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CNBC’s Nielsen Defection: Will It Kill Media Measurement, or Just Make A Scratch?

Analysis: CNBC's move could herald a new era of chaos in advertisers' efforts to make sense of TV

You wouldn’t think CNBC’s primetime fare is that much different from the stuff it airs during the day. “Shark Tank” and “The Profit” show people trying to start their own businesses at night while Becky Quick, Carl Quintanilla and Kelly Evans explore the markets during the day. Now the network is making the case that each set of shows requires its own yardstick.

In primetime, CNBC wants to let Nielsen measure its ability to woo audiences. Starting in the fourth quarter of 2015, however, the business-news network will no longer rely on Nielsen for the data it will use to negotiate with advertisers, a move reported previously by Adweek and The Wall Street Journal. Instead, it will turn to a company called Cogent Reports, which will survey financial professionals and affluent investors and the network will establish guarantees about how these types of viewers watch CNBC.

“Throughout our 25 year history, traditional measurement companies have struggled to capture CNBC’s audience of business executives, decision makers and affluent investors,”  said Mark Hoffman, president of CNBC, in a prepared statement. Rival Fox Business Network, which uses Nielsen, intends to continue doing so, while Bloomberg’s cable network, which does not use Nielsen measures, will stay on that course.

At first glance, this seems like another in a series of recent blows dealt to Nielsen, the media-measurement company whose metrics have formed the bedrock of how TV networks get paid for what they air. CNBC has long maintained that its wealthy viewers largely watch such fare as “Squawk Box” and “Closing Bell” while they are sitting at the trading desk, conducting business from an office or sitting in a hotel while on a business trip. Nielsen, the network’s executives have long argued, doesn’t measure such “out of home” behavior in a manner that gets CNBC the ad dollars it thinks it ought to get from Land Rover, Phillips digestive aids and the magicJack Internet-phone service (three sponsors spotted on air earlier Tuesday).

Yet the move could also be interpreted as self-serving. CNBC’s daytime programming has been plagued by ratings shortfalls in recent years, with its total audience as well as the one desired by advertisers – people between 25 and 54 – falling each year since 2009, according to Nielsen data. The network has always derived a sizable chunk of its tune-in from the out-of-home crowd, and the erosion has likely been accelerated by consumers’ new access to information and business-news from digital sources. By moving to Cogent, it’s almost as if CNBC invited Madison Avenue to enter into an annual touch-football tournament and then, after playing for decades, insisted on moving to a different field.

One senses the hand of Linda Yaccarino, who took over NBCU’s ad sales in 2012 and has come up with any number of new offerings for advertisers in an attempt to get them to buy more of the company’s broad media portfolio. The challenge to keep news as part of that conversation must be difficult, given the ratings pressure on this TV categoary across the board. Since making news programming part of the portfolio of Seth Winter, a veteran of selling NBC Sports, NBCU has devised a number of smart initiatives, including a 2013 package for financial-advisor Voya Financial that made the company the sponsor of program segments on “Today” and CNBC hosted by Carson Daly and Jim Cramer about financial education.

CNBC isn’t the only media company making new requests of its clients. Viacom, the owner of MTV, Nickelodeon and Comedy Central, in a recent call with investors bemoaned ratings declines for its traditional TV programs that are not being bolstered by measures of crowds who are streaming “Daily Show” snippets and running kiddie-fare on tablets. Viacom CEO Philippe Dauman announced the company would seek to create its own advertising opportunities in frontiers Nielsen has yet to master. In 2010, the CW – never a ratings powerhouse – offered advertisers the chance to purchase ad time across both TV broadcast and online video streaming, a nod to the fact that many viewers of shows like “Gossip Girl” weren’t watching the show in linear fashion.

To be sure, these moves reveal Nielsen’s limitations, and suggest viewers are moving so quickly into new forms of “TV watching” that the measurement giant can’t keep up with them. But the switches come from TV players who are losing out in the traditional system, not those who find it works to their advantage. Yes, everyone’s ratings have fallen over the long haul and will likely erode further, but CBS, Fox and ABC continue to rely on Nielsen measures (much to their executives’ chagrin, no doubt). If CNBC’s move provided the obvious solution, NBCUniversal would have lumped “The Voice” and “The Blacklist” – and more – as part of the deal.

”For networks with niche audiences like CNBC, pure age and gender-based ratings are not always the best means against which to sell,” Nielsen said in a statement. “These networks have always used alternative measures, which are provided by Nielsen as well as other insights and data providers in the market.”

The end result, of course, is that advertisers will have to work a lot harder to place their commercials. Imagine a big marketer like Audi devising a campaign it wants to use to lure high-income prospects to its dealers. It might agree to Nielsen measures for most of its TV placements, but to reach prospects via CNBC, it would have to devise another set of measures – taking up valuable negotiating time and requiring a different kind of oversight. If more TV networks embrace non-traditional measures to help gain value for their ad time, one can envision a real thicket sprouting in months to come: one set of measures, say, for CNBC, another for Viacom streaming content, a third for Fox video on demand and a fourth for linear TNT.

A true solution won’t come until advertisers and their buying reps team up to establish one. In 2007, large ad-buying entity GroupM helped push the creation of so-called “commercial ratings,” or views of TV ads made over the course of three days. The system was put in place to counter the havoc wrought by the emergence of DVRs, which let viewers skip past ads and view them days after their intended run date. Everyone jumped on the bandwagon.

With the advent of tablets and video-streaming hubs, the situation has grown more problematic, not less. Last year, GroupM moved the needle again by striking some “C7” pacts that would incorporate a week’s worth of views. But the new metric has yet to become currency, and may never do so, owing to all sorts of technical complications.

CNBC’s maneuver won’t kill TV’s current measurement system. But it’s one move among many that could make chaos – not commercial viewing – the new currency of the business of television.

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