With the exception of Super Bowl Sunday, we tend to avoid or ignore commercials when we watch TV. Nevertheless, they do tend to reach us -- corporations wouldn't spend so much money on them if they didn't. But exactly how popular are commercials, anyway?
Nielsen Media Research aims to quantify the effect of TV spots on America's viewing public. The group plans to debut a new ratings service sometime in May that will figure out how many people actually watch the ads attached to their favorite programming. (The system was supposed to be out earlier, but got delayed.) The technology will also offer data regarding the use of digital video recorders; in this case, the idea is to expand statistics on shows that are being stored by viewers for access at more convenient times -- quantifying the "time-shifting" phenomenon.
The value of entertainment content will grow over time, but the value of certain platforms delivering that content might erode. Remember when broadcast networks such as CBS (NYSE: CBS ) , Disney's (NYSE: DIS ) ABC, General Electric's (NYSE: GE ) NBC, and News Corp.'s (NYSE: NWS ) Fox were the kings of the broadcast world? Unfortunately for them, TV's geography has become more treacherous and complicated. Broadband is now entrenched in many homes, with video on demand and web streaming allowing viewers greater freedom to choose where, when, and what they watch.
Advertising is the lifeblood of broadcast content, but TiVo (Nasdaq: TIVO ) and other digital video recorders have drained some of its vitality. Video cassette recorders gave viewers the option to avoid commercials decades ago, but digital recorders have taken that consumer power to a whole new level. That's why it's more important than ever for advertisers to get a feel for the return on investment they're reaping with their spots. The new Nielsen service will add further dimension to advertisers' existing process for rating ads' success, perhaps providing the best impression of an ad's impact. It also will help level the playing field between online and traditional advertising a bit, since Internet advertisers have long been able to easily and thoroughly track their ads' performance and effectiveness.
It will be interesting to see how this new Nielsen system changes the TV landscape. Advertisers should gain an even better understanding of effective techniques, and they may reshuffle their ad dollars upon discovering that the same ad works better on, say, Heroes than it does on Ugly Betty. Meanwhile, commercial creators may be prompted to push the envelope to create wilder and more memorable spots. Will viewers get sick of such a scenario?
Whatever occurs, a better system to collect viewer data should eventually benefit advertisers and networks alike, helping everyone involved figure out the best way to distribute content and sell ads for it. Critics might cringe at the thought of ads competing more intensely than ever with one another, now that they, too, have ratings. Me? I'm looking forward to it.
Tune in to some more Takes:
- Dueling Fools: TiVo
- NBC Broadcasting Good Times
- Eye on CBS
- Nielsen also helps the video game industry.
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Fool contributor Steven Mallas owns shares of Disney and General Electric. As of this writing, he was ranked 3,100 out of 20,040 investors in the Motley Fool CAPS system. Don't know what CAPS is? Check it out. The Fool's disclosure policy is always worth viewing.