Ratings Gold? Or Ratings Fools Gold?

Splitsider’s John Herrman writes about Nielsen and ratings…

Here’s where things get a bit weird. The press and public is interested in knowing how many people watch a show, because it’s the most obvious indicator of its success. This belief drives the way we think and talk about ratings. It also happens to be wrong.

To be sure, networks are interested in knowing how many people watch their programming, and freely tout or play down Nielsen’s wider audience measurements. But the numbers that networks and advertisers actually use — to sell ads, to set prices, and to decide on the fate of a show — are commercial ratings. In other words, advertisers don’t care how many people are watching a show nearly as much as they care how many people are watching their ads. Nielsen provides this number, which takes into account everything from next-day DVR viewing to fast-forwarding through commercials. If every Nielsen Family watched a show the day after it aired but skipped through all its ads, that show would probably be canceled.

In reality, a large majority of viewing still takes place live, when commercial skipping isn’t possible. (Though channel flipping during commercials can have a noticeable effect on C3 ratings.) Within the small-but-not-insignificant set of people who watch recorded shows, around half of them skip through commercials.

Absent from these ratings, and most others, are types of viewing that serious TV fans — and especially comedy lovers — are well acquainted with: Netflix, Hulu, iTunes and even on-demand cable viewing don’t count toward the ratings totals, either because they don’t have ads at all, or because the ads shown differ from the ones shown during initial broadcast. A show with 10 million weekly Hulu viewers and one million live viewers is only slightly better than a plain one-million-viewer show, in terms of revenue. Nielsen does track online activity, and plans to increase its coverage dramatically over the next few years. But unless the ads shown during an online broadcast are the same as the ones shown during the TV broadcast, online viewers will continue to be broken off into a separate and much less important figure, and not a show’s main rating.

This, more than anything else, explains why viewers feel uneasy about ratings. Networks, advertisers and Nielsen itself all know and acknowledge that the ratings reported and transacted with don’t reflect a show’s full audience. Back to the example of the inauguration: it strikes people as problem that the event’s viewership didn’t seem to be measured properly, but for the people who buy Nielsen’s data, it’s really not. It tough to make much money on an one-off event with no ad breaks.