When Nielsen Media Research speaks out on the construction of US television viewing habits, you can hardly call it a survey ‘ instead it’s virtually a definitive statement about the direction of TV.
And this week Nielsen chose to highlight in its statement about its annual number crunching TV Trends and Nielsen Monitor-Plus, it’s advertising analysis, how few channels US viewers continue to watch. And that raises quite a few questions about the future of television.
The data it released this week has a number of highlights, and shows that dramas continue to be the most popular primetime entertainment in the US, and that each US home watches only 15.7 TV channels despite the fact that most homes now subscribe to over 104 channels, a rise of 15% over last year.
The research also shows that the 30 second TV advertising spot still represents 57% of all advertising, and that advertising spending in the US has risen this year by 4.6%.
All of that seems fairly hunky dory, but Nielsen has a habit of dressing up its research as if it’s nothing but good news for the US broadcasters. But it can’t really avoid the multiple concerns these details highlight for the US entertainment businesses.
So if the average number of TV channels has now broken the 100 barrier, and sits at 104.2 channels, why does the average US family still watch just 15.7 TV channels? In fact no other channels were watched at all unless they watched 10 minutes or less, so those other channels might just as well not be there.
That creates a great argument for unbundling channels from cable and satellite bundles, so that consumers can choose, and it also makes a huge case for advertising that is addressable and which can travel across multiple channels. Advertisers will want to reach viewers, even if they don’t watch the programming that the advertiser has chosen to go with.
There is a tired old saying in pay TV, that points out that every family watches just 15 channels, the problem is that each family doesn’t watch the SAME 15 channels. But it is becoming obvious that this is not technically true and that for wide swathes of demographics, the same 15 channels are being watched up and down the street, or more likely that only 30 or 40 channels are being watched across large neighborhoods, although Nielsen hasn’t released that level of detail.
But it does suggest that there are some US TV channels that are watched by virtually no-one, and yet they survive? How can that be? And would they be more healthy if they existed as an internet TV channel, available perhaps globally, where viewers and advertising can be measured more accurately. Perhaps as internet TV matures that’s the fate for many of the less popular channels.
We have often said that the reason for the proliferation of TV channels in the US was more to increase the potential footprint for advertisers than it was about offering consumers good TV.
Since the 1980s there had been a direct correlation between the total number of channels that a viewer had access to and the breadth of channels they actually watched, More available channels meant more channels watched. But now Nielsen is telling us that the number of channels available has gone up but there has been almost no movement of the channels that are viewed. In effect US TV channels are more or less saturated.
We are led to presume that if a viewer has 300 channels, he or she may still only watch 15 or 16 of them and a lower number still with any regularity.
Nielsen has also this week looked at the broadcast channels, those that are carried by the cable and satellite operators but which have a large US wide footprint, including being broadcast in analog taking in ABC, CBS, NBC, FOX, CW, PAX and MNT.
By examining what these networks show in their prime time slots, Nielsen is able to tell what it is that the US audiences want to see. What it says is that news programs are down, which is not too surprising given the amount of news on the internet, and that general drama dominates the viewing with 50% of all primetime viewing. Live Variety programs have dropped in popularity, and comedy has dropped. Sports, quizzes and animation are all roughly the same.
Nielsen says that the 30 second commercial is used for 57% of all advertising but the 15-second commercial is an important component in which has decreased in primetime, but increased slightly in the daytime.
Unit TV advertising fell by 2% and this is where Nielsen is most careful. It reports on TV segments that are up, but hardly mentions those that are down. The increases in cost per 1,000 viewers more than makes up for the decrease in the number of advertising units sold, but Nielsen gives no data on all those DVR viewed adverts that are fast forwarded through and which were not counted by advertisers during this year’s Upfront advertising sale.
In total Nielsen tracks 111.4 million US TV homes and says that now each home has on average 2.5 people and 2.8 television sets. Just 28% of the US has digital cable but 64% has some form of cable, and this is down from 68% in 2000. Now some 23% have satellite TV and 84% of US homes have a DVD player.
Nielsen’s separate report out this week on advertising says that ad spending overall across all types of media rose 4.6% over last year, with Internet spending up 35% and the top 100 spot TV markets revenues growing by 9.1% and Spanish-Language TV up 8.1%. Nielsen also says that Outdoor advertising has grown by 8.1%.
Our hunch and every analysts belief to date has been that Outdoor as a sector was on its way down, but Nielsen says that by spending on digital billboards and re-inventing itself, Outdoor has recovered.
Ad sectors that are flat or slightly down include B2B magazines, Coupons, smaller Spot TV markets, Network Radio, and Local Newspapers.
Advertising spending for the top 10 companies of 2006 reached $17.9 billion, remaining essentially flat from 2005, with just 1% growth. Six of the 10 advertisers experienced growth with AT&T and Verizon, growing the most at 44.4% and 16.2% respectively.
Offsetting these increases, two of the three automotive advertisers reduced ad spending. Specifically, GM spending was down 16% and DaimlerChrysler decreased its ad spending by 6.1%, although both Ford and Toyota continue to increase spending.
Spending for the 10 largest categories reached $45 billion in 2006, 3% greater than the same period last year. Most product categories have increased spending, with the exception of Credit Card Services (-6.9%), Auto Dealerships (-3.5%). The Pharmaceutical industry was the fastest growing in terms of percent increase over last year (14.9%) and in terms of actual dollar increase ($719 million) with Pfizer increasing spending 32% ($158 million). The number of product placement deals went down during 2006 by over 20%.