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.

My sense is that it won’t be that simple. I do think that we are on the verge of the next generation of television advertising products and a significant acceleration in TV ad spending. In fact, I believe that we could very well see TV ad spending in the U.S grow from its current $65-$70 billion annually to $100 billion by 2015 or 2016. Yes, that big. Half of that growth, I believe, will be data-driven.

However, technology and data alone won’t make TV advertising better. We are not facing a situation where if you build it, they will come. No. I believe that it will take some entirely new approaches, new business models and new companies to deliver that growth and to convert technical capabilities like set-top-box-data-driven addressability or push-button interactivity into real products that TV networks and operators can sell and marketers and their agencies can buy.

Just look at how the online ad market developed. Dynamic, cookie-based addressability was introduced on the Web in 1995. However, it wasn’t until 2003 or 2004 that we saw optimized performance marketing take off, with the scaling of services from companies like Advertising.com and 24/7 Real Media. Folks were selling ads on online search pages in the mid-’90s, but it wasn’t until GoTo.com/Overture pioneered a keyword-based, pay-per-click business model several years later — and Google improved on it — that paid search took off.

What might new TV approaches look like? I believe that, like the Web, performance-oriented sales models and inventory yield management will be key components of any success. Selling marketing results, rather than just better-targeted media, will remove risk for marketers and agencies and make it easier for them to test new products. Driving up revenue and profit yield for networks and operators — perhaps guaranteeing it, rather than just enabling them to sell more complex products — will make it easier for them to embrace new offerings.

An example? I spend most of my time these days thinking about how data-driven targeting can be applied to TV program promotion.B In July, I headed to the industry’s PromaxBDA conference in L.A., where I offered an example in that industry sector. I believe that we will soon see TV programmers and marketers able to buy ratings — or “ratings insurance” — for critical programs. Thus, rather than just buying off-air media time to promote new show launches, or for mid-season episodic show maintenance, television system operators will leverage their set-top-box data and predictive ad targeting technologies and “guarantee” ratings for shows.

Does selling “TV Ratings Insurance” sound crazy? I don’t know. It’s probably not much harder than selling and delivering key word buys in search. What do you think?

(This post originally ran on MediaPostbs Online Spin on June 17, 2010.)

Targeting low loyalty high attentiveness viewers is an ideal way to drive ratings for established programs. We define low loyalty viewers as ones that watch only one episode of a program in a season. As we previously determined, most shows have large numbers of such low loyalty viewers and their attention is for sale. Imposing the additional requirement of bhigh attentiveness,b we ensure that our target is more receptive to a particular program.

Our recent study examined whether exposure to promotion makes the highly attentive low loyalty segments more likely to tune in to subsequent episodes of a program.

We isolated high attentiveness low loyalty February 2009 audiences for ABCbs Lost and FOXbs 24.B Any viewer who saw at least thirty non-consecutive minutes of Lost on exactly one out of four possible occasions in February was included in the high attentiveness low loyalty audience for Lost. The same criteria were used to create a high attentiveness low loyalty audience for FOXbs 24.

Subsequently, we split the February high attentiveness low loyalty audience into two segments based on their exposure to promotion in the first week of March, prior to the first March episode. We then examined first March episode tune in of the promo-exposed and promo-unexposed highly attentive low-loyalty viewers and compared their rates. The results for both programs have confirmed our hypothesis that promotional exposure moves highly attentive-low loyalty viewers to tune in at higher rates.

Additionally, the graphs below illustrate that the high attentiveness low loyalty audience is a more effective target of promotion than the general set-top box audience. In fact, the high attentiveness low loyalty audience exposed to promotion is more than three times as likely to tune in to the program as the exposed general audience.

In our future analysis we plan to investigate whether exposure to promotion made the low loyalty viewers more loyal, and determine the persistence of the effect.

The New York Timesb Stuart Elliot covered NBCbs marketing tactics (a lot of radio).B San Francisco Chroniclebs Tim Goodman opined on production studiosb response to Leno, how theybll wish disaster on NBC as punishment for a strategy that marginalizes their contributions to the television ecosystem.B Fellow Jack Myersb MediaBizBlogger and media curmudgeon Charlie Warner has a three-part series on what hebs learned from the premiere.B Other outlets have relayed The Leno Showbs ratings, commented on the above commentary, and foretold further disruption as the competing networksb prime time programming comes online.

