Audience Research: Industry and Market Analysis
Audience Research: Industry and Market Analysis
The television audience is the commodity that stations and networks sell to advertisers. Television audiences are bought and sold, and audience research is the currency, so to speak, that the industry relies upon to make these transactions. From the television side of the business, the goal is to sell as many ads as possible while at the same time charging as much as advertisers are willing to pay. From the advertiser’s perspective, the goal is to buy time in programs whose audience contains as many people as possible with the demographic characteristics most desired by the advertiser. Advertisers want to buy these audiences as efficiently as possible. In order to accomplish this task, the industry usually describes audiences and their prices in terms of costs per thousand. This is simply the cost to purchase one or more ads divided by an estimate of the number of people in thousands. For example, if the cost for one advertisement is $300,000 and the program audience estimate is 40 million women, 18 to 49 years old, then the cost per thousand is $300,000 / 40,000 = $7.50. There are 40,000 1,000s in 40 million. In this example, an advertiser will spend $7.50 for every 1,000 women 18 to 49 years old who watch the program in which the ad will be placed. Audience research provides the estimates of the size and characteristics of the audience that the industry buys and sells.
Bio
In the United States, the A.C. Nielsen Company provides the audience estimates to stations, networks, program producers, advertisers, and advertising agencies. Employing probability sample survey research methodology, ACNielsen identifies which programs people watch and how long they watch them. Printed reports and online computer access allow Nielsen’s clients to examine a detailed picture of television audiences. Internet audience estimates are provided by Nielsen/Net Ratings.
Advertisers use this research information to locate the programs, stations, and networks that have large numbers of viewers with demographic characteristics they desire. These characteristics are based upon other market research that indicates such factors as age, sex, income, household size, and geographic location of people who are most likely to purchase and use their products or services. As they identify the significant users and purchasers of their products, advertisers look for television viewers with similar characteristics. These target audiences become the focus of the deals that buyers and sellers make. The audience research data helps identify the size and characteristics of the audience as well as the efficiency of a particular advertising buy.
Television stations and networks approach this equation from the other side. They use market research to identify the characteristics of users and purchasers of products and services to whom they hope to sell advertising. TV sales executives then employ Nielsen audience research to find the programs these target audiences watch. They will then do competitive analyses to compare the size and composition of other station and or network program audiences. They will use this data to convince advertisers that they can deliver more of the target audience at a better price than their competition.
Audience research is an integral part of this business ritual. It is the starting point for the negotiations in which buyers and sellers engage. As in any business transaction, there are many other factors that will determine price. Supply and demand, personal relationships, and other intangibles affect prices, but in the television industry, audience research plays an important role in how business is conducted.
Audience research has become more complicated with the extraordinary growth in the use of VCRs, cable and satellite delivery, video games, personal video recorders, and digital technology. The audience ratings for a given TV show must be measured in a way that takes into account each of the many ways we use television. In order to obtain accurate audience research, all viewing devices connected to the TV set must be metered and monitored to account for the viewing of television programs delivered over the air, via cable or satellite, playing a video game, playing a tape or DVD, employing a digital personal video recorder, or using a computer in conjunction with the TV. These audience research methods will become even more complex as TV stations and cable systems deliver digital television to a wider audience. This technology will allow for the delivery of either more traditional TV programs or higher audio and video quality.