Basic Television Advertising Fundamentals

“TV Nuts and Bolts”
Media Sales in a Cross Platform World
Tracey McCormack I UCLA Extension

• Broadcast Calendar
• Critical Nielsen Basics
• Nielsen Measurement
• Set Top Box Measurement
• Research: Definitions, Formulas & Terminology
• Time-Shifted Viewing and Recent Changes Within Nielsen
Measurement
• Stats: Key Stats on Key Players
• Sales: Definitions, Currencies, Marketplace
• Media Spending Trends
AGENDA

• The Broadcast Calendar is a Standardized Calendar Used
Primarily for the Planning and Purchase of TV Media and
Advertising
• Broadcast Calendar Weeks are Monday-Sunday Weeks, and
Every Month has Either 4 or 5 Weeks
• Every Month has 28 or 35 Days
• The Link Between the Broadcast Calendar and Gregorian
Calendar is That the First Week of Every Broadcast Month
Always Contains the Gregorian Calendar First of the Month
• Broadcast Calendar Years Can Either Have 52 Weeks or 53
Weeks
• The Broadcast Calendar Was Really Created for Accounting
Purposes and to Align With Certain Financial Calendars
BROADCAST CALENDAR

• Network Broadcast / National Cable Television
• There are Over 2,000 Affiliated Television Stations Across the U.S. That are Fed
the Same Programming Throughout the Broadcast Day. Some Portion of the
Day Will be Local, Original Content.
• Today, There are 116,400 Million U.S. TV Households, According to Nielson
• A Commercial on Network Television Will be Seen All Over the U.S. on
Networks Such as ABC, CBS, NBC, Fox, UPN, CW, Ion, Univision and More!
• Or on National Cable Channel Like ESPN, USA, TBS, Bravo, or Food Network
• Local / Spot Television
• Here, an Advertiser Can Use Selected Markets to Advertise Without Regard to
Network Affiliation
• Buys are Made on Market by Market Basis and Schedules May be Entirely
Different in Each City
TWO BROAD WAYS TO ADVERTISE ON TV

• National TV Options
• Network (ABC, CBS, NBC, Fox, CW, Ion)
• Syndication (Wheel of Fortune, How I Met Your Mother)
• Hispanic Television (UniMas, TM, Azteca)
• National Cable TV (Discovery, ESPN, Comedy Central)
• There are Several TIERS of Cable TV
• Regional TV Options
• Spot TV (Affiliates/Indies)
• Regional or Unwired Networks (Fox Sports West)
• Cable Interconnect (Adlink)
• Local Cable Systems (Comcast, Cox, Charter, Time Warner)
THERE ARE MANY TV OPTIONS

• The AC Nielsen Company Was Founded in 1936 by Arthur C. Nielsen as One of
the First Research Companies to Measure the Audience for Radio and
Advertising on Radio
• In 1950, Nielsen Was There Again at the Birth of the TV Broadcasting Business
• Nielsen has Remained the Leading, Dominating Measurement Service for All of
Media/Advertising Platforms for More Than 75 Years!
• Today, Nielsen is Owned by Dunn and Bradstreet and is One of the Largest
Research Companies in the World With the Largest Set of Servers of Any
Company in the World
• Nielsen is the “Gold Standard” in Our Business
• They Buy Up Other Research Companies (Like Arbitron for Example) All the
Time
• They Have Several Different Divisions and Today They Measure Everything That
Can Possibly be Measured: Every Platform, Every Language, Every Age and
Every Moment of Every Day
NIELSEN HISTORY

• Unlike a Newspaper or Magazine, Who Can Count
How Many They Have Sold, There is No Simple Way
to Know How Many People are Actually Watching Any
Given Program
• The TV Rating is Only the Simplest and Most
Democratic Measure of the Audience – How Many
People Watched
• Nielsen Basically Answers Two Questions:
• “Who is Watching TV?”
• “What are They Watching?”
NIELSEN HISTORY

