Thursday, April 28, 2011

Advertising 101 for Race Fans, Lesson 3: Neilson Ratings

A lot of discussion has taken place recently concerning the Neilson ratings that the league has garnered in recent races and more importantly in recent years.  The news generally has not been good and many passionate fans of the league, but novices in the world of advertising and media measurement have taken the stance to thrash the ratings, stating that “They are a flawed methodology and wrong” or “They are no longer pertinent or important anymore”
I thought I would take some space to discuss the ratings and how they are constructed.  Neilson is the primary supplier of television ratings in the US.  There are other providers in other countries such as TNS in Europe, but to this day Neilson is the sole significant provider here.  In radio, Arbitron is the primary provider for listener information.  On the web: Comscore and Neilson’s Net Ratings provide browsing consumption data.  These three sources of data represent examples of what is referred to as syndicated research.  Syndicated Research is where the providing company collects a single data set for the purpose of selling it to many clients, which is different than primary research that creates a specific research project for the specific needs of a single client (for the record, I work in primary research).
Neilson provides two numbers, the ratings, which is the share of all televisions tuned to a show when it is on and then the share that indicates the percentage of televisions actually on that were tuned to the show.  The latter is a larger number than the former.  The ratings are used to compute an audience size and measure how many people were reached by the ads running during that show, this number is all about the ads.  The share number is used by networks to determine who is “winning” in a particular time slot since the number of TV’s actually on changes from time slot to time slot.  In theory, take the ratings number, divide it by 100, multiply it times the number of Households, then times the average members per household and you get the number of people watching the show.
Originally back in the day, Data collection for the Neilson ratings consisted of 1000 randomly sample households from across the US, sampled to be representative of all households in the US (as compared and balanced back to the census) filling out weekly paper “viewing” diaries.  The 1000 study participants were continually recruited and replaced. 
As the television market fragmented from the 4 channels on the air to the 100’s of cable channels we have today are vying for the same general number of eyeballs, the ratings numbers began to become smaller and smaller for the shows being measured.  As a result, the methodology had to change as well.  Now the Neilson ratings are collected with a static sample of 25000 participants.  The additional respondents help reliably measure shows with the smaller audiences observed since fragmentation.  In addition to the increased sample size, the data collection has evolved from being pencil and paper to an electronic box that sits in the homes of the families that participate in the study.  The box has a coax cable to the TV on one side and a telephone cable on the other that transmits data directly to Neilson on the other.
The first criticism of the Neilson ratings that casual people have is the same that people have towards any sort of information estimated by sampling techniques.  “It’s not measuring everyone, so how can it be right?”  Unfortunately, basic education of probability and statistics is not seen as being as important to a math and science education as are physics and chemistry, which is too bad.  The Central Limit Theorem, the central tenet upon which nearly all of statistics is based is as vital as the Law of Gravity is to the physical sciences.  Unfortunately, it is not as likely to taken on faith by science novices as the Law Of Gravity since is it not as intuitive nor is it so obvious in common day life.  But it is every bit as true.
An intuitive example of how it works.  Suppose that the average height of men in the country was 70” (5’ 10”).  Only (say) 10% of men are 6’5” or over.  Now Suppose you measured a sample of 10 men, how likely is it that you would find an average height of 6’5” or higher?  Well if the probability of finding a single male that tall or higher was .1 then the probability of finding two is .1 x .1 = .01 (Independent probabilities are multiplicative).  Further the probability of a randomly drawn sample of 10 men being that tall is .110 = a really small number. 
Let’s take this to a less extreme example, suppose there is a .48 chance that a man is more than 5’11” tall, then what is the probability that a sample of 400 men will average 5’11” or higher given the population truth that men average 5’10”?  Given the example above, that would mean the probability is .48400 = again a really small number.  Point is, drawing a single observation far removed from the mean height or rating might be easy, but drawing a LARGE group that is far removed from the true census statistic is very unlikely unless there is a flaw in how you drawing your sample.  Which means if you are measuring the average height of men, don’t hang out in the locker room of an NBA team. 
