Dr. H. Ronald Moser Cumberland University Kleppner’s Advertising Procedure Dr. H. Ronald Moser Cumberland University

Chapter 8 Using Television Kleppner’s Advertising Procedure, 18e Lane * King * Reichart

Learning Objectives Understand the diversified nature of the television industry. Describe the multiple roles of television as an advertising medium. Discuss the changing position of network television. Describe syndicated rating services and television research methodologies. Identify the various segments of television viewing.

Pros of Using Television 99% of all U.S. households have television. TV’s combination of color, sound, and motion offer creative flexibility for virtually any product message (see Exhibit 8.1.) Television is very efficient for large advertisers. Digital television will create new opportunities for advertising and programming. From a marketing perspective, television has individual segments that offer special characteristics for advertising and programming. A positive characteristic pertaining to television that would be inviting to advertisers would be the blending of various technologies that enhance advertising. Television network executives see the Internet as a major challenge and greatest opportunity for television.

Exhibit 8.1. Creative Flexibility for Product Messages Exhibit 8.1. Television Offers Creative Flexibility for Product Messages.

Cons of Using Television The television message is short-lived and easily forgotten without expensive repetition. The television audience is fragmented and skewed to lower income consumers. Shorter spots have contributed to commercial clutter. Channel surfing and recording have decreased the amount of time spent viewing commercials. The effects television programming has had on U.S. culture has not been very positive on academic education.

Television Bureau of Advertising

Television as an Advertising Medium – Federal Communications Commission The business of television--and advertising is a major part of that business-is to function as an audience delivery system. The primary business of television is the delivery of audience. The FCC is the federal authority empowered to license radio and television stations and to assign wave lengths to stations “in the public interest.” For a number of years, television has been adding program options at a growing rate. In the 1970s, a few independent stations offered sports and off-network reruns as an alternative to network affiliate programming.

Limitations of Television – Cost Advertising and promotion, regardless of the medium or methods of distribution, are expensive. Television remains the primary medium for many advertisers because it has high household penetration. Before completely ruling out TV advertising because or cost, advertisers should consider if they need to reach huge numbers of people. The average household viewing time for television is more that eight hours per day. Cost: CPM for television still suggests medium can be cost-efficient compared to print.

Limitations of Television – Clutter Television Clutter – Is defined as any nonprogram material carried during or between shows. Clutter: Commercials account for more than 80% of nonprogram material. In recent years, the issue of television commercial clutter has become a major topic among advertisers and their agencies. There is a great deal of pressure on networks to increase the number of advertising minutes they sell in the highest-rated shows. According to WPP Group’s MindShare media group, network television runs an average of about 15 minutes of nonprogram content per hour.

The Rating Point System – Characteristics A Rating Point System - Is the basic measure of television audience; it is the percentage of television households in the market a television station reaches with a program. The Rating Point System is the basic audience-measurement statistic for television. The rating, expressed as a percentage of some population (either television households or a specific demographic group such as women aged 18 to 49), gives the advertiser a measure of coverage based on the potential of the market. Rating = program audience /total TV households. The formula for Gross Rating Points is: R x F = GRP.

Gross Rating Points – Characteristics Characteristics of the Rating Point System include: Gross rating points illustrate the weight of a schedule in terms of the total ratings for all spots bought. Each rating point represents 1% of the universe being measured for the market. GRPs are a function of reach and frequency. They are calculated by multiplying insertions by the rating. A characteristics that would not be included in the Rating Point System is a percentage of individuals divided by a specific target segment rather than households.

Exhibit 8.3. GRPs Measure Weight of a Advertising Broadcast Schedule A principal merit of the GRP system is that it provides a common base that proportionately accommodates markets of all sizes.

Exhibit 8.4. Cost Per Rating Point and Television Cost Efficiency If you’re trying to estimate the cost of a particular schedule or a particular spot, you should use Cost Per Rating Point (CPP).

Share of Audience – Some Generalizations To determine the success of a television show, you use a measure called share. Share of audience is the percentage of households using television tuned to a particular program. Advertisers use share to determine how a show is doing against its direct competition. Let us assume that the Good Morning America show has 5,000 households watching in a market with 100,000 households. In this case, we know that the rating for Good Morning America would be 5. Rating = Good Morning America viewers over total TV household x 100 = 100 = 5,000 over 100,00 x 100 = 20.

The Many Faces of Television – Some Generalizations Although the average viewer probably makes little distinction among cable, premium cable, broadcast networks, syndicated programs, daytime, or any of the other permutations of television, they are, in many respects, unique marketing vehicles. When it comes to advertising spending by types of television available, the category that receives the least advertising revenue in 2008 was syndicated TV (see Exhibit 8.5). Television has become an individual-user medium. Television serves a variety of purposes for a variety of viewers, but increasingly as a source of income based on their placement of advertising.

