October 17, 2007

Major Media Update: What's Up?

This is the first post in a planned series of commentary about the current state of the major advertising media. I welcome your comments and suggestions.


In an era when lower grade choice beef is often sold as prime, are we paying premium prices for a lower grade of television advertising time?

Primetime has often been regarded as a gold standard for media effectiveness because it combined the phenomenal selling power of the television medium with high ratings and viewer involvement providing advertisers with an opportunity to reach very large audiences quickly.

A 2.0 rating is primetime?

However, average primetime adult ratings have fallen to their lowest levels in history. For example, according to Nielsen, regular primetime programming during the week of September 17-23, 2007 delivered less than a 2.0 average adult 25-49 rating:

Demo Ratings
Women 25-54 2.10
Men 25-54 1.70
Adults 25-54 1.90
Source: Nielsen Television Index September 17-23, 2007

Since a rating point represents one per cent of the audience, this means that more than 98% of viewers DID NOT see the average program. That’s prime?

Top dollar for lower ratings

In spite of these very low audiences, primetime network television still commands the highest advertising prices. The following table shows what one rating point (representing one per cent of Adults 25-49) is reputed to have cost advertisers this fall in a variety of TV dayparts:

Dayparts Cost/Rating Point
Early Morning $25,502
Evening News $22,379
Prime $36,612
Late Night $32,644
Source: SQAD 4Q07 Scatter Adults 25-54

Based on the above CPP and ratings figures, one 1.9 rated primetime :30 should cost in the neighborhood of $70,000.

On the other hand, reinvesting that $70,000 into early evening news programming would generate 3.1 ratings, a 63% increase in audience.

Sure, the early evening news programming will skew older but that’s a bonus since we’re only counting Adults 25-54 in the above example.

So, where’s primetime and why are advertisers paying a premium for a lower grade of beef?

Tomorrow we’ll take a look at who’s in control of network advertising, the sellers, buyers or advertisers and the implications of these observations for advertisers.

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