• Census vs Sample
• Nielsen Starts its Measurement by Drawing a Sample
• A Pot of Vegetable Soup Does Not Require Eating the
Whole Vat to Know What’s in it
• Stirring the Soup is a Way to Make Sure That the
Sample You Draw Represents All the Different Parts of
What’s in the Pot
• A Representative Sample Doesn’t Have to be Very
Large to Represent the Population it is Drawn From
RANDOM SAMPLING

• While it Doesn’t Need to be Large, it Does Need to
Represent the Population
• The Larger the Sample, the Smaller the Standard
Deviation of Error of the Ratings Information Released
• Nielsen TV Families are Recruited In-Person by Nielsen
• The Families are a Cross-Section of the Households With
TVs All Across America
• They Have Households in All 50 States With All Different
Economic and Socio-Economic Profiles
• Samples are Designated to Match the Profile of Each City
and Each Demographic Group, and are “Weighted” if the
Sample Comes Back Short
RANDOM SAMPLING

• Participants in the Nielsen Sample are
Compensated for Their Efforts
• Sample Characteristics of What They are Searching
for Include:
• Territory and County Size
• Status of Cable, ADS, DVR, Multiple-Sets in the Home
• HH Size, HH Ages, Number of Kids, Pet Ownership
• Internet Access
• HOH Occupation, Education and Income
RANDOM SAMPLING

• From All This Collected Data in the Samples,
Nielsen Creates the Universe Estimates:
• Universe Estimate (UE): Total Persons or Homes
in a Given Population
• Television Universe: Total Persons or Homes in a
Given Population With at Least One Television Set
• Universe Estimates are Updated by Nielsen Every
Year in September
• Those UEs are the Basis for the Formulas We Use
to Calculate TV Ratings, Impressions, Shares and
HUTS
UNIVERSE ESTIMATES

• There are 210 DMA’s (Designated Market Areas) That Make Up the U.S.
• A DMA is Defined as “ A Collection of Counties as Described by Nielsen Where
the Population Can Receive Television and Radio Stations’ Offerings”
• Nielsen has TWO Types of “Samples” to Cover the U.S.
• One National Sample to Represent the U.S. TV Households and All the People Within the U.S.
• One Local Sample Within EACH of the 210 DMAs to Represent Each DMA and All the People
Within Each DMA
• Nationally (and in Many Local Markets) Data is Delivered to Stations and
Agencies 364* Days a Year
• Household Data
• Demographic Data
• Overnight Data
• Some Markets Get Less Regular Data Than Others
NIELSEN MEASUREMENT

• Nielsen Uses a Variety of Technology and Methods to Accurately Reflect
the Viewing Habits of People Both Nationally and Locally
• Set Meters (Previously Called Audi Meters)
• People Meters
• Code Readers
• Diaries
• Set Meters: Digital Boxes Attached to Each TV in the House
• Tells Us if the TV is ON or OFF
• Does NOT Tell Us “WHO” is Watching
• People Meters: Remote Controls Attached to Each TV in the House
• Tells Us if the TV is ON or OFF
• Tells Us WHO is Watching
NIELSEN MEASUREMENT

• Code Readers: A Newer Technology Being Used by Nielsen for
Measurement
• Attaches to Each TV in a Household But Reads “Code” From the Shows
• Tells Us if the TV is ON or Off
• Does NOT Tell Us WHO is Watching
• Diaries: Totally Manual Form of Measurement
• No Technology Used Here
• Humans “Write In” What Shows They Watched, When
• Used to Understand if the TV is on AND Who is Watching in One Booklet
NIELSEN MEASUREMENT

• Even Though Many Markets Get 364 Days a Year of Data, it’s Important for You
to Note That There are Many Markets That Only Receive Data in the Four Major
“Sweep” Periods
• The Four Major Sweep Periods Are:
• February, May, July and November
• The Sweep Periods are 4 Weeks in Each of Those Months
• Sweep Starts on a Thursday and Ends on a Wednesday
• The Sweep Periods are Largely Unnecessary in Many Markets Because There is
So Much More Available Data and Many Markets Get 364 Days of Data a Year
and 12 Books a Year
• HOWEVER, for the Majority of the Markets, Sweep Periods Still Matter and the
Networks Have a Responsibility to Those Markets to Air Highly Rated Programs
in the Sweep Months
SWEEP PERIODS

