by Dave Zornow
Published in Cable Avails magazine, November 1993

Ad-supported cable networks and agencies are involved in a hot debate about methodology, sample size, GRPs, and statistical reliability. Ironically, it has very little to do with research and everything to do with money.

The issue is posting, the report card by which agency buyers are graded for their purchase of network and syndication. Cable networks are crying foul because agencies post cable differently than other media. The CAB has asked agencies to treat cable like broadcast and syndication, saying that cable is at an economic disadvantage because the special methodology holds it to a higher standard than its competitors.

Network and syndication posts use a standard Nielsen Media Information Tape (MIT) which includes an average rating for all airings of a program during a week. For cable posts, agencies use the exact rating and VPVH for the quarter hour where a commercial ran, a methodology which the CAB contends is more stringent than the standard used for broadcast. Nielsen has just released an MIT tape for cable providing agencies the data to post cable the same way as broadcast and syndication. The CAB wants buyers to change their methodology, but few agencies are budging.

 "The issue is not a matter of money, it's consistency," says Dave Cassaro Senior Vice President of Advertising Sales at E!. "Now that Nielsen has finally got to the point where they can provide program level data for cable networks, we are only asking to be judged by the same set of rules used for broadcast and syndication." Cassaro contends that using the exact rating for the quarter-hour where the spot aired is less statistically reliable than the weekly or monthly averages preferred by the cable networks. Cable network researchers say this "day/date/quarter hour" method is more prone to under or over stating the audience delivery of cable schedules.

The CAB has produced a white paper to support this position. Both the CAB and Nielsen say that small schedules -- especially those on low rated, low coverage networks -- are more likely to show ratings "bounce" when posted using the exact quarter-hour procedure. For example, a media schedule with an average  .29 rating on a cable network with 33% national penetration could deliver anywhere between 17 and 33 GRPs. If a cable network under delivers on a guarantee of 25 GRPs, they would owe up to 8 ratings points and 28 spots. Assuming a rate of $500, that puts the seller in the hole for $4,000 cash or equivalent future inventory. If the seller delivers more than 25 GRPs it's a lost opportunity, because the seller can't take back spots once the goal is reached.

Cable network researchers say the quarter-hour posting methodology combined with the rules of the guarantee system put the cable networks in a "heads you win, tails I lose" position. "The reliability issue is in the buyers favor," says Richard Zackon, vice president of research at Court TV. "You lose when you over deliver, and you lose when you under deliver by providing make goods. The wider the swing, the more the seller loses."

But these arguments don't persuade Saatchi and Saatchi, one of the first agencies to implement the exact quarter-hour methodology.  "We started using exact day/date/quarter-hour before Nielsen could provide program averages for cable," says Sam Sotiriou, director of media research at Saatchi and Saatchi. "But after analyzing the results,  we decided that was a better way of looking at the data, because you're posting the exact audience which was viewing at the time the spot aired." Does Saatchi believe that cable is being judged unfairly compared to other media?  Sotiriou aggress that consistency is better, but his solution is to apply the day/date/quarter hour methodology to broadcast television and syndication too.

USA Network has produced an analysis to substantiate the CAB position. "Because of Nielsen's limited sample sizes, this posting methodology does indeed affect the total impressions reported, especially for narrow demographics," says Tim Brooks, vice president of research at USA. Brooks posted all of USA's schedules for two quarters using Saatchi's quarter-hour method and compared the results to USA's preferred methodology, weekly program averages with monthly VPVH averages. When USA combined its biggest advertising schedules with more than 100 million household impressions, Brooks found a net difference of less than 2% between the two methodologies. But smaller schedules -- those with 10 million impressions or less -- showed differences approaching 8%. Brooks says second tier and startup networks with fewer subs and smaller ratings will see larger differences.

Sotiriou says Saatchi did its own study comparing the methodologies before adopting cable quarter-hour posts, and the differences were inconsequential. "Based on the numbers we've looked at, the ups and the downs wash out," he asserts. "When Saatchi commits to a network we buy a lot of spots. We get reasonably good posts not terribly different from what our buyers negotiated because our investments in these properties are pretty deep."

Schedules which post higher than a seller promised are considered a bonus for the buyer. But the Chairman of the CAB's network research committee argues that buyers may have problems if the quarter-hour procedure consistently over delivers the guarantee. "What if an agency bought five cable networks, and they all over delivered?" says Howard Shimmel, Vice President of Research at MTV Networks.  "A client might say, you spent $1.5 million on cable, but you only needed to spend $1 million to reach the GRP goal. With advertisers' budgets being really tight, a buyer doesn't want to do that, either." Sotiriou thinks this argument is an unlikely scenario of extremes. "I could get struck by lightening or win the lottery, too," he says.

Although the debate is cloaked in research terminology, the real issue is which methodology gives the biggest advantage to the buyer or the seller. If quarter-hour posts are really less reliable than program average posts, the unstable ratings hurt the seller more than the buyer because cable networks must make good when the numbers say they didn't deliver. Many agencies are unwilling to give up the negotiation advantage that quarter-hour posts may provide, especially when the incentive is something as intangible as statistical reliability. ##

Dave Zornow is President/TNG Research, a media research consultancy and applications development company that works with media sellers and research providers.

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