We are all in the business of television, yet I've often wondered how well we, as an industry, truly understand how consumers use our product.
As ad-supported networks, or as cable operators trying to communicate the value of local avails to potential advertisers, such knowledge would seem to be critical. Yet many companies in our industry continue to maintain a dubious-and, some might even argue, outmoded-sense of priorities when it comes to measuring the impact programming has on viewers.
Despite the wealth of consumer data at our disposal, we continue to focus on numbers that often misrepresent how successful certain networks are at delivering on their promise. Take ratings, for example.
A quick glance at the Paul Kagan Associates
Advertising Report 2000
details a very interesting paradox. When comparing the report's top five networks on a cost-per-thousand basis (CPM being the rate advertisers pay for every 1,000 viewers) to Nielsen Media Research's top-five-rated, ad-supported cable networks of 1999, we see two entirely different lists. In fact, remarkably, neither has a single network in common.
Why? Because household ratings fail to take into account the two essential components of a network's value to advertisers: the delivery of a selected consumer audience and the importance of the programming to that audience.
The networks making up Kagan's top five CPM list for 1999 are ESPN, Country Music Television, Black Entertainment Television, MTV: Music Television and ESPN2. Each of these still delivers on the original promise of cable television-that is, to provide more programming choices, and within those choices, content directed at specific, targeted audiences (the old phrase was "narrowcasting").
ESPN, for example, delivers an audience of sports-hungry fans, primarily young and male. CMT caters to viewers-and by extension, consumers-who are interested in the country-music lifestyle. BET appeals to young African Americans. MTV continues to be the only network dedicated to popular teen culture; and ESPN2 has followed successfully in ESPN's footsteps as a network that can speak to young males passionate about sports.
As reporters, analysts and other experts evaluate the performance of these networks in trade magazines (and in the business and consumer press), they continue to overlook the fundamental criteria by which each is judged as an effective advertising vehicle. Instead, they constantly fall back on a timeworn, increasingly inaccurate yardstick-household ratings.
The simple fact is that household ratings have little or nothing to do with the financial success of these five networks. In fact, their intentional effort to target selected audiences is precisely why all of them have been financially successful.
And while the term "narrowcasting" has virtually disappeared from the cable lexicon, never before has the opportunity been greater for cable networks to satisfy finicky, "narrowly focused" viewers.
Sound crazy? Only if you still believe that households watch TV-and people don't. Old household viewing theories like "share of viewing" dictate that if one network adds audience, it comes at the expense of another. "Viewer erosion" follows a similar philosophy.
But both of these old theories are based on the single-set, household-viewing model-a model that has become largely obsolete.
The fact is, there has been a growing (yet largely ignored) trend in personal television viewing: those watching TV are now much more likely to be viewing alone, and are more often than ever making individual programming selections. The reason is twofold.
First, there has been consistent growth in the number of TV sets in U.S households, and secondly, these new sets (mostly cable-ready) are being placed in more and different rooms within the home. This preponderance of sets allows for a far more personalized viewing experience.
Simultaneously, thanks to system upgrades and the launch of new analog and digital tiers, there has been an exponential increase in the number of programming choices across all dayparts. Consequently, despite the continued inroads made by the personal computer, television set usage within the home has actually increased over the past 10 years.
SETS ON THE MOVE
To provide greater context, let's look at the growth in multiset ownership and usage. According to Nielsen, since 1990 the percentage of homes with three or more sets has increased a remarkable 71 percent. Today, 41 percent of all U.S. households have three or more sets and 74 percent have at least two sets.
According to two separate studies by Statistical Research Inc., most televisions (41 percent) are now located in the bedrooms of various family members. In fact, over 60 percent of children aged 8 to 17 report having a TV in their room.
And while the number of sets per home has increased, the number of persons per household remains virtually unchanged (at about 2.6). As a result, the number of persons per set has actually decreased. However, due to a substantial increase in personal viewing, total set usage is actually up.
Consequently, when we review trends in TV usage, we find that the traditional "household" measure understates the actual usage of individual sets-and therefore, as a matter of significant consequence, underreports total television viewing. Since 1991, while the Nielsen-reported prime time HUT level has increased by a mere 1 percent, multiset usage within the home has increased 57 percent, resulting in an overall television-viewing increase of roughly 6 percent.
As more channels are offered and the number of TV sets grows, viewing inside the home has actually increased, as more sets are used simultaneously. TV viewing has become more of a personalized event, while so-called "family viewing," or the sharing of TV sets, has experienced a steady decline.
With such a multitude of choices available, and an increased ability to choose, viewers now have the freedom to select their favorite TV networks within the genres that appeal to them most. (And with so many choices and so much shelf-space clutter, it doesn't take a marketing genius to understand the importance of developing strong network brands and the significance of key "destination" networks.)
In the past, fulfilling the desire to watch want one person wanted was considered a luxury, or at the very least the product of a joint decision. Now, with the increased availability of TV sets in different rooms throughout the home, personalized viewing is a very common occurrence.
This change in behavior represents a remarkable opportunity for "niche" networks to growaudiences, as viewing within the home becomes more solitary and fragmented. It also means that household ratings are far less meaningful than they used to be (and for most networks, not necessarily reflective of the success they have achieved in targeting their primary demographic group).
It is not unreasonable to suggest that cable has been primarily responsible for this change in the viewing habits of the American public. The choices we have given the consumer, the quality of the programming we have developed-as well as its very targeted nature-have all played a part in creating a far more personal viewing experience.
Now we must take the next step, which is to rethink many of the old standards for success, while developing a system that can more accurately measure behavior patterns within our audience. Someday, in a perfect world, we will be able to track the real impact our programming has on viewers-rather than simply who's watching it.
In the meantime, it is critical we make better use of the data available to us, and pay much greater attention to the individuals who make up our audience.
After all, thanks to us, households don't watch television any more. People do.
Artie Bulgrin is vice president of research for ESPN Inc.