So if Neilson is collecting 25,000 they are pretty well covered not only for measuring the total audience, but also for specific regions, demo’s and shows.  Their 25k is balanced to census statistics across several demographics and within specific census regions.  As much due diligence as could be expected by industry standards.
The next major gripe race fans seem to have about the ratings deals with the recording of races by viewers for future viewing.  Fans say that so many people DVR that the real number of people who watch the race is higher than the ratings because the ratings don’t include these people.  The first thing I would point out here is that the recording of races is not new.  There is new technology being used now that wasn’t available 10 years ago, but even 20 years ago VCRs were commonplace in households and the recording of broadcasts nearly as frequent as today.  So if the ratings trend for IndyCar is down, recording of events can’t be the culprit. 
But the philosophical question remains, should delayed recorded viewing of a show be counted in the ratings number?  To answer this we have to go back to who is ultimately pays the bills…The advertisers.  Neilson ratings exist so that Media (TV) companies can justify their advertising rates to the advertisers who buy the ad space.  So follow the money and at the end of the trail you find advertisers and sponsors. 
Advertisers have always been clear here.  NO! recorded viewing does not count.  The problem with recorded views is that it is generally assumed that people who watch a delay, fast forward past the commercials that have been paid for by the advertisers.  Therefore, that portion of the viewing audience delivered by the network provides no ROI for the advertiser footing the bill.  At the end of the day, nobody, and most importantly the advertisers, really cares who watches the shows or game themselves, only that the commercials are being viewed.  Your retort?  What about people who get up and take a pee during a commercial?  Well then if you come up with a methodology that gets around that, then the company I work for would love to talk to you, but no one has come up with one yet.
If you need more affirmation that the Neilson ratings are an accurate measure of the size of a television audience who are being exposed to ads in an IndyCar broadcast, consider this.  Essentially, Neilson ratings measure three audiences:  Those who watch over the air; those who watch on cable and finally those who watch via satellite.  For the over the air audience, Neilson ratings are the only source for viewership data, but for cable and satellite, there is another way to measure viewership.  If you have a cable box, satellite modem or Tivo/DVR with a telephone line plugged into it, then you are not only getting a feed from the distribution company but what you watch is going back up stream to the satellite/cable company and being tracked, they know what you are watching and they are creating massive databases to store it and mine it forever (creepy huh?).  This data collected by cable and satellite companies is referred to as “Set Top” data and is incredibly accurate…Guess what…when the Neilson panel is screened to exclude the broadcast viewers, the ratings trend very well with the set top data.
Many will say that soon everyone will stream TV and the Neilson ratings will go away.  I won’t debate that there won’t be a growing audience for streaming audiences, but it will be quite a while a large enough a cultural shift takes place to remove over air and cable audiences.  Part of it is technology.  Not all the country has cable access, so what makes us think that those same portions of the country will have ample internet bandwidth to stream anytime soon?  Even those with access to a wireless internet provider, there are usually “Fair Access” policies that limit how much data is delivered to a single customer during a given day.  A three hour race streaming on-line is a BUNCH of data and is sure to hit the fair access policy limits. 
Ultimately, on-line streams will simply be another distribution channel for people to select from, joining over the air, cable and satellite.  It is not realistic to expect that the media companies will share ratings info with each other so a third party measurement system will be required for the future streaming audience as well.  Remember who I said provided on-line audience measurement?  One company you have probably forgotten about by now and a familiar name.  Neilson is prepared for that day as well. 
I hope this has helped to demystify the Neilson ratings a bit.  I could probably go on but it getting late, Good Day Sirs.

