Television Bureau of Advertising The Importance of DVR Viewing to the Advertiser

Before making the decision to limit television buys to Live Only ratings in local markets, consider what is being left behind.

3 Timeshifted Viewing Delivers Valuable Customers Households with DVRs contain upscale demographics. While the vast majority of viewing is still Live, timeshifting is increasing. Most playback, however, occurs near the time of original telecast. Research indicates that a high percentage of commercials are not skipped; those that are skipped are also likely to deliver their message and/or reinforce key message points.

DVR Homes contain the kinds of consumers that advertisers most want to reach.

5 Characteristics of DVR Homes: More likely to have a younger HOH, children Index = 140 Index = 122 Source: Nielsen, Local DVR Timeshifting Analysis: Observations from November Released 1/11/08. Data based on 56 metered markets.

6 Characteristics of DVR Homes: High ADS Penetration, Higher Educated HOH Index = 157 Index = 167 Source: Nielsen, Local DVR Timeshifting Analysis: Observations from November Released 1/11/08. Data based on 56 metered markets.

7 Characteristics of DVR Homes: More likely to have HHI $75K+, POM HOH Index = 171 Index = 147 Source: Nielsen, Local DVR Timeshifting Analysis: Observations from November Released 1/11/08. Data based on 56 metered markets.

8 Nielsen’s Home Tech Report Also Indicates DVR HHs Contain Sought-After Consumers Source: Nielsen, Home Technology Report, 2 nd Quarter Respondents in Total HH Respondents in HH with DVRIndex Bachelor's Degree Master's Degree, Prof. or Doctorate Married Presence of Children (up to 17 yrs) Presence of Children under Presence of Children Professional/Administrative/Managerial Sales/Tech/Clerical HHI $70-100K HHI $ K HHI Over $200K

9 While Time Shifted Viewing Has Grown, It Is Still a Small Percentage of Overall Viewing Source: Nielsen, Three Screen Report, Third Quarter Q ‘073Q ‘08 Difference (In Hours) Traditional TV136:54142:295:35 Timeshifted TV4:176:322:15 % of TV Viewing that is Timeshifted3%4% Time Spent in Hours:Min per Month, per Quarter Persons 2+

10 Adults Show Higher Percentages of Timeshifting, Relative to Other Demos Source: Nielsen, Three Screen Report, Third Quarter K2-11T12-17A18-24A25-34A35-44A45-54A55-64A65+ Traditional TV 108:34110:59108:36133:00134:51159:23175:18196:23 Timeshifted TV 5:254:554:3610:048:157:196:323:44 % of Monthly TV Viewing that is Timeshifted 5%4% 7%6%4% 2% Time Spent in Hours:Min per Month By Demographic

Commercials Viewed in Playback Mode Have Value for Advertisers

12 Just How Many Commercials Are Viewed in Playback Mode, Anyway? Most studies seem to indicate about 50-60% of commercials are fast forwarded…meaning that 40-50% are viewed in real time. Even when commercials are fast forwarded, it appears that message points are delivered – consumers are in an alert state to ensure they don’t miss program content – and recall of key ad message points is strong. Here are some examples of the latest research findings.

13 Just How Many Commercials Are Viewed in Playback Mode, Anyway? According to Nielsen’s recently released Three Screen Report, among DVR households, about half of commercial content was viewed when programming was played back within 3 days. Source: Nielsen, Three Screen Report, May 2008.

14 Just How Many Commercials Are Viewed in Playback Mode, Anyway? According to Dave Poltrack, EVP of Research and Planning for CBS, about 60% of commercials are fast forwarded, meaning 40% are viewed in real time. Even the 60% that are fast forwarded deliver value: Poltrack cites research showing that people stop fast forwarding for certain ads, “so good ads don’t get fast forwarded through as much as poor ads…We’re trying to get our commercial pods as consumer friendly as possible.” Source: Advertising Age, October 18, 2008.