HOW IS TV VIEWING MEASURED?
Local Samples (210 DMAs)
56 Metered
Markets
25 LPM
Markets
31 Set Meter
Markets
154 Non-
Metered
Markets
14 Code
Reader
Markets
140 Diary
Only Markets
National Sample (Covers the Whole USA)

• National Sample
• Used to Measure Network Broadcast and National Cable
• Nielsen Homes Have Set Meters With “National People Meters” (NPMs)
Attached
• Currently There are Approximately 23,000 Homes in the National Sample
• Starting September of This year (2015) the National Sample Will Grow to
40,000 Homes
• The Networks Get 364* Days of Data
• Overnight Data 364 Days a Year
• Household Information
• Demographic Information on Many Demos
• 12 Rating Books a Year, Delivered Monthly

• Local Sample
• 210 DMAs
• Used to Measure Local Broadcast and Local Cable
• 56 “Metered” Markets
• 154 “Non-Metered” Markets
• 210 TOTAL
• Broken Up, Even Further as Follows:
56 Metered
Markets
25 Local
People Meter
Markets
31 Set Meter
Markets
154 Non-
Metered
Markets
14 Code
Reader
Markets
140 Diary
Only Markets

• There are 56 “Metered” Markets
• 25 LPM Markets
• Have Set Meters With “Local People Meters” (LPMs) Attached
• Markets 1-25
• Largest Share of Ad Revenue in These Markets
• 364* Days of Data
• Overnight Data 364 Days a Year
• Household Information
• Demographic Information on Many Demos
• 12 Rating Books a Year, Delivered Monthly

• 31 Set-Meter Markets
• Markets 26-56
• All 31 Have Set Meters Installed in the Sample Homes
• These Markets DO NOT Have People Meters Installed
• Until 2015, These Markets Received 364 Days of Overnight Data
• Household Information ONLY!!
• These Markets Got Their Demographic Info From Diaries
• Were Supplied With Full Books (Including Demo Data) Only 4
Times a Year
• In the Sweep Months
• Some Markets Choose to Pay for Additional Books in January,
March and October

• **Now – *New – As of 2015!
• Nielsen Announced a New Methodology for These 31 Markets Called the “Viewer
Assignment” Methodology
• Nielsen Will Begin Using the National People Meter Demo Data Along With Local
People Meter Demo Data in Regional Markets to Supply These 31 Markets With 12
Books a Year
• The People Meter Demo Information Collected Will Be Estimated to Make a
“Likely” Scenario for the Households in Each of These 31 Markets
• There Will NO LONGER be Diaries in These 31 Markets at All
• They’ll Have HH and Demo Info 12 Times a Year, Instead of Four
• Continued HH Overnight Data
• No Demo Overnights
• But the Big Change is That They’ll Go From 4 Books a Year to 12 With More
Sophisticated Technology Allowing them Demo Info with 12 Books a Year

• 154 Non-Metered Markets
• Markets 57-210
• Until 2015, These Markets Received ONLY 4 Books of Data a
Year
• There Was NO In-Home Technology in Place in These
Markets for Measurement
• All Data (HH and Demo) Came From the Diaries
• Were Supplied With Full Books (Including Demo Data)
Only 4 Times a Year
• In the Four Sweep Months
• No Overnight Data of Any Kind

• 14 Code-Reader Markets
• **Now – *New – As of 2015!
• 14 Markets Within Markets 57-210
• These Markets Will Have NEW “Code-Readers” Installed
• Code Readers are a Brand New Technology for Nielsen Designed to Give More
Sophisticated Technology to These Small Markets
• The Networks and Show Producers Have “Encoded” All Their Programs With a Code
That These New Nielsen Code Readers Can Understand and Pick Up
• There Will be 400-800 Code Readers in Each Market; 1 Per Every TV in the Household
• The Code Readers Will Supply Each Market With HOUSEHOLD INFORMATION ONLY
• Diaries Will Still Need to be in Place to Get the Demo Information
• These Markets Will NOW Receive 12 Full Books a Year With HH and Demo Information
• No Overnights of Any Kind
• But This Change is a HUGE Advancement in Technology for These Small Markets