Wednesday, April 20, 2011

Wanna fix the Ratings? Then Fix the TV Product.

There is a type of study in the marketing research industry called an Ethnography study and despite the similarity between Latin root influences, they have very little to do with Willy T Ribbs.  Typically an Ethnography study looks to understand how consumers of a product or category interact with the product as they use it.  The goal being if you understand how your product is used or consumed, then you can design it better for those purposes.  Methodologies for these studies are more diverse than any type of marketing research I can think of, ranging from having study participants e-mail recipes, texting camera pictures of the product as it is being used or consumed, to having a person follow a participant around and actually watch a subject interact with the product (David, does any of this sound familiar?)
After having married into two nascar families (not at the same time mind you, the first experience didn’t end so well) and having bought a house from another, I feel like I have collected enough data to publish some information from an ethnographic study of nascar viewing consumption and broadcast interactions and draw inferences from it that has pertinence to IndyCar as well.
Sunday morning starts off with the pre-race show and opinions about them are split.  The wicked and evil of the world have these shows on as background noise as they go about their sinful ways Sunday morning, sleeping in late then farting around the house as they cook breakfast.  The good, righteous and saved of the world don’t watch them because they are at church.  Instead, the good and righteous of the world get their nascar fluff on espn during the week while secretly fantasizing about getting Mrs Briscoe naked and doing impure things to her which is why they have to go to church on Sundays so they can feel better about themselves.
Then the race starts, and all eyes are glued to the tele looking for the first lap melee.  Soon, after a couple tries at it, the race settles down into cars going around in circles at which point Y2k attention spans start to wander.  The older types start to doze on the couch and begin to snore.  Those under 18 wander off to another TV, one with a game console hooked up and begin to play games, occasionally racing related, more often however these games relate to gratuitous simulations of mortal violence.  Sometimes, if the weather is just right, they go out and play basketball. 
The 25 – 35 crowd is a little different, they tend to be more mobile and will have hopped into their pickup trucks and migrated to the lair of another herd member where they are joined by other members of the herd.  The herd congregation spot is usually the lair of the herd leader and it is often a basement or detached garage which is stocked with the following items:  A TV with the race on, a fridge full of Coor’s light and a pool table or a computer with a porn site loaded up – sometimes both (as was the case during the open house where I first looked at the property that is my current residence.  FYI if you are selling a house and are holding an open house, it means get the hell off the property, not just out of the house.  Going out to the detached garage, getting drunk while watching Tony go round in circles usually is detrimental to your chances of selling said house Bubba)  But I Digress.  In this environment, after the race starts and the cars are generally going around in circles, viewers tend to migrate to the fridge then either the pool table or porn loaded computer.
Then with about 30 laps to go something inexplicable happens, some instinctual alarm goes off in the psyche of all these racing enthusiasts.  They heed an inner call to return to the television set, nascar throws a yellow to bunch up the field and then the excitement begins anew until the checkered finally drops.
The gist?  Nascar events generally are marked by two race stages that are compelling and engaging to the consumer: the start and the finish.  The 2 hours in between are a disposable, filler portion of the broadcast that rarely engages the consumer. 
A flaw with the Neilson methodology that determines audience ratings or the set top data the satellite and cable companies collect to provide similar data, is that if the viewers leave the TV on to go do something else, the measurement methodologies still record that something is being “watched”.  Ratings do not show the dip in attentiveness that actually happens.  Credit Fox for recognizing this and calling out nascar to shorten up their races after making the same discoveries.
In some of the discussion that has ensued relating to the first 60 laps of Long Beach, it would appear that certain IndyCar fans have the belief that IndyCar is different, that the entire 5 hour broadcast window is or must be compelling must see TV and are outraged that a League vs drivers disagreement over double wide restarts robbed them of having a full rich 2.5 hour race experience.  Honestly during the middle portions of the race Sunday, I went outside fed the Ducks, spray painted some wooden easter eggs for a friend’s child and spent the rest of the time twittering.  Mrs JP attacked a 5” thick piece of Polyfoam with a 12” bread knife and hand crafted a replacement cushion for the love seat.  Other than Mike Conway muffing a pit stop, we didn’t miss much.
