The standard for selling TV ad spots has historically been based exclusively on ratings. However, the local TV market is primed for disruption as both sellers and buyers shift toward impressions vs. ratings. Of the many factors impacting this change, the most notable is how elusive it is to depict ratings accurately. As a result, there are new considerations in the sales process, including the strategy of pay for performance, which relies more on impressions than ratings. So, what’s the difference in impressions vs. ratings, and how can it help local TV?
The Challenges with Ratings
In the current local TV environment, ratings play a significant role in selling spots. Your buyers come to you with ratings. When ratings are the key metric in how you sell advertising, you know it’s not an absolute science and that you’ll have to issue makegoods and further negotiate with advertisers when spots don’t run as planned.
Ratings also have deep flaws as an audience measurement method because of consumption fragmentation. There’s broadcast, streaming, replays and recordings. Nielsen recently launched Nielsen ONE to provide cross-media measurement to solve this growing challenge. It had previously announced in 2022 a transition to impressions-based buying, which integrated BBO (broadband-only) homes into ratings calculations.
Ratings also only represent a fraction of the target audience ecosystem. They round up to the 10th of a point, so it’s not a true representation.
So, ratings are losing favor as a metric for spot sales. Evolving to fit the current environment opens the door for impression-based selling.
Impressions vs. Ratings: Why Impression-Based Selling Is Good for Local TV and Advertisers
Why are impressions a better option? There are several reasons why local TV should adopt this framework. First, impressions count screens and viewers more accurately than ratings. Second, an impression-centric model recognizes all TV audiences to improve reach and targeting for advertisers. Third, impressions offer more precise reporting.
Selling by impressions is also something your customers are aware of, as that’s how they purchase most digital advertising. It’s not a completely new concept, but they’ll need some education and support on the new process and how they can remove rating submissions from their bucket. The best way to effectively restructure the buying workflow is with pay for performance.
Pay for Performance: Delivery of Impressions
Pay for performance creates a dynamic where you deliver impressions (performance) agreed upon by your station and the advertiser or agency. There is a rating component, but your customers accept the proposal based on a guaranteed percentage of impressions. There’s no specificity around dayparts or programming, but your customers can include restrictions.
With this new contract, you’ll be able to do makeups in flight on linear and digital, so makegoods and credits won’t be the challenge they are today. One of the most valuable aspects of pay for performance is that your spots become more reliable. Your advertisers will appreciate this and will likely buy more advertising from you.
The future of local TV appears to be heading toward delivering impressions vs. relying solely on ratings. Learn more about how to transition to this model by reading our post on pay for performance.