DMA Rank Markets Code Reader HH
70 Flint-Signaw-Bay City, MI 400
82 Madison, WI 400
107 Reno, NV 400
123 Santa Barbara-Santa Maria-San Obs., CA 400
40 Grand Rapids-Kalamazoo-Battle Creek, MI 800
45 Harrisburg-Lancaster-Lebanon-York, PA 600
54 Fresno-Visalia, CA 500
58 Albany-Schenectady-Troy, NY 500
59 Mobile, AL-Pensacola (Ft. Walton), FL 500
71 Tuscon (Sierra Vista), AZ 500
81 Paducah, KY – Cape Girardeau – MO 500
95 Charleston, SC 400
118 Traverse City-Cadillac, MI 400
122 Yakima-Pasco-Richland-Kennewick, WA 400

• 140 Diary Markets
• 140 Markets Within Markets 57-210
• These Markets Receive ONLY 4 Books of Data Per Year
• There is NO In-Home Technology in Place in These Markets
for Measurement
• All Data (HH and Demo) Comes From the Diaries
• They are Supplied With Full Books (Including Demo Data)
• Only 4 Times a Year
• In the Four Sweep Months
• No Overnights of Any Kind
• The Sweep Months Still Matter a Great Deal to These
Markets

• If I Were to Guess The Future I’d Predict…
• If the “Code Reader” Test Markets are Successful
• Nielsen Will Likely Take the Diaries OUT of All 210 Markets
• Install Code Readers Into All 210 Markets
• Use the “Viewer Assignment” Model to Assign Demo Information
• Give Everyone in All Markets 12 Books a Year
• This is Just MY Guess. I Have No Knowledge That This Will Really
Happen in the Future. Just My Assumption.
• We’ll See…

• Set Top Box Data is a Relatively New Phenomenon in National and Local
Television Whereby Companies Such as…
• Rentrak
• Kantar Media
• Ti-Vo
• And Others are Using the Set Top Boxes That Already Exist in Your Home via Cable or
Satellite to Have a Larger Sample and Theoretically Have a Lower Standard Deviation
of Error
• Today, Rentrak is Probably the Biggest of All the Companies That Offer
This Service and it has Been Bought by a Number of Small, Unrated by
Nielsen Networks and Ad Agencies
• By Q1 ’15 They’ll be in 26 Million Homes
• Rentrak Will Have Data From About 1 in 4 Homes
• “Massive and Passive”
SET TOP BOX DATA

• STB Data has Many Challenges to Overcome
• It is Not a Representative, Random Sample of the U.S. Population
• Integrating Into the Donovan Data System
• Having Enough Homes in the Sample
• Having Demo Information as Well as HH
• Getting the Ad Agencies to Begin Using it
• There are Still Great Skeptics to STB Data, But it Appears
That Nielsen is Getting Into the Game of STB Data in
Addition to Their Sample, Which Will Help the Cause
Tremendously
SET TOP BOX DATA

Research:
Definitions, Formulas & Terminology

• Households Using Television is the Percentage of Total Television
Households Having Their Sets Tuned on at a Particular Time
• Example:
• The First Two Homes are Viewing The Night Shift on NBC on Monday From 10-11p
• The Next Home is Viewing NCIS: LA on CBS on Monday From 10-11p
• And the Next Home, Castle on ABC From 10-11pm on Monday
• Of the 5 Homes Owning Television Sets, Four are Viewing (or USING Television)
• 4 TV Homes Watching Television From 10-11pm DIVIDED by 5 Total Homes That
Own TV Sets = 80%
• Expressed as a Percentage, the HUT at This Time is 80%
• When the Same Calculation is Done With PEOPLE, it is Referred to as PERSONS
USING TELEVISION or PUT
NBC NBC CB
S
ABC NOT USING TV
HOUSEHOLD USING TELEVISION (HUT)

HUT LEVELS VARY BY
DAYPART AND BY SEASON
Daypart Fall/Winter Spring Summer Avg. Year
Daytime 27 26 26 27
Early Fringe 50 43 40 46
Prime 64 57 40 59
Late Fringe 28 28 28 28

