When we look at the TV ratings, what we are looking at is a sampling of the country as put together by the Neilsen company. And it's been that was since the 1950s. The idea is that Neilsen chooses a sampling demographic and with their permission, monitors their viewing habits. Originally this was done through a viewing diary where Neilsen families kept track of what they watched. This morphed into a small monitor box on the television. In 2005 Neilsen expanded to include DVR viewings. The results are reported in ratings and share showing both the overall market and target demographics. Networks used these numbers to set prices for the advertising slots, or inventory, that they would have available to sell. Advertisers would uses these numbers to chose where they wanted to market their products.
NBC Universal doesn't think that Neilsen Ratings are the only game in town any more and they are offering up $1 billion of the advertising inventory using its Audience Targeting Platform (ATP) to prove it.
ATP, which uses information from set top boxes and third party sources, has been used for the last two years to sell what the company calls 'certain brand segments' and only during the Upfront. This year it will be available to all advertisers and in both the Upfront and the scatter market. The use of ATP allows advertisers to target viewers with a more sharply defined set of characteristics, no longer relying on the broader demographic choices of the past: Men or Women in a particular age group. NBCU is saying that ATP buys will be "fully guaranteed" to deliver "precisely defined customers" across all platforms.
This is part of what NBCU calls their Symphony strategy, which allows buyers to promote their products using the company's celebrities across all of their broadcast, cable and digital platforms and can even tap into Comcast's, their parent company, distribution assets and theme parks. Universal Pictures, The Secret Life of Pets, is considered a huge success of the Symphony strategy.
This change could have huge ramifications across television if it catches on. For the major networks, if a show drops below a 0.7 rating it's considered a flop and in all likelihood will be cancelled shortly. That's not the same case for show on the CW which have a lower threshold. But if that overall ratings number is taking out of play and shows are then looked at based on the specific audience an advertiser might reach… a show that has historically done poorly might continue because advertisers want that specific audience and other shows that get huge ratings could end up moving on if no one wants to market to that particular audience.
A show like NCIS which pulls in 14 million viewers only gets a 1.6 rating in the 18-45 demographic while The Flash which airs at the same time only reaches just around 2.7 million viewers but gets a 1.0 rating in the same demographic. But in an ATP style set up you can break that audience down even more and it could be that advertisers are more likely to get sales out of the Flash audience than NCIS, strengthening the CW show and weakening CBS's juggernaut.
That said, I think the Neilsen rating system is flawed and needs to be replaced and if advertisers get behind ATP and start asking other networks for similar data and buying options, we could see the change happening quickly. But we could shift from programming dictated by a small sampling of America to one dictated by the products advertisers need to promote.