Hi All! Sorry I have been absent lately. To be honest fandom things have not been the same with JLS leaving, and it’s been tough! But this post has been in my drafts for a while. I work in the industry and see a lot of posts and questions about ratings and what they mean so I thought I would post some info from my perspective. Some of this is oversimplified, and I’ll likely post in pieces. Feel free to ask any questions!
TV ratings, what they mean and what about Chicago PD? Part 1
Why are ratings important?
They provide info on viewership to networks, advertisers and the media and how people are consuming content put out by the networks.
How are ratings calculated?
Ratings are calculated via statistical sampling. There is a core group of people that form a sample audience, and their habits are tracked and then that data is extrapolated to draw conclusions over a larger audience (this is a gross oversimplification), but net net this is how it works. There are about 130MM homes with TVs in the US. The sample is about 20k. This is done by Nielsen. It’s an imperfect science, but it’s the science we’ve got.
What about streaming?
The bane of an advertisers existence is the lack of accurate cross platform measurement. Streaming provides more exact data, but there is still a lack of technology that provides accurate measurement of reach and frequency across platforms. There have been advancements. This is a post for another day.
Why does this even matter?
Advertisers pay to air commercials during shows. They select where to air based in part on ratings and the estimates of the number of households or people they can reach for a certain cost and how many times they can reach them. Advertisers need to figure out how much of their advertising and promotion money goes into linear TV advertising and connected TV advertising vs. other media like digital (social media advertising, online video and other digital advertising, search, PR, etc).
Networks also use ratings data to determine if a show should be kept or cancelled. The amount of advertising dollars that a network can make off of a show is a critical element in their profitability calculation. If a show has more viewers, it has more eyeballs and those eyeballs are worth money to advertisers and consequently, networks. Advertisers and media agencies calculate based on a combination of data sources the return on investment generated from these different media channels and that determines the amount of money they will invest.
When do they invest?
Linear and Connected TV can be purchased in the upfront season and on scatter-outside the upfront. The upfront is a period of time where advertisers sign year-long deals with networks (at a discount, theoretically) in exchange for a specified amount of ad inventory in the form of impressions. The upfront is also refers to the presentations that happen during this time by the networks to advertisers. This used to be a huge fancy boondoggle with presentations and star talent, but has changed since covid. Advertising is a supply demand marketplace and there is usually only 16 minutes of ads per one hour show. Ratings, quality of viewership, shifts to streaming and digital platforms all play a role in ad costs and inflation or deflation. Plus, ROIs vs other platforms.
Is traditional TV doomed because of streaming? Do the viewers who watch on peacock the next day count?
This is a great debate but for many household brands looking to get the word out, traditional TV still drives a ton of reach within valuable demos. Streaming can for sure augment this reach. The cost of advertising on streaming is greater on a per impression basis but it has proven to be profitable so that’s good for advertisers
Analytics have expanded to include more than immediate and fast national ratings (same day viewing), and include +3 and +7 day viewing which will take into account first time views on streaming devices. There is also data that will tell advertisers the percent of people actually watching commercials during this timeframe. For instance a lot of people subscribed to ad-free streaming during covid but that has come down a lot since the economy is in crisis and people’s dollars are not going as far.
What do all of the ratings points mean? What about number of viewers? What’s a rating point? A GRP? An impression? What is share? And have ratings really tanked since JLS left? Will the show be cancelled because of low ratings? Who decides this and how? How do individual actor contracts play into all of this (if at all)? How do networks really get ad money? And more… stay tuned for part 2 and 3!
