow to 40,000 Homes

• The Networks Get 364* Days of Data

• Overnight Data 364 Days a Year

• Household Information

• Demographic Information on Many Demos

• 12 Rating Books a Year, Delivered Monthly

HOW IS TV VIEWING MEASURED?

• Local Sample

• 210 DMAs

• Used to Measure Local Broadcast and Local Cable

• 56 “Metered” Markets

• 154 “Non-Metered” Markets

• 210 TOTAL

• Broken Up, Even Further as Follows:

HOW IS TV VIEWING MEASURED?

56 Metered Markets

25 Local People Meter

Markets

31 Set Meter Markets

154 Non-Metered Markets

14 Code Reader Markets

140 Diary Only Markets

• There are 56 “Metered” Markets

• 25 LPM Markets

• Have Set Meters With “Local People Meters” (LPMs) Attached

• Markets 1-25

• Largest Share of Ad Revenue in These Markets

• 364* Days of Data

• Overnight Data 364 Days a Year

• Household Information

• Demographic Information on Many Demos

• 12 Rating Books a Year, Delivered Monthly

HOW IS TV VIEWING MEASURED?

• 31 Set-Meter Markets

• Markets 26-56

• All 31 Have Set Meters Installed in the Sample Homes

• These Markets DO NOT Have People Meters Installed

• Until 2015, These Markets Received 364 Days of Overnight Data

• Household Information ONLY!!

• These Markets Got Their Demographic Info From Diaries

• Were Supplied With Full Books (Including Demo Data) Only 4 Times a Year

• In the Sweep Months

• Some Markets Choose to Pay for Additional Books in January, March and October

HOW IS TV VIEWING MEASURED?

• **Now – *New – As of 2015!

• Nielsen Announced a New Methodology for These 31 Markets Called the “Viewer Assignment” Methodology

• Nielsen Will Begin Using the National People Meter Demo Data Along With Local People Meter Demo Data in Regional Markets to Supply These 31 Markets With 12 Books a Year

• The People Meter Demo Information Collected Will Be Estimated to Make a “Likely” Scenario for the Households in Each of These 31 Markets

• There Will NO LONGER be Diaries in These 31 Markets at All

• They’ll Have HH and Demo Info 12 Times a Year, Instead of Four

• Continued HH Overnight Data

• No Demo Overnights

• But the Big Change is That They’ll Go From 4 Books a Year to 12 With More Sophisticated Technology Allowing them Demo Info with 12 Books a Year

HOW IS TV VIEWING MEASURED?

• 154 Non-Metered Markets

• Markets 57-210

• Until 2015, These Markets Received ONLY 4 Books of Data aYear

• There Was NO In-Home Technology in Place in These Markets for Measurement

• All Data (HH and Demo) Came From the Diaries

• Were Supplied With Full Books (Including Demo Data) Only 4 Times a Year

• In the Four Sweep Months

• No Overnight Data of Any Kind

HOW IS TV VIEWING MEASURED?

• 14 Code-Reader Markets

• **Now – *New – As of 2015!

• 14 Markets Within Markets 57-210

• These Markets Will Have NEW “Code-Readers” Installed

• Code Readers are a Brand New Technology for Nielsen Designed to Give More Sophisticated Technology to These Small Markets

• The Networks and Show Producers Have “Encoded” All Their Programs With a Code That These New Nielsen Code Readers Can Understand and Pick Up

• There Will be 400-800 Code Readers in Each Market; 1 Per Every TV in the Household

• The Code Readers Will Supply Each Market With HOUSEHOLD INFORMATION ONLY

• Diaries Will Still Need to be in Place to Get the Demo Information

• These Markets Will NOW Receive 12 Full Books a Year With HH and Demo Information

• No Overnights of Any Kind

• But This Change is a HUGE Advancement in Technology for These Small Markets

HOW IS TV VIEWING MEASURED?

HOW IS TV VIEWING MEASURED?

DMA Rank Markets Code Reader HH

70 Flint-Signaw-Bay City, MI 400

82 Madison, WI 400

107 Reno, NV 400

123 Santa Barbara-Santa Maria-San Obs., CA 400

40 Grand Rapids-Kalamazoo-Battle Creek, MI 800

45 Harrisburg-Lancaster-Lebanon-York, PA 600

54 Fresno-Visalia, CA 500

58 Albany-Schenectady-Troy, NY 500

59 Mobile, AL-Pensacola (Ft. Walton), FL 500

71 Tuscon (Sierra Vista), AZ 500

81 Paducah, KY – Cape Girardeau – MO 500

95 Charleston, SC 400

118 Traverse City-Cadillac, MI 400

122 Yakima-Pasco-Richland-Kennewick, WA 400

• 140 Diary Markets

• 140 Markets Within Markets 57-210

• These Markets Receive ONLY 4 Books of Data Per Year

• There is NO In-Home Technology in Place in These Markets for Measurement

• All Data (HH and Demo) Comes From the Diaries

• They are Supplied With Full Books (Including Demo Data)

• Only 4 Times a Year

• In the Four Sweep Months

• No Overnights of Any Kind

• The Sweep Months Still Matter a Great Deal to These Markets

HOW IS TV VIEWING MEASURED?

