Technology Transforms TV Ratings And Ad Sales

How are television ratings being done these days? It was only about a decade ago that TiVos and other DVRs started showing up in U.S. households. And more and more, we're watching TV online and on demand. How is the new technology changing the science of television ratings?

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DAVID GREENE, HOST:

Believe it or not, there was a time when you had to watch a television program when it actually aired. Then came VCRs, which had certain drawbacks.

STEVE INSKEEP, HOST:

Who taped over my episode of "The Cosby Show"?

GREENE: Then just over a decade ago, TiVo and other digital video recorders started showing up in many households. And now about half of Americans use DVRs to watch TV when they feel like it, not when shows happen to be on. More and more, we're watching television online, on demand. NPR's Neda Ulaby reports on how all of this technology is changing the science of television ratings.

NEDA ULABY, BYLINE: TV ratings exist to help advertisers figure out how much to pay for commercials.

(SOUNDBITE OF ADVERTISEMENT)

UNIDENTIFIED SINGER: (Singing) If you're playing to win, here's a brand new soap...

ULABY: These commercials subsidize the programs we like to watch, at least on channels that aren't Showtime or HBO. But what's the value of a commercial on a show that got DVR'ed weeks ago? Only 11 percent of TV viewers watch their favorite shows live, according to a company called Pixel. And Nielsen, still the granddaddy of TV measurements, recently found that video on demand is in 60 percent of American households. That technology makes it harder to fast-forward through commercials.

BILL LIVEK: The video-on-demand platform, we believe, is the platform of the future.

ULABY: That's Bill Livek. He runs a company called Rentrak. It's kind of like Nielsen. Nielsen uses its own devices to track TV viewing habits. Rentrak gathers data from our cable and satellite boxes, about what we watch and when we watch it.

LIVEK: Over a hundred million anonymous television sets report in.

ULABY: Livek says Rentrak works with advertisers to combine its data about TV viewing with consumer data gathered other ways.

LIVEK: Whether loyalty cards that we have at our grocery store or drugstore, or the auto registrations that are publicly available.

ULABY: So it's because of Rentrak that you don't see truck commercials in New York City television. And it can help companies figure out if more people buy soap or cereal after their ads air on TV. And Rentrak's only getting bigger. It recently bought a company that measures how well product placement works. And over at Nielsen, executive Brian Fuhrer says his company also updates its methods for measuring audiences, all the time.

BRIAN FUHRER: We use audio codes that are embedded every two seconds. So as we track through the program, we know exactly which minutes of programs that consumers watch, and which ones they elect not to.

ULABY: Including ads. Fuhrer says that today's thousands of Nielsen families include ones where people watch TV only on broadband. Soon, it'll start measuring TV viewership on tablets and smartphones. And he says unlike Rentrak, Nielsen actually talks to TV viewers so they can measure more than just minutes glued to the screen.

FUHRER: Traditionally, Nielsen has talked about, you know, measuring the audience in a reach fashion. How many people did my program or ad reach? We're laying on top of that now the concept of resonance - you know, did it change people's attitudes?

ULABY: And they measure if it changes people's behavior. Nielsen still rules audience measurements, says analyst Tom Adams. His clients include both Nielsen and Rentrak. He says Nielsen was smart to start measuring streaming video and Twitter chatter and watching TV on new devices. And he says maybe it's time to start rethinking how it measures when shows are watched. Nielsen TV ratings count shows viewed within three or seven days after they air.

TOM ADAMS: They have this challenge of a lot of the DVR watching going on outside of the Nielsen window, and the parallel challenge of a lot of viewership moving to Web-based services that just don't yield anything that's equivalent to a ratings point.

ULABY: Nielsen and Rentrak are explicit about protecting consumers' anonymity and privacy. But Adams says there's still a ton of data being mined.

ADAMS: The thing that people generally need to think about is the privacy issue, frankly.

ULABY: All of it's being monitored: what we watch, what we buy and what we do online. That's known as social listening.

ADAMS: Social listening is kind of completely beyond privacy limits, in a sense, you know, and I think consumers tend to forget that.

ULABY: So TV ratings have evolved into more than just selling ads. They're now part of a marketing ecosystem, with loyalty cards and Facebook likes.

Neda Ulaby, NPR News.

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