Thursday, May 28, 2009
The Numbers Don't Lie: TV Program Loyalty Has Changed
By Dave Morgan
Television viewing is growing, but it's also certainly changing. Earlier this week, Nielsen reported that 285 million Americans watched TV in the first quarter of this year, for an average of 153 hours a month, up 1.2% from last year. So, in spite of increased competition from the Internet and mobile and gaming, television usage continues to grow. However, as I've learned recently, the way people watch television has certainly changed. Old notions of loyalty no longer seem to apply.
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 -- 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?
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Dave Morgan is the CEO of Simulmedia. Previously, he founded and ran both TACODA and Real Media.
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