• If I Were to Guess The Future I’d Predict…

• If the “Code Reader” Test Markets are Successful

• Nielsen Will Likely Take the Diaries OUT of All 210 Markets

• Install Code Readers Into All 210 Markets

• Use the “Viewer Assignment” Model to Assign Demo Information

• Give Everyone in All Markets 12 Books a Year

• This is Just MY Guess. I Have No Knowledge That This Will Really Happen in the Future. Just My Assumption.

• We’ll See…

HOW IS TV VIEWING MEASURED?

Set Top Box Measurement

• 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, Unrated by Nielsen Networks and Ad Agencies

• By Q1 ’15 They’ll be in 26 Million Homes

• Rentrak Will Have Data From About 1 in 4 Homes

• “Massive and Passive”

SET TOP BOX DATA

• STB Data has Many Challenges to Overcome

• It is Not a Representative, Random Sample of the U.S. 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 Using it

• There are Still Great Skeptics to STB Data, But it Appears That Nielsen is Getting Into the Game of STB Data in Addition to Their Sample, Which Will Help the Cause Tremendously

SET TOP BOX DATA

Research:Definitions, Formulas & Terminology

• 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 The Night Shift on NBC on Monday From 10-11p

• The Next Home is Viewing NCIS: LA 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

HOUSEHOLD USING TELEVISION (HUT)

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

• 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 The Night Shift on NBC

• The Next Home is Viewing NCIS: LA on CBS

• The Next Home is Viewing Castle on ABC

• The Fifth Home is Not Viewing Any Television Program and Therefore is Not Counted in the Share Equation

• The Night Shift = 2 Out of 4 Homes Viewing = 50 Share (2/4)

• NCIS: LA = 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%

SHARE

NBC NBC CBS

ABC NOT USING TV

• 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 The Night Shift on NBC

• One of Five Homes is Viewing NCIS: LA on CBS

• One of Five Homes is Viewing Castle on ABC

• One of Five Homes is NOT Viewing Television at That Time

• The Night Shift = 2 of 5 Homes = 40 Rating (2/5)

• NCIS: LA = 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)

RATING

NBC NBC CBS

ABC NOT USING TV

• Rating Media Math

• Example:

• If There are 5,647,440 TV Households in Los Angeles…

• And if “The Voice” Has an Average of HH Audience of 500,000

• The Math Would Work as Follows:

• (500,000 / 5,647,440) x 100 = 8.8 Rating

• Remember: One Rating Point is = 1% of the TV Universe

• A 1 HH Rating Point Represents 56,474 Households

RATING MEDIA MATH

• Impressions (or Thousands) 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 NCIS: LA 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

IMPRESSIONS

CBS CBS CBS CBS CBS

• Impressions (Thousands) Media Math

• Example:

• If There are 5,647,440 TV Households in Los Angeles…

• And if “CSI” has an Average HH Rating in LA of a 3.5

• The Math Would Work as Follows:

• (5,647,440 x 3.5%) = 197,660 (Avg. HH Audience)

• 197,660 / 1000 = 197 Thousands

IMPRESSIONSMEDIA MATH

• VPVH (Viewers Per Viewing Household) is a Calculation That Quantifies the Concentration of a Particular Demographic Within Viewing Homes

• Example:

• There are Five Homes Viewing NCIS: LA 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 0.800

VPVH

CBS CBS CBS CBS CBS

• 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

GROSS RATING POINTS (GRPS)TOTAL IMPRESSIONS (000)

Program Units Rating Impressions GRPs (000)

Meredith Viera

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

• Reach or Frequency are the Choices Made in the Media Planning Process to Help Determine the Most Effective Advertising Schedule for a Particular Advertiser

• And a Balance of Reach and Frequency is a Must for All Media Buys

• Reach

• Reach Refers to the Number of DIFFERENT People Who Have Been Exposed to an Advertising Campaign at Least Once. Each Person is Counted Only Once, Regardless of How Many Times They Saw the Spot. Reach is Expressed as the Percentage of the Target Audience Reached at Least Once With a Given Schedule.

• Frequency

• Frequency Represents the Average Number of Times a Person (in the Target Audience) Was Exposed to the Commercials. Studies Have Shown That a Frequency Below 3 Does Not Deliver an Effective Campaign.