Audience “engagement” problems that plague nascar are issues with IndyCar as well.  I suspect that at some level this engagement issue is what has driven the attendance trends at IndyCar events.  Long Beach and St Pete draw well because when the race gets boring, there is more to do.  There’s plenty of Tecate girls clad in skin tight shiny blue spandex to purchase $8.75 beers from…and flirt with or gawk at.  At Nashville or Chicagoland when drivers are doing laps 50 – 150 trying to save fuel and stay out of trouble, attendees have nothing to do but sit in their seats and get bored.  Even if the finish is great, they go home thinking that they could have saved the $60 and watched the final 20 laps at home.  Indy is different than the average oval in that there is always Turn 3 infield and hence more like Long beach than Chicagoland. 
Big time racing has settled into an event with the format of:  start, finish and a 2 hour scheduled nap in between.  The race strategy is pretty predictable for these events.  If you have agood car and lead, the  run way and hide Will, save fuel if you can. If you got a good car and are near the front, keep your nose clean and make your run late after the last pit stop Dario.  If you have a good car and start further back, then Tony start punking the also rans in the back but don’t expect the TV to notice until you have moved up at least 10 spots.  If you got a lousy car JR, hope you can figure it out and hope you can fix it in order to make a run late, otherwise, let Helio and Viso gain you some positions.  The point is, double wide restarts or not, unless you are named Helio Castroneves, there is no incentive to do anything stupid early or in the middle for the cars the TV has the camera on.  The format encourages predicable boring race strategies, exacerbating the problem.
Diehard fans are probably outraged at this point talking about how people should appreciate the finer nuances of pit strategy, fuel conservation and tire management.  But the casual fan is like the Honey Badger, they don’t care, frankly they don’t give a shit.  I have asked a number of casual sports fan friends of mine what they hope to see in a race and it almost always comes down to three things:  The big one; A late pass for the lead; and someone they’ve heard of winning the race.  In reality this is all SportsCenter has taught them to expect, so when they see an hour and a half of race “filler” that seems to serve no purpose they move on and if they find Tiger on a run or derrick Rose en Fuego, they don’t come back.
Racing events on television need to be blown up and recreated and re-imagined as to provide more must see content.  The filler must be flushed.  Probably no other racing series has a better format for television than USAC or WOO sprint events.  Heat Races, followed by more heat races followed by a Final race for all the marbles.  Sprint car racing triples the green flag starts and checkered flag finishes and disposes of the disposable in between.  SO why, you ask, are these events not the hottest thing on TV?  Simple, Two things:  Going around in circles and Dirt.  Nascar and Supercross have shown you can get away with one or the other and be successful, but combine the two and you have something that mainstream America will never see as more than a primitive slop exhibition put on by uneducated hicks. 
Sorry if I offend you, I am not here to make friends today…
This same basic format works quite well for sports other than auto racing.  The recent revelation of the winter Olympic games has not been the inclusion of new extreme sports for the teenies in the audience.  The new crack for Olympic viewers is Short track speed skating.  If you are familiar with the sport then you know – it is organized just like a sprint or midget race.  Heats with about half the participants of each heat moving on until there are 4 skaters left for all the marbles.  Every heat is important and has tangible consequences.
You want to create made for TV racing events that will draw in new viewers and grow the ratings number?  Then drop this into a 5 hour IndyCar broadcast window:  Two heat races where the field is split into balanced groups based on odd and even placements from qualifying.  Run 25 laps on ovals and 10 on road circuits, no pit stops, pay a small loading of championship points.  Then roll out the lights cars and let them have their moment, perhaps shorten their event a little.  Then finally, roll out the top 10 from each of the qualification races and run a race long enough to mandate a fueling pit stop, make tires degrade quickly enough that teams and drivers contemplate extra stops to gain an advantage.  On a road course roll out a new compound that was not available in practice, quals or the heats.  Challenge drivers, teams and engineers to adapt or be left behind.
An event like this makes every lap relevant and important, there are no “Fuel saving” or “keep your nose clean” laps anymore.  Drivers race every lap hard.  Fans watch the whole event because everything presented to them has tangible consequences that even a novice fan understands.
Radical? Yes, but as long as the .27 ratings continue, the closer we get to pulling the plug on IndyCar.  Every race?  No, traditional long form endurance runs like Indy can still be part of the schedule as they provide variety from week to week.  A new idea?  Nope, I imagine the Texas two step in June is a trial balloon for something like this and I would imagine league and network researchers will be comparing the minute by minute ratings for this event to other events in order to see how engaged the audience stays.
At this point despite what everyone else might suggest, new cars, more Americans more underdogs aren’t going to save this thing.  Redesigning your on air product to be consistently more engaging to the viewer is the only thing that will…