• A Share Refers to the Percentage That a Program or Station has of the Total
Viewing Audience. Share is NOT Projected to the Total Households Owning a Set,
But Only Those Households That are Viewing at a Particular Time.
• Example:
• The First Two Homes are Viewing The Night Shift on NBC
• The Next Home is Viewing NCIS: LA on CBS
• The Next Home is Viewing Castle on ABC
• The Fifth Home is Not Viewing Any Television Program and Therefore is Not Counted in the Share
Equation
• The Night Shift = 2 Out of 4 Homes Viewing = 50 Share (2/4)
• NCIS: LA = 1 Out of 4 Homes Viewing = 25 Share (1/4)
• Castle = 1 Out of 4 Homes Viewing = 25 Share (1/4)
• ALL SHARES SHOULD ADD UP TO 100%
SHARE
NBC NBC CB
S
ABC NOT USING TV

• A Rating is Expressed as a Percentage of Individuals or Total Television
Households Tuned to a Particular Television Program. Rating is Projected to the
Universe of All TV Homes, Viewing or Not
• Example:
• Assume a Total Television Population (Those Owning a Set) of Five Homes
• Two of Five Homes are Viewing The Night Shift on NBC
• One of Five Homes is Viewing NCIS: LA on CBS
• One of Five Homes is Viewing Castle on ABC
• One of Five Homes is NOT Viewing Television at That Time
• The Night Shift = 2 of 5 Homes = 40 Rating (2/5)
• NCIS: LA = 1 of 5 Homes = 20 rating (1/5)
• Castle = 1 of 5 Homes = 20 Rating (1/5)
• ALL RATINGS SHOULD ADD UP TO THE HUT LEVEL (80)
RATING
NBC NBC CB
S
ABC NOT USING TV

• Rating Media Math
• Example:
• If There are 5,647,440 TV Households in Los Angeles…
• And if “The Voice” Has an Average of HH Audience of
500,000
• The Math Would Work as Follows:
• (500,000 / 5,647,440) x 100 = 8.8 Rating
• Remember: One Rating Point is = 1% of the TV Universe
• A 1 HH Rating Point Represents 56,474 Households
RATING
MEDIA MATH

• Impressions (or Thousands) are the Raw Numbers of Individuals
Viewing a Particular Program, Usually Attributed to a Demographic
and Expressed in Thousands (000)
• Example:
• Assume There are Five Homes Viewing NCIS: LA on CBS.
• In One Home There are 2 Women 18-49 Viewing for a Total of 2 Impressions
Against W18-49
• In Two Homes There is 1 Woman 18-49 in Each Viewing for a Total of 2
Impressions Against W18-49 Viewing
• In Two Homes There are No W18-49 Viewing Although Some Other Demographic
is Viewing
• The Grand Total of Women 18-49 Impressions is 4
IMPRESSIONS
CBS CBS CBS CBS CBS

• Impressions (Thousands) Media Math
• Example:
• If There are 5,647,440 TV Households in Los Angeles…
• And if “CSI” has an Average HH Rating in LA of a 3.5
• The Math Would Work as Follows:
• (5,647,440 x 3.5%) = 197,660 (Avg. HH Audience)
• 197,660 / 1000 = 197 Thousands
IMPRESSIONS
MEDIA MATH

• VPVH (Viewers Per Viewing Household) is a Calculation That
Quantifies the Concentration of a Particular Demographic Within
Viewing Homes
• Example:
• There are Five Homes Viewing NCIS: LA on CBS
• Within Those 5 Viewing Homes There is a Total of 4 Women 18-49 Viewing
• Therefore We Have 4 Viewers (W18-49) Per 5 Viewing Households
• This is Calculated as 4 Divided by 5 and Described as a Decimal 0.800
VPVH
CBS CBS CBS CBS CBS