The days after a show has premiered in its new timeslot are an opportunity to observe how television viewers have adjusted their choices of what to watch.B Focusing on a particular new program, for those viewers who have chosen to tune-in, what kind of programming were they watching in the weeks leading to the premiere and how many are demonstrating loyalty and tuning in multiple times?

Looking at those viewers who tuned in to the first week of The Jay Leno Show reveals indicators of some program preferences that youbd expect and some that would surprise.B The two charts below examine the programming airing at weeknights at 10PM that the Leno audience viewed prior to the September 14 premiere.

The first chart reveals televisionbs emerging long tail.B The chart shows the percentage of the Leno audience that watched any of 650 different programs airing at 10PM on weeknights across broadcast and major cable networks in the weeks of August 31 and September 7, ranked in descending order by the percentage of the Leno that tuned-in.

Only 10 of the 650 programs attracted 5% or more of the audience that went on to view at least one episode of The Jay Leno Show during the week of September 14.B Of the 10, 9 of the programs were on NBC.

The next 30 programs each attracted 1% of more of the Leno audience.B Half of those next 30 programs aired on ABC, led by 20/20 and Primetime news programs.

The second chart examines the relative likelihood of the The Jay Leno Show audience to have tuned in to various programming in the two weeks leading to the premiere.B It shows the top 25 programs by Rating Index, a ratio of the program rating among viewers of at least one episode of The Jay Leno Show and the overall program rating.B A Rating Index value of 100 indicates that the Leno audience was no more or less likely to have viewed the program as the general viewing population.

The top 8 programs by Rating Index are, as one might expect, NBC programs.B The audience that had tended to watch NBC at 10PM continued to watch after Leno premiered.

Interesting entries in the top 25 programs by Rating Index are Bravobs Flipping Out and PBSb Great Lodges of the National Parks and Wild River: Colorado.B Leno viewers were nearly 3 times more likely than the typical viewer to have watched those programs. The Bravo entrant to this list is likely the result of cross network promotion.B The crossover of audience genre affinity to explain the connection with Leno and the PBS programming is worthy of more scrutiny.

The degree of loyalty to The Jay Leno Show is similar to observations of loyalty to other programming: low.B The chart below examines viewer loyalty to Leno at 10PM.B Of the viewers who watched any of the Leno Show during the week of September 14, a majority, 65%, tuned in to one episode.B Only 5% of Leno viewers tuned in four times in the programbs premiere week.

Audiences arrive to a program, watch some part of it, and depart likely never to return.B Networks bownb a viewing audience the same way that you bownb the breeze that comes through your homebs open window.

Viewers sampled programs before The Jay Leno Show aired at weeknights 10PM on NBC, and viewers will sample programs after the September 14 premiere.B To make the most of the rest of the Fall 2009 season, program marketers will do well toB understand which viewers have a proclivity to sample and which viewers have a proclivity to return to programs.

Consequently, the types of programs that broadcast networks can air, and the subsequent growth rates of these programs, differ considerably from the programs and program growth rates on cable.B Broadcast networks tend to only air shows that are likely to earn high ratings in the first season, leading to programming that sometimes has a one-size-fits-all feel.B Cable networks, on the other hand, can produce niche shows that might initially have low ratings but that have a chance to garner higher ratings several seasons down the road.

Cable programs, then, are much more likely than broadcast programs to exhibit significant season over season growth.B Most broadcast programs start out with large audiences that begin to dwindle each year, while cable programs tend to start smaller and progressively grow larger each season.

Take HBObs True Blood, USAbs Burn Notice, AMCbs Mad Men, and TNTbs Leverage for example.B All of these shows enjoyed a healthy growth with each additional season, with True Blood taking home the prize for the largest seasonal jump. B ABCbs Desperate Housewives, NBCbs Heroes, CBSbs CSI: Crime Scene Investigation and FOXbs House didnbt fare as well in that they lost audience with each progressive year.