15 Just How Many Commercials Are Viewed in Playback Mode, Anyway? According to a study from Innerscope Research for NBC Universal, viewers with DVRs who fast forward through commercials still recall and recognize brands at twice the expected rate. People fast forward in a “hyper-alert state” to ensure they don’t miss their show. Seeing a familiar ad further enhances recall for both live and DVR viewers: For DVR viewers, ad recall increased from 15% to 53% when an ad had been seen before. Advertisers are beginning to take advantage of hyper-alert gaze by centering key images on the screen. Source: LiveScience.com, October 2, 2008.

16 Just How Many Commercials Are Viewed in Playback Mode, Anyway? A study appearing in November 2008’s Journal of Marketing found that people who fast forward through commercials actually pay more attention to the television screen than those viewing in real time, and can be influenced by the brand images they view for only a short amount of time. The study recommends placing branded information at the center of the screen, noting that this can positively affect brand recognition and attitude, and behavioral intent. Source: Journal of Marketing, “Breaking Through Fast-Forwarding: Brand Information and Visual Attention,“ November 2008.

17 Playback Viewing in DVR HHs is Relatively Consistent Across Major Demographics Cumulative Viewing Live Viewing Same Day Playback 1 Day Playback 2-3 Day Playback Remaining Playback HH92.2%97.0%98.0%99.2%100.0% P %94.7%96.5%98.7%100.0% P %95.1%96.6%98.7%100.0% P %95.0%96.6%98.7%100.0% P %96.6%97.7%99.1%100.0% Viewing Among DVR Households Total Day, November 2007 HH based on 56 metered markets; person demos based on 13 LPM markets Source: Nielsen, Local DVR Timeshifting Analysis: Observations from November Released 1/11/08. The vast majority of viewing is still live. Less than eight percent of HH viewing is in playback mode, and approximately 12% of viewing among key demos is in playback. By the end of three days, over 98% of total viewing is captured.

18 DVR Playback by Daypart in LPM Markets Cumulative % of Playback Same Day+1 Day+3 Days+7 Days M-F 6-7A85.7%86.4%93.7%100.0% M-F 7-9A76.5%80.1%91.5%100.0% M-F 9A-12P70.8%75.0%90.2%100.0% M-F 12-4P68.4%75.7%90.6%100.0% M-F 4-6P67.7%78.1%91.1%100.0% M-F 6-8P71.4%83.2%94.0%100.0% M-Su Prime to 11P51.3%72.3%89.2%100.0% M-Su 11P-2A47.1%75.5%90.8%100.0% Playback Viewing by Daypart in LPM Markets P18-49 November 2007 Source: Nielsen, Local DVR Timeshifting Analysis: Observations from November Released 1/11/08. For the key demo of P18-49, of the 12.3% of viewing done in playback mode, the vast majority occurs in the same day. Over three-quarters occurs within one day, and over 90% occurs within 3 days.

19 Timeshifting Continues to Impact PUT Levels for All Demographics Percent HUT/PUT Increase from Timeshifting (Live v. Live + 7) 13 LPM Markets M-Su Prime November 2007 Source: Nielsen, Local DVR Timeshifting Analysis: Observations from November Released 1/11/08.

20 Timeshifting Continues to Impact HUT Levels Across all Dayparts

21 In DVR Homes, Playback Tends to Occur in Prime and Late Night Dayparts Source: Nielsen, Audience Insight: US DVR Penetration and Usage. Released July DVR Playback by Daypart – NPM Sample Persons May 2008 Includes time spent in “trick mode,” as well as playback older than 7 days. Highest DVR usage in Prime and Late Night is consistent with findings from earlier studies. Most often, content is played back in the same daypart in which it originally aired.

There is a perception that, nationally, C3 ratings are close to Live Only Program Ratings. Taking this a step further, some agencies are using Live Only ratings in local LPM markets on the assumption that what works nationally must work locally.