• Gross Rating Points and Total Impressions: A Mathematical Expression
of Total Media Weight Generated by an Ad Campaign. The Sum of All
Ratings and Impressions for All Commercials in a Given Media Schedule.
• Example:
• Jello Pudding Aired Spots in the Following Programs
GROSS RATING POINTS (GRPS)
TOTAL IMPRESSIONS (000)
Program Units Rating Impressions GRPs (000)
Meredith
Viera
7x 3.0 2.1 21.0 14.7
News 5x 5.0 3.5 25.0 17.5
The Tonight
Show
5x 2.5 1.8 12.5 9.0
CSI: Miami 1x 4.0 2.8 4.0 2.8
Totals 18x 62.5 44.0

• Reach or Frequency are the Choices Made in the Media Planning
Process to Help Determine the Most Effective Advertising Schedule for a
Particular Advertiser
• And a Balance of Reach and Frequency is a Must for All Media Buys
• Reach
• Reach Refers to the Number of DIFFERENT People Who Have Been Exposed to an
Advertising Campaign at Least Once. Each Person is Counted Only Once, Regardless
of How Many Times They Saw the Spot. Reach is Expressed as the Percentage of
the Target Audience Reached at Least Once With a Given Schedule.
• Frequency
• Frequency Represents the Average Number of Times a Person (in the Target
Audience) Was Exposed to the Commercials. Studies Have Shown That a Frequency
Below 3 Does Not Deliver an Effective Campaign.
REACH AND FREQUENCY

• Cume
• The Percent (or Number) of Households or People Who
Watch at Any Time During a Specified Time Period
• Cume Indicates a Cumulative Audience
• Cume Audience is the Number of DIFFERENT Individuals
Who Viewed a Program
• Cume is an UNDUPLICATED NUMBER
• Cume is Synonymous With “Reach”
• Programs are Evaluated on an AVERAGE AUDIENCE Not
a Cume Audience
CUME

MEDIA FORMULAS TO KEEP IN MIND
Rating Share x HUT
Share Rating / HUT
HUT Rating / Share
VPVH Viewers / Viewing Homes
GRP Reach x Frequency

Time-Shifted Viewing and Recent
Changes Within Nielson Measurement

• National Broadcast and Cable Includes “Time-Shifted
Viewing” (DVR Usage) in Their Equations
• National Broadcast and Cable Have 4 Different Nielsen
Audience Data Streams From Which to Choose
• Nielsen Measures the National Sample and Releases Audience
Information in 3 Feeds of “Program Rating” Data:
• Live, Live +Same Day, Live +7
• Nielsen Also Releases Audience Information in 1 feed of “Commercial
Rating” Data Called the “C3”
• C3: Commercial Pod Ratings PLUS 3 Days of Time-Shifted Viewing
• Generally, the Agencies That Buy National Broadcast and Cable Buy
Off of the C3
TIME-SHIFTED VIEWING

• In the Local , LPM Markets (Top 25) Nielsen has Changed the Way HUTS
are Defined Based on Time-Shifted Viewing
• This Change Started in January of 2014
• Example:
• Assume That a Household in LA, RECORDED “The Voice” on Monday From 8-9pm
• That Same Household in LA, WATCHED the Recorded Episode of “The Voice,”
Later That Week, on Saturday at 12noon
• Until Now, Both the HUT and Rating Would Get Assigned to “The
Voice” at the Time of Recording
• Now, the Rating is Still Applied to the Program, But the HUT is Assigned
to the Time the Program is Viewed
CHANGES TO HUTS
IN LPM MARKETS

Stats:
Key Stats on Key Players

HOURS OF WEEKLY MEDIA CONSUMPTION

AVERAGE AGE OF BROADCAST VIEWERS

TOP BROADBAND PROVIDERS (2015)
Category Provider Subscribers
Cable Comcast 21,586,000
Time Warner 12,073,000
Charter 4,956,000
Cablevision 2,756,000
Suddenlink 1,135,500
Mediacom 997,000
WOW (WideOpen West) 729,700
Cable ONE 486,142
Others 6,505,000
Subtotal 51,224, 342
*Source: Leichtman
Research Group

