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Ad Revenue and AGB Nielsen vs. Google Analytics

4:58 pm PHT

Let’s ignore the current ZTE-Lozada affair for awhile and go back to the previous national issue: the spat between ABS-CBN and GMA over the alleged tampering of AGB Nielsen’s TV ratings. While people are now drawing up lines and labeling themselves as “proudly Kapuso” or “team Kapamilya,” at the heart of the issue is the integrity of the TV ratings and how it drastically affects the earnings of TV networks which are mostly dependent on ad revenue.

The problem with on-the-air broadcast media like TV and radio is that you can’t directly obtain the audience metrics. That’s why TV and radio stations turn to third-party companies like AGB Nielsen to do the measuring. While the survey methods used by AGB Nielsen are automated (via a box that is connected to the TV) and rely on statistical methods that are quite accurate, this is still not as good as the scenario of the broadcast network—and advertisers—directly measuring their audience down to the last person.

Print media have it just a little bit better since they can track how many pieces of newspapers or magazines have been sold as well as the number of subscriptions. But while they can count the least number of interested readers, they can’t count the actual number of readers because a single copy is often read by many eyes (see Jayvee’s post on the concept of pass-on readership and its potential for padding). Furthermore, you can’t differentiate between the guy that buys the newspaper just for the comics or crossword puzzle versus the gal that reads the paper from cover to cover (hmmm… sounds familiar, hehehe).

Enter the Internet and new media. One distinct advantage of new media is that publishers and even advertisers can directly measure their audience. Unlike traditional media where viewership is mostly passive and can’t be measured directly, communication over the Internet is transactional-based and is implemented such that every TCP packet sent, every HTTP resource requested, and every mouse click could be logged and quantified.

Tools such as AWStats and Google Analytics provide webmasters and advertisers with the means to directly and unambiguously detect interest and viewership. While fraud and deception are still possible (AdSense click fraud, anyone?), the raw data is there for anomaly analysis, unlike with AGB Nielsen where it had to take a whistleblower to bring fraud to light.

The primary reason why audience metrics is needed in traditional media is for setting ad rates. In new media, this is not the case; metrics is mostly collected for the benefit of the publisher’s ego. (Hehehe.) But for the growing segment of online publishers that look into monetizing their content either through ads or subscription fees, metrics fulfill the same role they do in traditional media: the size of the audience directly determines the rates one can charge from advertisers as well as providing input into optimizing subscription fees.

This brings me to the size of the online ad industry. According to the following recent second-hand information from O’Reilly Radar:

Imran Khan of JP Morgan already estimates global internet ad spending for 2007 at about $30 billion […] But according to his figures, the internet’s share of global ad revenue appears to be only about 5.3% worldwide, and 6.3% in the US.

There’s no doubt that the share of the Internet of the global audience’s attention is fast outstripping TV, radio, and print media and is very likely much higher than the 5–6% mentioned above. This means that ad revenue will follow the actual proportion of viewership. Although Internet penetration is still low in the Philippines, ABS-CBN and GMA will most certainly be fighting over a diminishing slice of the ad revenue pie in the future (at least for traditional modes of media—GMA has GMANews.TV, for example).

In the local indie online publishing scene, there are already many people making big money online. Probloggers are the most visible among the bunch, and there are already a few local federated ad networks that are operating. (Examples of such ad networks based in the U.S. are The Deck, which I blogged about last year, and Federated Media Publishing.) Two local ad networks that come to mind are Mad Crowd Media (which, I hear, has yet to get an advertiser, correct me if I’m wrong, please) and BlogBank, which already has LBC as an advertiser. I’m sure there are other ad networks yet to be announced.  ;)

Well, even traditional media companies are getting into the game with such websites as Inquirer.net and GMANews.TV, which, according to a confidential source, both command the largest proportion of online ad spendings. In this case, this means that the indie segment still has a lot of convincing to do to woo advertisers.

The moral of my overly-long and rambling essay is that investing into online publishing is a nice long-term strategy that you should consider. Ad spending online will definitely grow as more people leave traditional forms of media behind and the earlier you start, the better chance you have of making it big.

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Comments

Comment times are in Philippine time (+0800).

1

On 8:53 p.m., 23 Feb 2008, sarah lee wrote:

well i think that abs cbn really is telling the truth based on the evidence shown it is obvious that gma and agb is collaborating to manipulate the tv ratings and i believe,for i have seen for many years now that most people from mega manila is watching abs cbn show. i have a question why does gma 7 still escape from a obvious crime they did, that is manipulation of tv ratings?is it possible that agb just install there meter to certified gma viewers in mega manila? is our country way of justice will ever change?

2

On 4:18 p.m., 16 Jul 2009, tvresearcher wrote:

First of all, TV in-home viewing is measured down to the person. The TV meter comes with a remote control that contains buttons assigned to each member of the panel household. Whenever a person watches/stops watching TV, he/she presses his/her button to log on/off viewing. Second, print media readership measurement is still “primitive” as face-to-face/phone surveys are still the best way to execute the measurement. Third, while it is very easy to measure the hits of web site, it does not tell you how many new people were hit, which is very important in advertising. So among the different media, TV measurement has the most advanced technologies.

3

On 4:21 p.m., 16 Jul 2009, tvresearcher wrote:

To Sarah Lee: You have made a very serious allegation. I don’t what made you say that it is obvious that AGB and GMA are collaborating to manipulate the ratings. Did it not occur to you that ABS-CBN may be trying to discredit the ratings as it saw itself losing to GMA? Never the trust the Lopezes.

4

On 3:06 p.m., 14 Sep 2009, seav wrote:

@tvresearcher, I disagree.

“Measured down to the person”? That may be true to a particular household, but you don’t actually install the TV meter in every household in a particular area do you? What you’re doing is simply statistical sampling which is never as good as statistical population data. And you’re also hoping that the household is diligent in pushing buttons every time.

Web statistics, on the other hand, is automated and the hits on a web server is a very direct way of measuring traffic. While this can’t be directly translated to actual person count, I would rather derive my data from a complete sample of direct web server hits (and this is quite cheap), compared to TV ratings that can only measure only a fraction of the households (and expensively too).

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