Exhibit 8.5. Ad Spending by Type of Television, 2008 (In Million Of Dollars) Exhibit 8.5. Advertising Spending by Type of Television, 2008 (In Million Of Dollars).

Network Television – Some Generalizations Networks are comprised of local stations that contract to carry network programming. Networks sell national advertising on the basis of station clearance. Compensation is a system whereby networks share advertising revenues with affiliates in return for using local station time for programs. If advertisers choose to make a network buy, they actually receive a group of local stations that contract to carry network programming.

Exhibit 8.7. Network Television – Historical Ratings Exhibit 8.7. shows the top network programs over the years. The four so-called major networks are ABC, CBS, Fox, and NBC.

Network Television – Clearance and Affiliate compensation – Some Generalizations Networks sell national advertising on the basis of station clearance. Network clearance is expressed as the percentage of the network’s station lineup that has agreed to clear their schedules for network programming. The top four networks can expect that close to 100 percent of their stations will clear their schedules to run network programming. Another primary factor in the relationship between networks and affiliates is station compensation. Compensation is a system whereby networks share advertising revenues with their affiliates in return for using local station time for their program. Major advertisers consider a network that has reached 70 percent coverage as a national program worth their consideration.

Network Ownership – Network Commercial Pricing and Declining Audience Share An issue that some feel Congress should address relative to conglomerates is should conglomerates have the right to own the means of distribution (a station or network) and the production of content (a program production studio)? The average price for a prime-time, 30-second spot placement on the for major networks in 2008 was about $125,000. If a network uses popular programs to support subsequent programs during its daypart schedule, it is concerned about the strength of the block. Research has consistently shown that programs do not stand on their own but instead are greatly influenced by the programs shown directly before them, called the lead-in, and the total daypart schedule is called a block. An example of the importance of lead-ins is demonstrated by the investment local stations make to schedule popular programming prior to their evening news.

Network Commercial Pricing and Declining Audience Share – Dayparts If a network uses popular programs to support subsequent programs during its Daypart Schedule, it is concerned about the strength of the block. Morning, 7:00-9:00am Monday-Friday. Daytime, 9:00am-4:30pm Monday-Friday. Early fringe, 4:30-7:30pm Monday-Friday. Prime-time access, 7:30-8:00pm Monday-Saturday. Prime time, 8:00-11:00pm Monday-Saturday, 7:00-11:00pm Sunday. Late news, 11:00-11:30pm Monday-Friday. Late fringe, 11:30pm-1:00am Monday-Friday.

Advertising Criteria for Network Television Buying decisions by clients and their agencies are largely determined by demand, avails, demographics, and CPM. Avails (availability) address the reality that networks ration prime commercial spots among major adverts. Demographics - Here we are talking about the audience of potential network buyers. CPM – Here we are looking at cost considerations. Demand – Demand is a function of demographics, CPMs, but there could be certain qualitative factors.

Network Television Advertising Criteria – Nuances in Television – Some Generalizations Availability (Avails) – Of spot inventory are rationed so prime commercial spots are packaged with less popular spots. Upfront Buying – Refers to the season in which most prime-time spots are bought (see Exhibit 8.8). Scatter Plan – Buys follow the up-front season and refer to quarterly buys throughout the year. In negotiations, many media planners today look for a variety of options to reach particular target markets including network time. Make-Goods – Are concessions to advertisers for a failure to achieve a guaranteed rating level.

Exhibit 8.8. Top Network Television Advertisers – Spot Television As show in Exhibit 8.12. the top 10 syndicated television advertisers.

Spot Television – Reasons to Buy Spot If national advertisers decide to buy time from local stations, they are making spot buys which are usually placed through station representatives (reps). If stations sell through a rep they are not linked in any way other than being clients of a particular rep firm. These station groups are called nonwired networks. Spot buys allow network advertisers to provide additional GRPs in the markets with greatest sales potential. Spot buys provide businesses with less than national distribution a means of avoiding waste circulation incurred by network television. Spot buys also support local retailers (see Exhibit 8.10). Spot buys allow network advertisers to control uneven network ratings on a market-by–market basis. Moser’s

Exhibit 8.10. Top Spot Television Advertisers As show in Exhibit 8.10. the top spot television advertisers.

Spot Television – Local Television Advertising Local advertisers increasingly purchase television advertising. Preemption Rates - Here we are looking at the lower-rate on a spot advertisement. Special Features – Here we are looking at something new, new telecasts, may be a weather report. Run of Schedule (ROS) – Here we are allowing a station to run commercials at its convenience. Package Rates – Here we are selling time slots at different periods which is sold as a package. Product Protection – Here we are looking at ways to keep our product as far from commercials as possible. Schedule Rotation – Here we are looking at the placement of commercials within a schedule to get the greatest possible showing.