Sales:
Terminology, Currencies, Marketplace

• Upfront: The Marketplace for Buying TV Commercial Time Well in Advance of the
Telecast Date and Usually for an Extended Period, Such as a Year, Typically 4Q-3Q;
Usually Begins in May
• Scatter: The Marketplace for Purchasing TV Commercial Time Closer to Telecast Date, for
a Quarter at a Time or Less; Usually Purchased the Quarter Before or During the Quarter
of Telecast
• Guarantee: An Assurance by the Selling Network That the Advertiser’s Commercial
Schedule Will be Viewed by a Specific Total of Audience (Gross Impressions)
• Under-Delivery: The Amount of Audience (Gross Impressions) That an Advertiser’s
Schedule Falls Short of the Guaranteed Amount
• ADU & Recap: Free Commercial Units Given to an Advertiser Either in Anticipation of
Audience Under-Delivery or After the Fact; a Recap May be “Recaptured” by the
Network and May be Booked at the Time of the Order
• Make-Good: A Commercial Unit Given to an Advertiser to Compensate for a Commercial
That Was Missed
TERMINOLOGY

• Pre-Emption: A Commercial Unit That Was Scheduled to be Telecast But is Not,
Typically Because a Program That Was Originally Purchased Has Been Changed or a
Technical Error
• Registration: An RFP From an Agency; Includes Client Name, Brands, Target Audience
to be Guaranteed, Budget, Flight Dates, Dayparts and Audience Mix for Each and Other
Terms and Conditions
• Proposal: Prepared by the Network to Include Units and Projected Audience Delivery
Within Each Daypart and a Schedule of Either ROS and/or Programs, All for a Total
Gross Cost
• Hold: After Negotiations are Complete, the Agency in Good Faith Requests That the
Network “Holds the Inventory Out of Sale” Until the Agency Can Get Final Approval of
the Proposal
• Order: Once the Proposal Has Been Approved by the Client it Becomes an Order
• Cancellation Options: On Long Term Deals, Such as Upfronts, Some Portion of the
Order May be Agreed to be Cancelable With Sufficient Notice
• Firm: The Portion of the Order That is Not Cancellable is Considered Firm
TERMINOLOGY

• Because Traditional Television Viewing is Linear, the Time of Day That the Viewing
Occurs is Important
• Audience Viewing During Different Times of the Day Have Different Implied Values
• For Instance, Women Viewing During Primetime are Worth More Than Women During
Daytime
• The Different Times of Day are Called Dayparts
• Broadcast and Local Affiliate Dayparts are Based on Network’s Schedule
• Local Affiliates Sell Short Breaks During Network Programs, and in Adjacencies and Own
100% of the Time During Their Own Local Programming, Like Local News
• Cable Network Dayparts are Defined by (and Different) for Each Network
• Cable Networks Schedule 24 Hours a Day, so Their Affiliates (Cable Systems) get 2 or 3
Minutes Every Hour to Sell
• Typical Broadcast Dayparts:
Early Morning 5am-9am Daytime 9am-4pm Early Fringe 4pm-7pm
Prime Access 7p-8pm Prime; Mon-Sat 8pm-11pm / Sun 7pm-11pm
DAYPARTS

• Cost Per Point (CPP): The Amount of Money an Advertiser Pays
to Deliver One GRP (1 Rating Point) of People or Homes
• Time Period Cost / Time Period Rating = Cost Per Rating Point (or CPP)
• If “CSI” Delivers a 8 HH Rating and the Rate is $20,000…
• $20,000 / 8 = $2,500 CPP
• The Primary Function of a CPP is to Estimate the Total Cost of a Planned TV
Schedule Within a Given Market
• CPP Enables a Buyer or Planner to Quickly Estimate a Given Budget or
Market Conditions
• Local TV Markets Have Always Been the Users of CPPs, Where National
Cable, Network TV and Virtually Every Other Media Uses CPMs
CURRENCIES

• Cost Per Thousand (CPM): The Amount of Money an
Advertiser Pays to Deliver 1,000 People or Homes
• The “M” in CPM Stands for the Roman Numeral for 1,000 or the
Latin Word “Mille,” Which Means 1,000
• Time Period Cost / Audience x 1,000
• Example:
• If “Dancing With the Stars” on KABC Costs $10,000…
• And if the Average Viewership of “DWTS” on KABC is
350,000 Households…
• The CPM Would be Calculated as Such:
$10,000 / 350,000 = 0.028
CPM = 0.028 x 1000 = $28.57
CURRENCIES

