When the upfronts, US television's ad selling season, kick off in May next year, negotiations between networks and advertisers are likely to be more fraught than usual. The industry could well find itself trading with a new currency that measures the viewing figures of ads, rather than the ratings of the big-drawing shows around them.
For the ad industry, long unhappy with the trading status quo, the change can't come soon enough, but it could throw an already unsettled market into further chaos.
US broadcasters have traditionally used live viewing averages as the standard for selling advertising airtime. This is all set to change when the independent audience measurement company Nielsen Media Research starts offering commercial ratings on a test basis in November. The ratings will retroactively measure the new season's schedules from September, collating the average audience for around 22 minutes of commercials across one hour of live programming with those for content watched on digital video recorders within seven days of transmission.
Advertisers, media agencies and the major TV networks - ABC, CBS, CW, NBC and Fox - are behind the move to commercial ratings, having lobbied Nielsen hard for the figures. The results, however, have not pleased all concerned.
"It's something of a compromise between some people who want no commercial minutes and some people who want every single second of commercials reported," the Nielsen spokesman Gary Holmes says. He is equally cautious about the likely impact of the ratings on the ad-selling business. "It's hard to tell if it will become the currency," he says. "If people want to use it, then they can. There seems to be support in the industry."
The industry, which tussled over whether to trade on live-plus-seven-day ratings before the upfronts this year, certainly supports the change. It remains divided, however, as to how detailed the commercial ratings should be. Lyle Schwartz, the broadcast director and managing partner at Media-edge:cia New York, sees Nielsen's new service as a step forward. "The ratings will let us get closer to the number of people who actually see an ad in a programme," he says.
The biggest benefit, in Schwartz's view, will come from the inclusion of DVR viewing in the ratings. "All negotiations were done off live TV before," he says. "Numerous studies show a huge difference between commercial avoidance for live TV and delayed viewing, so we wanted to factor in viewing in the delayed mode. If we gave no value to DVR, we would underrate the availability of consumer eyeballs."
Alan Wurtzel, the president of research and media development at the NBC network, agrees. "Commercial ratings are appealing for advertisers because they bring you closer to the ultimate issue," he says. "How effective was the ad? How many people saw the commercial, rather than the programme in which it ran?"
For certain media agencies, Nielsen's new ratings are just one small step in the right direction. "Moving to a commercial rating is a psychological leap for broadcasters, but they haven't gone far enough," Jim Kite, the executive vice-president and director of insights, research and accountability at MediaVest, says. "We want to know the commercial ratings for each break, not a big lump average. We want to know the lead in and out from ad breaks. Over the course of an hour the audience flows."
Kite maintains that this kind of granular breakdown would be a shot in the arm for the industry. "If we had a commercial rating for each break, you would see a much more dynamic marketplace," he says. "It would be a lot more sophisticated in terms of buying TV. The planner and buyer would buy more strategically."
Mike Shaw, the ABC sales president, argues this is precisely what his network can offer. ABC has developed a proprietary commercials ratings system that it already offers to media agencies and advertisers who want to buy space in ABC shows such as Grey's Anatomy, Desperate Housewives and Lost. "We can sell show by show, daypart by daypart, whatever the client wants," he says.
While agencies and networks can't agree on a precise definition for commercial ratings, there is no dispute that a currency change was needed. The question is why it has taken so long. Wurtzel believes the US market was held back by its arcane ways. "The media environment was far more complex in the US, so things happening elsewhere in the world were far more interesting and straightforward," he says.
The technicalities of transmission have also hampered the switch to commercial ratings. "Most of the broadcast network commercial breaks are fairly straightforward, but in cable there are national commercials and then local cut-ins that aren't coded in the same way," Wurtzel says. "It sounds like a great idea, but the devil is in the detail."
With more than 25 years of experience in providing ad-break viewing figures, the UK audience measurement body Barb understands the US market's trepidation about the new ratings all too well. "Any change in the way that people are transacting can cause anxiety," the Barb chief executive, Bjarne Thelin, says. "It will create uncertainty at first but there must be some level of unsettled environment for the industry to be calling for this in the first place."
Agreeing on the scope of commercial ratings and then their adoption as the new trading standard could keep the TV ad business locked in debate right up to the upfronts next year. This might seem excessive, but a new currency is nothing short of a revolution for the industry. "We've been using the current system for more than 60 years," Wurtzel says. "What's got to change is the whole way of thinking about the business."