Thursday, April 14, 2011

2012 Bonus Objectives for Randy Bernard

Randy,
As you may recall your compensation package is based on two components:  A guaranteed component which was covered in your offer letter and an At Risk / Bonus portion based on yearly performance objectives determined from year to year.  2010 and 2011 were development years for the league and your objectives reflected that fact.  2012 is expected to be a growth year for the IndyCar series and your objectives will reflect those expectations.  Your performance will be measured against a series of numeric objectives listed below:
30 Fully sponsored full time participants car driver combinations should compete for 28 qualifying spots for most regular series dates.
40 Participants should compete for 33 starting spots within the Indianapolis 500
1.0 or Greater should be the average Neilson rating for the races broadcast on the NBC Universal Sports channel.
2.0 or Greater Should be the average Neilson rating for the broadcast races other than the Indianapolis 500.
5.0 Should be the minimum Neilson rating for the Indianapolis 500
1.2M Fans should attend the 20 IndyCar series races during the 2012 season.

Saturday, April 2, 2011

At Long Last...

I have to admit...I was getting nervous...everyone else was basking in the glow but not me.  For about three weeks now I would head to the mailbox in anticipation and.... nothing.  One day I flipped through the mail and got a newsletter from Mid Ohio, a nice reminder of something to enjoy later in the summer.  The sense of urgency to get up at 7 am Drive to the race course, , walk the 3/4 of a mile to set out our lawn chairs in the morning dew and stake our claim in the esses with 15k beloved commrades enjoying the scent of ethanol ... a fraternal brotherhood of speed...


But that nice little reminder of things to come wasn't what I had been hoping for, the object of my obsession had not yet arrived. 


A week or so later, a plain little white envelope was in the mail, it seemed thick and a little stiff.  I opened it and I smiled...Tickets to the Iowa USAC race on Friday night and the IndyCar race Saturday.  Memories came rushing back from last year's race, the best oval race of the year.  The suspense of the stalker and the stalked, a green flag pass after the last pit stop and a different team in victory lane.  An outstanding afternoon of racing.  But still not the fix I was looking for.


Another week and I heard from a friend who made his arrangements a full month after me had his little blue envelope of joy...and I admit I REALLY started to get nervous.  Another week and nervousness turned to despair...despair to hysteria...What was I going to do...Paul Tracy was going to the be there, Townshend Bell too even Dan Wheldon had a date for Memorial Day weekend...But not me.


Sure, there would be Iowa followed by six nights in Glacier the week afterwards.  There would be the whole three day orgy of speed at Mid Ohio, the family outing to Kentucky that has become a yearly tradition.  Heck there would be Vegas, $5million challenge  followed by a week long excursion to Grand, Zion and Bryce Canyons.  LOTS of good racing.  Lots of good times...But would the racing year be so full, sweet or complete if IT never came?? 


Of course not...


Had lunch with the nephews today.  One asked, where are we sitting this year?  I tried to not look nervous or let on that anything was up.  I said "Same basic place as last year, just one row lower...It's a BIG year, seats are going to be harder to come by." "Cool" was the response.  Their anticipation was making me even more nervous now.  George had suggested I call the ticket office.  He was right, Monday I would take care of this, put myself out of my misery.


So ... Imagine my Joy today ... Coming home from lunch ... Checking the mailbox ... seeing the hint of blue underneath the coop electric bill ... rushing inside to find a sharp knife ... cutting carefully ... seeing the green "lot 2" pass ... a moment spent trying to figure out what the hell a "Staind" was ... but then seeing them ... 4 Pictures of Dario with the words "100th Anniversary International 500 Mile Sweepstakes" above him... And Finally ... All was right with the World.

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