• The Primary Function of a CPM is to Evaluate Broadcast Media
• It is Used to Compare the Cost Efficiency of One TV Station With
Another. The Goal of the Agency or Buyer is to Attain the Largest
Audience at the Lowest Price.
• CPMs Can be Calculated for Any Medium – or Across All Mediums
• For Many Years Local Media Was Always Purchased Against CPPs, Not
CPMs
• Today, More and More Local Media Buyers are Starting to Use
Thousands and CPMs Instead of Ratings and CPPs in Their Avail
Requests
• The Reason is That it’s Easier for All the Media to be Evaluated Against
the Same Currency
• Every Media Out There Today is Measured on a CPM and So Local TV
Must Adapt
CURRENCIES

• Agencies Determine What CPMs They Want to Pay for
Their Clients by Using the Following Types of Data:
• Internal Cost History
• Competitive CPMs Paid on Like-Sized Nets
• Collusion
• Available Market Data Such As:
• SQAD Reports
• Nielsen Data Reports on CPMs
• Kantar Media Reports on Competitive Spending
CURRENCIES FROM THE AGENCY’S POV

• Television Time is Both Finite and Perishable
• There is a Fixed Number of Commercials That Can Run in Any Given Hour
• Unsold Units Cannot be Moved to Another Day
• Demos in the Network’s Sweet Spot Yield a Higher CPM
• Stations Decide What Their Selling CPP Will be Based on Some of the
Following Factors:
• Ratings / Demand
• What the Market Will Bear
• In Some Cases Volume Discounts Apply
• It is the Responsibility of the Sales Manager to Sell Every Spot, Each Day
for the Highest CPM Possible and Most of it is Sold Months in Advance
CURRENCIES FROM THE STATION’S POV

• Factors Effecting the Marketplace
• Economic Downturn or Upswing
• Olympics
• Politicals (Major Election Year)
• Propositions
• Disasters (Plane Crashes)
• Major News Coverage (Car Chases)
• Content of a Show (American Idol)
• Major Sporting Event Coverage (World Series)
• The Pace of the Automotive Industry
FACTORS EFFECTING THE MARKETPLACE

• Gross vs Net
• A Contract is Negotiated for an Amount of Money and the TV Station or
Network Bills the Agency for That Entire Amount, Known as “Gross”
• In Theory, the Agency Would Collect the Entire Gross Amount From the
Client to Pay the Station, But Would Receive a 15% Discount From the TV
Station or Network
• Known as the Agency Commission, it Was Originally Considered to be the
Agency’s Compensation. The TV Station or Network Receives the “Net”
Amount, 85% of the Negotiated Money.
• Only the Most Foolish of Clients Now Allow Their Agency to Keep the Full
15% Discount That Stations and Networks Give
GROSS vs NET

UPFRONT SALES
Upfront Sales (Billions)
Networks 2012-13 2013-14
ABC $2.1 $2.2
CBS $2.5 $2.6
FOX N/A $1.8
NBC $1.9 $2.0
CW $0.400 $0.420

HOW MUCH DOES A :30 SPOT COST:
NETWORK BROADCAST

Tracey McCormack
Phone: 323-977-TMAC
Email: Tracey@McCormackMedia.net
Website: www.McCormackMedia.net
Twitter: @TraceyMacTweets
LinkedIN: Tracey McCormack
Facebook: McCormack Media Services
YouTube: Tracey McCormack
Google+: McCormack Media Services
Los Angeles Headquarters
McCormack Media Services
3219 Kelton Ave.
Los Angeles, CA 90034
New York Office
McCormack Media Services
138 W. 87th Street, 2R
New York, NY 10024
CONTACT

Basic Television Advertising Fundamentals

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (20)

Andere mochten auch

Andere mochten auch (20)

Ähnlich wie Basic Television Advertising Fundamentals

Ähnlich wie Basic Television Advertising Fundamentals (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

Basic Television Advertising Fundamentals