TV ratings: Live or Tivo’d?

How is consumer use of Digital Video Recorders (DVRs) impacting the economics of television advertising? More than you might expect. 

In a recent article in New York Times online, “Bar The Door. TV Ads Want Your Tivo,” writer David Leonhardt reviews how advertisers are squaring off with networks over how television ratings should count DVR viewers, and how much advertisers should pay for them.

According to Leonhardt, Nielsen now releases three ratings for every show: Live audience (including VCR users), those who watch the show via DVR within 24 hours, and those who watch a show within a week of a show’s broadcast.

Now some in the industry are calling for separate ratings for a show and for its commercials, a nod to the fact that DVR users are super-fast forwarding through commercials. 

[As an aside: One network, says Leonhardt, claims it has research that DVR users remember as much about commercials as people without the devices, an assertion the writer calls “clearly ludicrous.”]

As proof of the impact of DVRs, Leonhardt cites the popular Fox TV hit series “24” as having the highest percentage of a network-cherished high-income audience watching on delay, followed by “Lost” and “Survivor.” Many of these viewers will watch the show days later and zip through ads. Advertisers of course don’t want to pay for the unwatched ads he says.

Leonhardt cites a Forrester Research prediction that by 2008, more than one in four households will own a DVR, up from one in eight now. At the same time, he concludes that “Tivo is not going to kill advertising, and it won’t kill the networks.  If anything, it may help them, by increasing the audience for top shows like “24” at the expense of shows that just happen to be on when you turn on your set.”

But as things heat up between networks and advertisers, Leonhardt suggests that on the horizon are Tivo-proof ads.

This “networks vs. the advertisers” ratings-war is just starting.