A narrower definition of the TRP could provide a panacea for advertisers and agencies that are hard-pressed to increase budgets to match the price increases media owners have introduced in the current upfront marketplace. Better-defined TRPs will drive business outcomes more cost-effectively.

CBS and Nielsen have found that advertisements reaching a high concentration of consumers who purchase specific product categories have a significantly higher correlation with sales outcomes. Thus, advertisers facing budgetary constraints could benefit by using better-defined TRPs in their media negotiations.

By contrast, advertisers that continue to focus on broadly defined GRPs reaching audiences outside of their targets may only satisfy general awareness outcomes among audiences ill suited to becoming good customers. Advertisers who pour their media budget into better-defined, TRP-focused inventory will reduce waste. The corollary to this is that, when an advertiserb?s goal is increased product sales, buying GRPs without a narrow target produces significant waste.

Several steps are required to shift to more narrowly defined TRPs as a core media negotiation focus. Many of these steps were impossible to accomplish until recent advances in data collection and processing. They include:

• Aggregation of sales data, which may come from a syndicated data provider or a retailer
• Aggregation of granular viewing data, using either respondent-level or set-top box-based data sets
• Identification of best- fit statistical models correlating audiences and sales data
• Development of predictive algorithms which identify future audience behaviors
• Negotiation of units of inventory which over-index against those target audiences

Buyers and media directors alike know that the traditional response to increases in the price of media is to downgrade the mix of programming on a media plan, using less network inventory and more run-of-schedule cable inventory. Clearly, using better-targeted TRPs is superior at both a tactical and strategic level, although it will inevitably require different competencies, technology providers and ad sales models. But advertisers looking to manage against the very real constraints they face will work to make this model happen and significantly improve the efficiency of their media budgets as a result.

Like many of you, I have been reading and hearing a lot about how folks in the U.S these days, particularly younger ones, are using their computers to watch a lot of their video, including shows that they used to watch on their TVs. I am sure that this is true. I know a lot of folks who regularly use services like YouTube, Hulu and Boxee. I know even more folks who tell me that their children are watching a lot of video that way. However, I have always wondered whether actual Web video viewing patterns actually matched up to all of the hype surrounding the platform.

Apparently, my skepticism is warranted. On The Ad Contrarian, I read a review of Nielsen’s “Three Screen Report” for the first quarter of 2010 that highlighted a couple of really powerful data points in the report. First, as has been widely reported, TV viewing time in U.S. homes continues to increase, growing 1.3% (or an incremental 2 hours per month) year over year. During the same period, Internet video viewing time grew 5.9% (or an incremental 11 minutes) year over year.

Who would have thought the average increase in time that Americans watched television in early 2010 compared to early 2009 would be over ten times more than the average increase in time for watching Web video? Not me. I’m particularly surprised that Web video viewing only grew 5.9% over that time, when it was coming off such a small base. Web video viewing still represents less than 2% of the time that folks in the U.S. devote to consuming video.

Maybe a lot of that Web video time has shifted to mobile devices? Smartphones are exploding, and many millions of us now carry iPhones, BlackBerries, Droids, or similar phones capable of playing video. Nope. The Nielsen report tells us that there was no growth in subscriber mobile video consumption over the past year.

This is important stuff. As we all know, a lot of media and telecommunications companies, and a lot of their executives, are in the process of making some really big decisions about where they should be focusing their video resources now and in the future. If you’re a studio, do you produce short-form products for the Web and mobile? If you’re a TV network, do you push your video onto the Web to try to capture early audiences, even if this undermines the multibillion-dollar relationships that you have with cable and satellite operators? If you’re a multichannel TV operator, do you make massive investments to build or partner for a “TV Everywhere” platform, to ensure that Web-only viewers are satisfied, too?

A lot of big bets are going to be made by these companies. A lot of big risks are going to be taken. If these companies and their executives are making decisions under the impression that Web video viewing is exploding in America, and TV viewing is falling, the recent data suggests that they are wrong — and they may be in for a rude awakening when their Field of Dreams is built and no one shows up. What do you think?

(This post originally ran on MediaPostbs Online Spin on July 1, 2010.)

Disbelief and dismissal characterize many of the responses to our findings.B Citing their own and their peers’ television viewing habits, people assert the highly directed nature of their viewing and declare their loyalty to a curated selection of television programs.B With the exception of live sporting events, they engage their TiVo or cable company’s digital video recorder to record their favorite programs for time-shifted playback at their convenience.

We’re sure that people do do that.B We do that.B We’re also sure that most people watch a lot more television than just the programs to which they’re loyal.B We call this difference between all TV viewing and viewing favored programs the Loyalty Gap.

We can understand the reluctance to accept our findings on loyalty.B It’s expected and perhaps natural for our reports of low levels of loyalty to conflict with people’s view of the world.

We’re social creatures.B We need to connect with others.B Projecting our need to connect on media, we identify ourselves by the television programs we choose and seek others with similar preferences.B The challenge of identifying and connecting with others around the more solitary act of inattentive viewing keeps us from looking past our loyalty and recognizing the amount of time we spend channel surfing and sampling programs.

Data from the Video Consumer Mapping Study fits this model.B The study found that people tend to underreport the amount of television they watch.