REACH AND FREQUENCY

• Cume

• The Percent (or Number) of Households or People Who Watch at Any Time During a Specified Time Period

• Cume Indicates a Cumulative Audience

• Cume Audience is the Number of DIFFERENT Individuals Who Viewed a Program

• Cume is an UNDUPLICATED NUMBER

• Cume is Synonymous With “Reach”

• Programs are Evaluated on an AVERAGE AUDIENCE Not a Cume Audience

CUME

MEDIA FORMULAS TO KEEP IN MIND

Rating Share x HUT

Share Rating / HUT

HUT Rating / Share

VPVH Viewers / Viewing Homes

GRP Reach x Frequency

Time-Shifted Viewing and Recent Changes Within Nielson Measurement

• 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

TIME-SHIFTED VIEWING

• In the Local , LPM Markets (Top 25) Nielsen has Changed the Way HUTS are Defined Based on Time-Shifted Viewing

• This Change Started in January of 2014

• Example:

• Assume That a Household in LA, RECORDED “The Voice” on Monday From 8-9pm

• That Same Household in LA, WATCHED the Recorded Episode of “The Voice,” Later That Week, on Saturday at 12noon

• Until Now, Both the HUT and Rating Would Get Assigned to “The Voice” at the Time of Recording

• Now, the Rating is Still Applied to the Program, But the HUT is Assigned to the Time the Program is Viewed

CHANGES TO HUTSIN LPM MARKETS

Stats:Key Stats on Key Players

HOURS OF WEEKLY MEDIA CONSUMPTION

AVERAGE AGE OF BROADCAST VIEWERS

TOP BROADBAND PROVIDERS (2015)

Category Provider Subscribers

Cable Comcast 21,586,000

Time Warner 12,073,000

Charter 4,956,000

Cablevision 2,756,000

Suddenlink 1,135,500

Mediacom 997,000

WOW (WideOpen West) 729,700

Cable ONE 486,142

Others 6,505,000

Subtotal 51,224, 342

*Source: LeichtmanResearch Group

Sales:Terminology, Currencies, Marketplace

• Upfront: The Marketplace for Buying TV Commercial Time Well in Advance of the Telecast Date and Usually for an Extended Period, Such as 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 Commercial Units Given to an Advertiser Either in Anticipation of Audience Under-Delivery or After the Fact; a Recap May 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

TERMINOLOGY

• 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

• 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 and 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

TERMINOLOGY

• 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:

Early Morning 5am-9am Daytime 9am-4pm Early Fringe 4pm-7pm

Prime Access 7p-8pm Prime; Mon-Sat 8pm-11pm / Sun 7pm-11pm

DAYPARTS

• 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)

• If “CSI” Delivers a 8 HH Rating and the Rate is $20,000…

• $20,000 / 8 = $2,500 CPP

• The Primary Function of a CPP is to Estimate the Total Cost of a Planned TV

Schedule Within a Given Market

• CPP Enables a Buyer or Planner to Quickly Estimate a Given Budget or

Market Conditions

• Local TV Markets Have Always Been the Users of CPPs, Where National

Cable, Network TV and Virtually Every Other Media Uses CPMs

CURRENCIES

• Cost Per Thousand (CPM): The Amount of Money an Advertiser Pays to Deliver 1,000 People or Homes

• The “M” in CPM Stands for the Roman Numeral for 1,000 or the Latin Word “Mille,” Which Means 1,000

• Time Period Cost / Audience x 1,000

• Example:

• If “Dancing With the Stars” on KABC Costs $10,000…

• And if the Average Viewership of “DWTS” on KABC is 350,000 Households…

• The CPM Would be Calculated as Such:

$10,000 / 350,000 = 0.028

CPM = 0.028 x 1000 = $28.57

CURRENCIES

• The Primary Function of a CPM is to Evaluate Broadcast Media

• It is Used to Compare the Cost Efficiency of One TV Station With Another. The Goal of the Agency or Buyer is to Attain the Largest Audience at the Lowest Price.

• CPMs Can be Calculated for Any Medium – or Across All Mediums

• For Many Years Local Media Was Always Purchased Against CPPs, Not CPMs

• Today, More and More Local Media Buyers are Starting to Use Thousands and CPMs Instead of Ratings and CPPs in Their Avail Requests

• The Reason is That it’s Easier for All the Media to be Evaluated Against the Same Currency

• Every Media Out There Today is Measured on a CPM and So Local TV Must Adapt

CURRENCIES

CURRENCIES

ACTUAL AGENCY AVAIL

ACTUAL AGENCY AVAIL

• 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 AGENCY’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

CURRENCIES FROM THE STATION’S POV

• 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

FACTORS EFFECTING THE MARKETPLACE

• 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

GROSS vs NET

Media Spending Trends

MEDIA INFLATION RATES

TOTAL MEDIA AD SPEND TRENDS

TV AD REVENUES:TOTAL

UPFRONT SALES

Upfront Sales (Billions)

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

HOW MUCH DOES A :30 SPOT COST:NETWORK BROADCAST

LOCAL AD MARKET SPENDING

LOCAL MEDIA 5 YEAR FORECAST

LOCAL MARKET TRENDS

LARGEST GLOBAL AD SPENDERS

Tracey McCormackPhone: 323-977-TMAC

Email: Tracey@McCormackMedia.netWebsite: www.McCormackMedia.netTwitter: @TraceyMacTweetsLinkedIN: Tracey McCormackFacebook: McCormack Media ServicesYouTube: Tracey McCormackGoogle+: McCormack Media Services

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