Local Ratings Key to Finding Missing Millions

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Despite a lot of complaining about local-ratings research,
most MSOs aren't exactly rushing into new commitments.

Even with the much-ballyhooed audience gains enjoyed this
year by the basic-cable networks, cable isn't getting its due at the local-operator
level. That's largely due to a lack of reliable audience research, according to
Cabletelevision Advertising Bureau president and CEO Joseph Ostrow, CAB research vice
president Jonathan Sims and Jerry Machovina, executive vice president of ad sales at
Tele-Communications Inc.'s TCI Communications Inc.

Putting that buyer dissatisfaction in dollar terms, Ostrow
said cable's sales should be much higher. The Nielsen Media Research diary
methodology that Sims dubbed "inherently flawed" has translated, Ostrow
observed, into "millions of viewers that we're missing and, as a result,
millions of [advertising] dollars that we're missing."

TCI has invested in ADcom Information Services Inc. to
begin producing local-ratings data for Dallas and San Francisco. TCI's investment in
ADcom will translate into spending "6 percent, 7 percent or 8 percent of our
revenues" on research, rather than the historic "1 percent to 2 percent,"
Machovina said.

Dick Spooner, ADcom's vice president of ad sales, said
in September that TCI's involvement would speed the researcher's planned
local-cable and broadcast-television-ratings rollout across the top 30 DMAs, and that
talks were under way with MediaOne and other MSOs.

But MediaOne -- the first MSO to use ADcom's
local-ratings data, for the past two years in Jacksonville, Fla. -- has yet to expand that
commitment to other markets. Ed Dunbar, vice president of ad sales at MediaOne, has been
unavailable for comment.

Sims said ADcom's rise will mean more demographic
ratings, rather than household ratings, for cable.

To operators and interconnects like Bay Cable Advertising
-- which prefer having agency buyers base their buys on households, rather than on
demographics -- Ted Block, executive vice president and director of media at Foote, Cone
& Belding, San Francisco, said during a Western Show panel earlier this month,
"Not gonna happen: [Agency] planners for the last 25 years have been planning on
demos, and they will not go back to having part of the buy being done against
households."

That approach "is going backwards," Block
reiterated, in responding to an Adlink seller's complaints.

Although cable has trumpeted near-perfect run rates due to
digital ad insertion and back-office improvements that make it far easier to buy, Block
presented the buyers' perspective when he emphasized that local cable nevertheless
lacks reliable demographic audience data.

Block called cable's local-ratings situation "a
real problem … We need to figure out [a solution]."

Noting that cable's share of total local-television ad
sales last year was just 9 percent, or $2.2 billion, and citing CAB estimates that total
cable ad revenues should top $10 billion in 1999, Ostrow said all of those tallies should
be higher still.

Even if cable's audience share was cut from 37 percent
to 27 percent to factor in the lower reach of insertable networks, Ostrow said,
cable's local share should still be closer to $4 billion.

Sims, citing a recent Nielsen side-by-side comparison of
"People Meter" and diary data on cable- and broadcast-television-network
audiences, said the meters pick up considerably more cable viewing than the diaries do.

Nielsen diaries' total-day viewing among adults 25 to
54, for instance, showed a 41 percent shortfall when compared with the metered data, Sims
said, whereas the TV networks' slippage was about 2 percent. Results among adults 18
to 34 were similar, he added.

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