Nielsen Puts Off Tallying TV Ads

Networks, Ad Firms Debate TiVo Factor

Stuck in a squabble between the television networks and big ad agencies, Nielsen Media Research is postponing the rollout of an upgraded service that would more accurately measure how many people watch commercials, the company said yesterday.

Nielsen counts commercial minutes by reading the data sent from set-top boxes in participating households. The company has been moving away from user diaries and toward set-top boxes that automatically monitor shows, as a way to make its reports more accurate. At the heart of the issue is a debate over whether people actually watch commercials on shows they have recorded using digital video recorders, such as the popular TiVo brand.

For decades, networks have priced their commercial minutes based on the program on which they're shown. Popular prime-time programs such as CBS's "CSI" series and Fox's "American Idol" get top dollar for their commercial time, as much as $500,000 per 30-second ad.

Earlier this year, Nielsen, whose audience data are used to help the networks and ad agencies set commercial rates, said it would introduce a service that measures viewership for commercials watched live and up to seven days later on DVRs. This ignited the controversy.

Advertisers, arguing that few people actually watch recorded commercials, did not want to pay for their delayed viewing. Networks, citing data that show a significant number of viewers watch and recall recorded ads, even if they say they skip over them, wanted to charge extra for the delayed viewing.

Over the summer, it appeared a compromise had been struck, and Nielsen was set to launch the service Dec. 11.

But the ratings firm did itself no favors by releasing a study on Monday that showed most viewers who TiVo'd programs watched them in the first two to three days after they were recorded. This seemed to bolster the argument of advertisers that a seven-day time span is too long.

Controversy reignited.

As a result, Nielsen sent a letter to clients yesterday saying it would postpone the commercial-measuring service and schedule a meeting among all parties to try to devise a system acceptable to all sides.

"We're going to convene this meeting and see if we can generate some consensus on what commercial minutes we should be measuring," Nielsen spokesman Gary Holmes said yesterday.

Complicating matters, a number of cable channels said they would not participate in the new measuring service. Their concern: Cable channels carry a mix of national and local ads, and the new Nielsen service could not always differentiate between the two. Nielsen is fine-tuning the technology and said it should be able to tell the difference between local and national ads by the end of the year.

Nielsen was at the center of an audience-counting flap in 2004, when it introduced electronic devices called "local people meters" that showed how many people watched television in individual cities. Unlike the diaries, the meters automatically monitor programs that are being watched.

Initial results showed that a number of shows were being watched far less than had been reported in diaries. Showing particular drop-off were shows with predominantly black casts on the lightly watched UPN network, such as "Girlfriends" and "Eve." The new devices showed an upswing in black viewers for shows on Black Entertainment Television cable channels, however, mirroring the shift of viewers away from networks to cable.

But the shows featuring largely black casts were a revenue staple for UPN stations, many of which were owned by Rupert Murdoch's News Corp., and the new, lowered ratings data would cripple the stations' ad revenue. Murdoch's son, Lachlan, was running the television stations at the time and vowed to discredit Nielsen and start a rival ratings service. News Corp. supported a group called Don't Count Us Out that said Nielsen did not correctly count minority viewers. Nielsen disagreed, saying it made efforts to "overcount" minority viewers, who record Nielsen data at a lower rate than non-minority viewers.

The dispute ended after Nielsen said it would spend $50 million on technologies and practices designed to make sure it was accurately counting minority viewers.

TiVo also collects viewer data from its customers, including which commercials they watch, and sells the information to advertisers.