The line has blurred between National Broadcasters and Cable Programmers. The Walking Dead on AMC is a top-rated show; Monday Night Football runs on ESPN. Advertisers wanting to reach consumers on a local basis in these programs are quick to consider Spot Cable as a viable advertising vehicle. Agencies looking at viewing shares and trends in the local Nielsen books are eager to build the medium into their local media plans and buys. The industry has come a long way in evolving Spot Cable from a commercial-count-only transaction, to having measurable audiences. National Cable Communications (NCC) has been at the forefront of creating an index and methodologies to make this medium feasible for the accountability-minded advertiser. It follows that their growth is dependent upon the support of large advertisers and their agencies, which is tied to their ability to quantify impressions and ratings. Nielsen Media Research alone does not offer this capability.
What we tend to see, however, is a tremendous lack of consistency in the way that Spot Cable is handled by individual agencies, and a general lack of knowledge by clients (and even their agency people) with respect to some of the nuances of this growing media channel. So, read on for five key concepts that are crucial to understand in assembling any media plans or buys that include Spot Cable.
Some Key Concepts
In order to understand some of the complexities of the Spot Cable ecosystem, it’s important to be familiar with a few key entities and concepts:
- Multiple System Operator (MSO) – An MSO is an operator of multiple cable or direct-broadcast satellite television systems. Examples include Comcast, Time Warner, Charter, and DirectTV. National cable networks (ESPN, TNT, etc.) give several minutes per hour of local advertising time to their distributors (the MSOs). The MSO will sell some of this time directly in local markets, and other time will be sold by third parties such as programmatic exchanges or reps like NCC.
- National Cable Communications (NCC) – Owned by three of the largest cable operators in the U.S. (Comcast, Cox Communications, and Time-Warner Cable) NCC Media represents advertising sales for those companies, local cable systems, and alternate TV service providers nationwide. They provide “one-stop shopping” for multi-market spot cable advertisers and their agencies.
- Zones (or Soft Zones) – Unlike local broadcast, in which an entire Nielsen Designated Market Area (DMA) receives the same ads, cable is served to subscribers in smaller geographic “zones”, each of which can have the capability for local ad insertion. This makes local cable a popular channel for retailers.
- Interconnects – An interconnect is a collection of many zones, usually by the largest MSO or MSOs within a market (or DMA). It is a way to purchase a large swath of the local cable households within a DMA, however as we’ll see, an interconnect buy is not the same as buying “all” of the cable and satellite households in a DMA – in fact, far from it in some cases.
- Syscodes – A syscode (system code) is a specific 4-digit code assigned by NCC to represent a specific geography available for ad insertion in local cable. A syscode may represent a specific zone, a grouping of zones, an entire interconnect, or even an interconnect and adjoining zones. A given household may fall into several syscodes.
Five Things You Might Not Know About Spot Cable
- Interconnects do not provide DMA-wide advertising coverage. Though marketed as a one-stop-shop for regional or national advertisers, these conglomerates of major local cable systems and/or satellite providers for the purpose of advertising sales represent anywhere from 16% to 80% of Nielsen DMA TV Households. In most larger markets, the Interconnect covers 40-60% of households. Besides the households which do not have cable or satellite subscriptions, there are inevitably various geographic pockets which are not covered by the main Interconnect. It is crucial for advertisers and their agencies to have a good understanding of the population coverage relative to the market’s total TV Households. A DMA-equivalent TRP in spot cable is a mathematical expression … it does not represent “full” coverage of the DMA or even all of the cable households within the DMA.
- NCC’s Sys Codes are the only available industry standard key (or legend) to local cable populations or universes as they relate to the various ways in which ad buys can be configured. These populations are updated regularly, but are subject to self-reporting from participating cable operators and satellite providers. Further, they are published with little technical documentation as to the time period captured or the appropriate application of the data. This data is maintained for - and sold on a subscription basis to - advertisers, agencies, industry buying software platforms and other end users for the purpose of Spot Cable audience calculations. It is left to these end users to apply this data in an appropriate, timely and consistent fashion – a task which they perform without much consistency. It is not evident to Clients whether or to what degree this data is being managed appropriately.
- Some of the major industry buying software platforms were incorporating Ad Insertable Universe Estimates (AIUEs) only as recently as this year (as if the number of households in which your commercial could run was irrelevant to an audience calculation!). In addition, different industry buying platforms (Media Ocean, Strata, etc.) will return different calculation results based on the aforementioned lack of standardized usage documentation accompanying the NCC data. Some software will continually update with no linkage of updated subscriber counts to the air dates of the commercials, while others will allegedly time-stamp the update and tie that to any ratings calculations for that time period regardless of when the numbers are run. There is little documentation or transparency to accompany how this is being executed – meaning your front-line agency people likely have no idea how your local cable post-performance information is being calculated.
- Nielsen does not report the transactional ratings. Though the local Nielsen product (NSI) measures viewing to cable programming, the audiences and shares reported cannot be purchased in any practical manner by a local advertiser (you may be able to get close in Local People Meter (LPM) DMAs but it requires purchase of every single zone). In order to calculate audiences for local buys in non LPM DMAs, additional non-Nielsen data overlays must be applied. Nielsen’s local sample sizes do not allow for robust network level reporting of local cable in small and mid-sized markets. (On a separate but related note, this is why Nielsen’s syndicated competitive reporting tools like Ad Intel (formerly Monitor Plus) do not capture Spot Cable). Although Nielsen competitor Rentrak does have larger samples in many of these markets due to its set-top-box methodology, it does not report cable ratings at the sub-market (i.e. interconnect, zone) level. Its methodology for assigning demographics to ratings is also inconsistent with Nielsen’s, which continues to be viewed as the industry standard.
- NCC has thus developed alternate audience calculation methodologies – Fusion and National Data Modeling (NDM) – to compensate for small Nielsen sample sizes returning no results for demographic slices or fragmented cable viewing. Fusion and NDM abandon NSI in part (Metered markets) or in full (Diary-measured markets). Fusion applies a Nielsen National demographic skew to local household viewing data while NDM projects National viewing patterns to a local population. These methodologies have been broadly embraced by the selling and buying (agency) communities. So chances are, your agency is posting your local cable this way whether you know it or not.
Why is all of this important? As this channel continues to grow, it’s important for there to be better standardization and documentation with respect to the way that data is handled, so that clients have full transparency into the process and results. Particularly as more and more spot cable inventory is traded programmatically (a buying paradigm which in many cases has its own transparency issues), it’s important that clients (and their agencies) understand what they are buying and how their buys performed – in an accurate context.
What should an advertiser or agency do? Be educated. Consider the costs relative to local broadcast stations as well as to National buys (if an option). Think about the insertable geography that can be covered or not, and how narrowly the desired programming can be purchased and/or guaranteed. Discuss any compromises that may have to be made based on the available data and ramifications on audience guarantees. And most importantly, continue to advocate for improvements in measurement and accountability for this medium the same way we do for any area of media investment.
If you enjoyed this post, you might also like “Spot TV Advertisers: Understanding Nielsen's Measurement Updates”.
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