Television viewing duration and reach is in the upper right of the graph.B From the graph, survey respondents reported viewing over 240 minutes of television daily but were observed watching around 330 minutes.

Around 90 minutes of daily television viewing are lost on our consciousness.B People watched television for those 90 minutes but have failed to include it in their estimation of the time spent watching.

With a gap of that magnitude, people’s reluctance to accept our observation of low loyalty makes more sense.B People are likely to recall viewing the programs to which they’re loyal but may tend to neglect additional time spent watching TV.

Another data point in the Video Consumer Mapping Study, one that’s affirmed by Nielsen’s Three Screen Report, conflicts with people’s reports of highly directed, DVR-intensive viewing.

The amount of time people spend watching DVR playback is dwarfed by live TV watching.B As a percentage of all TV watching, live and timeshifted, DVR playback is 5.4% in Nielsen’s study and 4.6% in the Video Consumer Mapping Study.B Put another way, according to Nielsen’s study, people watch nearly 19 times more live television than timeshifted television.

The imbalance of live to timeshifted television viewing is a stark contrast to reports of heavy DVR utilization and the implied higher degrees of program loyalty.

People are loyal to a selection of television programs, but the data indicates a Loyalty Gap.B Viewers allocate attention, sometimes without realizing it, to a lot more television programming than that to which they are loyal.

Relative to the latter, my team has been spending a lot of time lately analyzing Twitter data to try to see if it could be useful in better understanding how people view television, since so many people regularly tweet about their TV viewing activities. The results have been interesting, but what was most eye-opening was the amount of interest and discussion that was generated in comments when the results were released on a popular technology finance blog, Fred Wilson’s AVC (Disclosure: Fred is an investor in my company, Simulmedia).

What came through the strongest among the 100+ comments was whether Twitter might be able to replace Nielsen and other audience measurement services, or whether Twitter data might even be able to replace set-top-box data as a source for census-based television viewership. Could Twitter someday replace Nielsen ratings, or set-top-box data? In my view, it’s too early to tell, but here are some of the advantages that it might offer:

Real-time results. What Twitter lacks in precision, it certainly makes up for in real time. Tweets tell you what people are doing in the moment. You don’t have to wait hours or days or weeks for results. As more and more marketing becomes real-time, so must the tools that enable it.

Intention data. Twitter can not only tell you what people are doing, but why. Understanding intentions and motivations can take a lot of guess work out of marketing and media.

it’s a focus group/survey tool on steroids. Twitter lets you watch, interact and survey lots of different types of people very quickly and very efficiently. The survey and focus group business will never be the same once companies learn how to leverage Twitter here.

Authenticity. Twitter today is as wide open and uncontrolled as TV panels are closed and controlled. Neither is ideal, but having both means that we’re all more likely to find out the truth about viewers over time.

It’s free. Yes. Hard to beat this one. Companies can tap into Twitter for free. I suspect that Twitter will find ways to charge for premium services and uses over time; now, however, it is free.

Is Twitter the new black when it comes to consumer marketing research? Should Nielsen and others be worried? What do you think?

(This post originally ran on MediaPost’s Online Spin on June 4th, 2009.)

For the past three months in my new start-up, Simulmedia, we have had a team of data analysts, behavioral biologists, and statisticians using TNS Media Research’s InfoSys TV system to analyze anonymous, aggregated set-top-box data records representing recent viewing histories of approximately 350,000 households in the Los Angeles market to better understand how people watch television. The insights we’ve been able to glean already have been pretty extraordinary, but one really stands out: Television viewers watch significantly fewer episodes of each program that we had anticipated. Program loyalty is the exception, not the rule.

We selected a number of top shows from broadcast and cable networks and calculated a “loyalty score” for each program. Surprisingly, we discovered that a relatively small number of folks who watched a particular show this season, watched two or more episodes. The show with the highest loyalty score — “American Idol,” unsurprisingly –B garnered a loyalty of only 65%. Thus, only 65% of the folks in our sample who watched “American Idol” this season watched it more than once. “Lost” came in at 52%, “Gossip Girl” at 50%, and “Mad Men” at 33%. On average, only 46% of folks who watched a particular program in our sample watched two or more episodes.

Maybe this isn’t news to many of you, but we were surprised. Why does this seem to contradict conventional wisdom, largely based on panel- and sample-based research? Probably because panels can project, for example, that a particular episode had an audience of 10 million viewers, with 75% of those viewers from a particular demographic group — but they can’t tell you that two-thirds of those folks are different from those who watched the show the week before.

Of course, the elephant in the room is the DVR (digital video recorder). The set-top-box data we analyzed did not include DVR viewing. However, since neither Nielsen nor advertisers value that viewing very much — given DVR ad-skipping — the linear viewing reality that program loyalty is the exception, not the norm is also part of the economic reality of television today.

What does this mean for television companies and advertisers? I think it’s now incumbent on players in this market to dig into viewer data. Anonymous set-top-box data and analysis is now available from a number of sources and firms. There is no longer an excuse not to know what TV viewers really do. Now is the time to find out, and adjust business practices according to reality, not just history. What do you think?

(This post originally ran on MediaPost’s Online Spin on May 28th, 2009.)