After years of media industry debate about the effectiveness of ads on television, Nielsen Media Research will finally help provide some answers.
Nielsen, the company that measures TV audiences and, hence, network ratings, will now proffer up TV ratings for commercials. It used to only do so for TV shows, but come fall, will provide minute-by-minute data.
The initiative will be important to the big networks, including GE's (GE - Get Report) NBC, News Corp.'s (NWS - Get Report) Fox, CBS (CBS - Get Report) and Disney's (DIS - Get Report) ABC. Needless to say, it will also be watched closely by advertisers large and small who collectively pour billions dollars into television buys each year.
In providing commercial ratings, Nielsen could be opening up a Pandora's Box for either advertisers or the networks. The networks say the new ad ratings will show that TV is still the best medium to reach the masses and that viewership doesn't really drop off as much as advertisers say. Advertisers, in turn, believe results will show that they've been overpaying the networks when people are turning away and tuning out.Media company stocks have not performed well in recent times. The possibility of advertiser defection from TV based on weak commercial ad ratings figures would be unwelcome at a time when this year's upfront sales were flat to down. Meanwhile, the Internet continues to emerge as a powerful competitor for eyeballs, especially coveted younger ones. On the flip side, if the Nielsen data shows that folks don't channel surf as often as was previously thought, the news will be good for the networks, and advertisers will likely be forced to pony up more cash for spots, especially around big hits like American Idol. Advertisers and networks have known for years that people use their remote controls to flip channels during commercials. Now both industries have larger challenges from emerging technologies including the DVR, which allows wholesale ad skipping.