23 Do C3 Ratings = Live Only Program Ratings? November 2007 NTI Network Prime Program Averages C3 v. Live Only Program Ratings Index On a national level, primetime C3 ratings do indeed equate very closely to Live Only Program Average ratings, as the table below indicates. A18-34A18-49A25-54 ABC101 CBS NBC99 FOX CW99 MNT9493 Source: Nielsen NPower Analysis, November This top-line view, however, does not demonstrate the variances of individual prime programs.

24 For Individual Prime Programs, C3 v. Live Only Ratings Differences are More Apparent November 2007 NTI C3 v. Live Only Program Rating Index Looking at individual programs paints a clearer picture; C3 ratings can be significantly higher than Live Only program ratings. This difference is expected to grow as DVR penetration increases. Source: Nielsen NPower Analysis, November A18-34A18-49A25-54 The Office Ugly Betty Numb3rs Bones The Reaper

25 For Syndicated Programs, Similar Ratings Differences Can Be Observed November 2007 NTI C3 v. Live Only Program Rating Index Looking at individual programs paints a clearer picture; C3 ratings can be significantly higher than Live Only program ratings. This difference is expected to grow as DVR penetration increases. Source: Nielsen NPower Analysis, November A18-34A18-49A25-54 King of Queens Oprah Dr. Phil Cops Sex and the City

For most other program genres and dayparts, Live + 3 Commercial Indices indicate very little commercial skipping.

27 Nielsen Research on Commercial Skipping Source: Nielsen DVR Update July 2008 / Breakouts and programs less than 5 minutes have been excluded.

In addition to the ratings swings that can be observed nationally, there are local issues to consider. Most important is DVR penetration, which varies greatly market to market.

29 DVR Penetration Continues to Rise As of November 2008 DVR penetration is 26.9%, up from 19.7% one year ago. *Source: Nielsen, Media-Related UEs, November National DVR Universe Estimates Source: Nielsen Media Research May ‘07 July ‘07 Sept ‘07 Nov ‘07 Feb ‘08 May ‘08 July ‘08 Nov ‘08

30 While National DVR Penetration is 24.4%; in Many DMAs, Penetration is Much Higher November 2008 DVR Universe Estimates In some DMAs, DVR penetration is nearly 50% higher than national estimates. Local market viewing patterns will be affected by changes in DVR penetration, and need to be examined on a case by case basis. Source: Nielsen, November 2008 Media-Related Universe Estimates. DMA RankDMADVR Penetration 28San Diego Austin37.4 5Dallas-Ft. Worth Orlando-Daytona Bch-Melbrn36.8 2Los Angeles Sacramnto-Stkton-Modesto35.2 6San Francisco-Oak-San Jose Raleigh-Durham (Fayetvlle) San Antonio Cleveland-Akron (Canton) Tampa-St. Pete (Sarasota)33.5

31 TVB Recommends That Advertisers Count Timeshifted Viewing When Planning Ad Buys DVR penetration will continue to rise, and will increasingly affect viewing patterns. Ignoring this viewing shortchanges media plans. While some commercial skipping occurs, close to half of ads are viewed in real time; ads that are fast forwarded through still deliver valuable ad impressions. Most playback occurs close to the program’s original airtime, and commercials are delivered during desired advertising intervals. Nationally, Live Only program ratings – for individual primetime programs – often exceed C3 ratings by significant margins. Local market viewing nuances need to be considered; like cable and satellite penetration, DVR penetrations varies from market to market.

32 TVB Calls for Live + 3 Standard Over 90% of playback, regardless of daypart, occurs within 3 days. Live + 3 day ratings capture nearly 99% of total Live + 7 viewing in key demographics. For the vast majority of advertisers, ads that air within 3 days of original airtime: still serve to build awareness of a campaign, motivate viewers to reach to time sensitive sales events, cause customers to take other desired actions.

Live Only ratings do not reflect the new realities of television viewing in local markets. The Live + 3 standard represents a more accurate estimate of viewing behavior.

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