Television Syndication – Some Generalizations Syndication is the sale of television programming on a station-by- station, market-by-market basis. Syndicated shows are sold on an advertiser-supported or Barter basis. Barter syndication refers to the practice of offering the right to run a show to stations in return for a portion of the commercial time in the show. Syndicated shows may be off-network syndication or first-run programs.

Television Syndication – Some Generalizations Syndication accounts for more and more money, year after year. A major show can provide coverage comparable to broadcast networks. Unlike cable, it is available in every television household. Some popular long-running shows are in syndication while still providing first-run productions. Currently, syndication accounts for close to $4.4 billion in advertising revenues, and major syndicated shows provide coverage comparable to the broadcast networks (see Exhibit 8.11).

Exhibit 8.11. Television Syndication – Need for Programming The Number of Television Stations Means That There is a Strong Need for Program Content, Like that Offered by Syndicated Programs.

Exhibit 8.12. Top Syndicated Television Advertisers As shown in Exhibit 8.12. the top 10 syndicated television advertisers.

Cable Television – Some Generalizations One of the main reasons that cable has been so successful is because of the unique, selected networks and programs appeal to segments of audiences with targeted demographics. Factors that make cable so attractive to advertisers is its ability to target audiences. Its really low cost. A strong summer season. The opportunities for local and spot cable advertising. Exhibit 8.13. lists the top 10 cable television advertisers, 2008 (in million of dollars).

Cable Television – Reasons for Cable’s Attractiveness to Advertisers One of the main reasons that cable has been so successful is because the unique, selected networks and programs appeal to segments of audiences with targeted demographics. Ability to Target Audiences – Here we are talking about specific demographic and lifestyle segment. Low Cost – Because of the competitive environment prevents increase in CPMs. Strong Summer Season – Has offered some strong programs opposite network summer reruns. Local and Spot Options – The majority of cable advertising dollars are spent at the network level.

Cable Television – Exhibit 8.13. Top Cable Advertisers As show in Exhibit 8.13. – the top cable advertisers, 2008 (in millions of dollars).

Cable Television – Cable’s Success Factor: First-Run Programming

Cable Operators Can Insert Commercials Such as This One into Their Local Systems Exhibit 8.14. – Most local cable operators can insert commercials such as this one into their local system.

Videocassette Recorders and Digital Video Recorders – Time-Shift Viewing Since its introduction in the 1970s, the videocassette recorder (VCR) has allowed viewers access to theatrical movies, make-for-VCR films, promotional and educational tapes and, of course, it has permitted them to record television shows for later viewing—called time-shift viewing. At one time, it was anticipated that the primary use of VCRS would be off-air recording. Advertisers thought that the VCR would provide a method to increase the audience of a show. Many industry observers think the VCR is an outdated relic, replace by digital technology that allows much greater flexibility than the VCR.

Videocassette Recorders and Digital Video Recorders – Time-Shift Viewing

Exhibit 8.15. Top 10 Brands Appearing in a TV Program Some programs and products lend themselves to product placements better than others. Exhibit 8.15. shows the top 10 brands appearing within a television program and the top 10 programs using product placement.

Exhibit 8.15. Top 10 TV Programs Using Product Placement Some programs and products lend themselves to product placements better than others. Exhibit 8.15. shows the top 10 brands appearing within a television program and the top 10 programs using product placement.

Syndicated Rating Service – The Nielsen Rating The primary suppliers of syndicated television ratings is Nielsen Media Research. The company was founded in 1923 by A.C. Nielsen to collect radio audience information, and it initiated television rating in 1950. The Nielson Television Index (NTI) provides network ratings on a national basics. Data are provided from more than 9,000 households. In these households a People Meter is attached to each television set. The People Meter has buttons assigned to each person living in the house and additional button for visitors.

Syndicated Rating Service – The Nielsen Rating – Nielsen’s People Meter

Syndicated Rating Service – Nielsen Media Research Nielsen is the primary supplier of syndicated television ratings.

Syndicated Rating Service – Nielsen Rating System: Areas of Concern In recent years, the Nielsen rating system has come under a great deal of scrutiny by both advertisers and broadcasters. Although a number of issues have been raised, we discuss three major areas of concern: Sweeps Weeks – are an efficient and relatively inexpensive means of estimating quarterly local market ratings. Diaries – The People Meters help to eliminate the current sweeps problem by providing o ongoing audience measurements for most of the country. Exposure Value – Advertisers only want to pay for audiences who are watching their commercials. Television networks want to get credit for audiences that record and playback their programs.

Syndicated Rating Service – TVQ Measures Show Popularity The best-known qualitative research service is Marketing Evaluations, which compiles a number of “popularity” surveys call “Q” report. The most familiar of these are TVQ and Performer Q.

The End! THEY WILL BE THERE! WHAT ABOUT THOSE REVIEW QUESTIONS? “S” DRIVE