Note: Data from Nielsen Media Research as reported by TVByTheNumbers & Wikipedia

B That is not to say that there arenbt a few anomalies on broadcast networks.B Both B CBSb NCIS and NBCbs The Office have grown by 50% (11.8M to 17.8M) and 70% (5.4M to 9.2M) respectively since their first seasons. B While those are impressive changes, the overall downward trend still remains for most broadcast networks.B In fact, of the shows we researched for ABC and FOX, we couldnbt find one that had grown in audience recently when comparing one season to another.B

As the options from cable networks continue to increase, it is harder for broadcast networks to maintain their grip on audience.B While broadcast networks still win in terms of audience size, cable networks are slowly catching up, producing numerous programs with large ratings, even if the ratings sometimes take a few seasons to develop. B With the Fall 2009 season quickly approaching, broadcast networks are hoping as usual that they have huge hits on their hands.B Cable networks also hope that their programs will be successful, but know that their shows likely have a bit more breathing room than broadcast programs, which tend to be dropped immediately if ratings are lackluster.

Darwin postulated that competition for limited food resources led to the single finch population on the island to diverge into 13 different species. Each species adapted to specialize on a different food source – resulting in the evolution of different beak shapes that we see today.

At Simulmedia, we think that TV networks face similar pressures as they compete for a share of increasingly scarce audience attention.B These pressures force networks to focus on attracting specific audiences.

We tested our hypothesis by adapting the Audience Attentiveness framework we introduced in an earlier post. B To recap, the Y-axis represents Attentiveness, measured as theB average network minutes viewed during primetime per viewer, the X-axis represents the Relative Segment Reach which is theB percentage of audience segmentB viewing primetime on that network, and the area of the bubbles represents the number of total network primetime viewers within each segment.

We predicted that broadcast networks should have programming that caters to a wide variety of audiences – intuitively, the only way they could maintain their large reach.B As a result broadcast networks should have audiences distributed across all four quadrants of the Simulmedia Attentiveness chart.

Cable networks, like the finches, should show signs of specialization.B We should see a small cluster of audiences with high attentiveness and high reach in the upper-right quadrant with the rest of the audiences clustering towards the center.B Data was extracted for February 2009 by applying Simulmedia Audience SegmentsB) on the TNS InfosysTV system.

As predicted, the cable networks we sampled displayed various degrees of specialization (see charts below). Their charts showed a cluster of audiences separate from the others in the top-right quadrant.B ESPN, as expected, with its exclusive focus on sports tends to be an extreme case of specialization as seen by the Basketball Fans.

Spike, although not as extreme as ESPN, tends to have relatively higher segment reach and attentiveness into the Remote Detective audiences; whereas for Discovery the core audiences are TV Naturalists and Reality Watchers.

Among the broadcast networks, while audiences interacted with NBC as predicted – relatively equal distribution across the four quadrants – CBS and ABC had remarkably different patterns. CBS and to a lesser extent ABC’s audiences aligned themselves almost perfectly in a straight line.

We think this indicates that CBS and ABC have adopted an audience acquisition strategy focused on niche audiences.B Their attentiveness charts look somewhere between a traditional broadcast network and a cable network.B This slight tilt towards specialization seems to have worked as both have beat NBC (when one excludes the Super Bowl) in the ratings game.

In conclusion, we think that TV Networks are adopting a range of audience acquisition strategies. B Cable networks continue to specialize on small niche audiences. Some such as ESPN are hyper-specialized focusing exclusively on sports audiences, whereas Discovery and Spike Cable networks show a lesser degree of specialization.B Surprisingly, broadcast networks are also showing signs of specialization as illustrated by CBS and ABC; however others such as NBC continue to execute on the traditional model.

As for the finches, they continue to evolve 150 years after their discovery by Darwin. National Geographic reports that “Since the arrival of the Large Ground Finch in 1982 on the island of Daphne the Medium Ground Finch, a long-time Daphne resident has evolved to have a smaller beak-apparently as a result of direct competition with the larger bird for food.”

Thoughts welcome….

*Thanks to Jeff Storan and Stewart Hauser for their help with the data visualizations.