As consumers embrace a diverse array of streaming content providers, broadcast television, once a one-stop-shop for dominant advertising reach, continues to decline. The pandemic provided a final shot in the arm for table stakes network viewing, as audiences leaned into local news and spent more time in general watching television. However, as life, for the most part, has resumed and connected TV’s adoption curve is nearly vertical, the average daily percentage of U.S. households that watched linear TV in the Fall of 2021 was the lowest of any quarter in the past two years.
These trends have a domino effect on how viewership is measured and, in turn, how advertising agencies choose to make TV buys and how their assessment of viewer metrics influences those buys. As such, we’ve created a quick Q&A to offer our clients and partners a general lay of the land. Questions provide answers from how these external factors will influence our strategy to our approach to execution moving forward.
How will viewer metrics change based on the diverse ways (cable, satellite, streamers) people consume content via television?
Using an impression-based model will be critical for gauging advertising opportunities within the TV landscape. Largely fueled by two industry milestones, this shift is well underway. First and foremost, the pandemic fast-tracked consumption trends for most viewers, resulting in unprecedented growth in streaming viewership – well ahead of industry forecasts. Secondly, it was announced that Broadband Only (BBO) homes — television homes that can only receive video programming through a broadband internet connection — would now be incorporated into Nielsen Local Universe Estimates. This change took effect in January 2021 for Return Path Data (RPD+) markets and will roll out for Local People Meter (LPM) and Set Meter markets in January 2022.
RPD+ markets are smaller markets that make up 23% of the country’s TV Households. LPM markets include the 25 top cities in the country, representing 50% of U.S. TV Households, while Set Meter markets are mid-to-large size markets representing 27% of the total U.S. TV Households.
What are BBO households?
Television homes that can only receive video programming through broadband internet, known as BBO households, have surged in popularity recently and now comprise a whopping 25% of all TV households. That’s up from just 18% in 2018. Rather than relying on the traditional means of Over-The-Air or cable/satellite provider viewing, more people choose to stream their content exclusively. BBO homes access their programming using popular streaming services, including DirecTV Stream, Fubo TV, Hulu Live, and YouTube TV. These providers offer nationally available and live local programming.
How will these changes impact programming ratings and impressions?
With the addition of BBO Households, Universe Estimates will increase. And while broadcast TV stations will see an increase in impressions, they’ll experience a decrease in ratings, which are based on a percentage of Universe Estimates. With TV Households expected to increase by an average of 13% year-over-year, these changes will impact each market’s TV Household numbers differently. For instance, depending on location, we may see shifts from 3% (Miami-Ft. Lauderdale) to 39% (Juneau).
How will these changes impact the way we make TV buys?
The majority of TV stations currently sell inventory using a ratings-based model. In these scenarios, orders are transacted using Gross Rating Points (GRPs) as the common currency for fulfillment. GRPs are a measure of impact and are expressed as the percentage of the target market reached, multiplied by exposure frequency, e.g., 60% of target market x 3 ad spots = 180 GRPs.
Now that Nielsen will measure BBO homes, the total number of TV Households will increase. This will subsequently increase PUT (People Using Television). As a result, stations are forecasting a substantial decline in GRPs across most existing orders. This means that orders guaranteed on a GRP basis may experience significant under-delivery. What’s historically been considered an effective reach and frequency threshold, based on the market targeted, may need to be reevaluated.
Is there any concern about duplicate reporting with live, local streaming?
This new measurement will include impressions from live, local streaming platforms if the household passes the tuning test (5-plus minutes of streaming local content). Nielsen is only including BBO impressions that are placed through a linear feed, which eliminates impression duplication. With the inclusion of these new homes, it’s not possible to determine the exact number of impressions coming from streamed local content versus broadcast-only. Ad impressions placed directly through Hulu or other platforms will be captured in Nielsen’s Digital Ads Rating service.
How do we at Lewis Communications plan to adjust our approach to TV buying based on these emerging trends and changes?
The inclusion of BBO households allows us to shift from GRP to impression-based buying. By utilizing impression-based buying, we can ensure a more comparable unit of measurement across multiple media tactics as new platforms and audiences evolve.
As we work to transition into this new TV buying approach, our Channel Engagement team at Lewis will continue to review Nielsen and other industry resources on the topic of BBO household inclusion and impression-based buying. Most critically, the success of our buys hinges on the understanding that these changes will not affect markets equally. And, as a result, we’ll continue to analyze individual markets based on how each is impacted, especially within the geographies highly targeted by our clients.
Currently, Lewis adheres to strict buying guidelines. We’re committed to these guidelines because each ensures effective and cost-efficient buys for our clients. While our unit of measurement will shift, the integrity of our buys will remain intact. Our team will continue to strategically craft buys based on strong daypart mixes and brand-appropriate programming to reach our target audiences.