BROOKE GLADSTONE:
We're back with On the Media. I'm Brooke Gladstone.
BOB GARFIELD:
And I'm Bob Garfield. Until now, Nielsen ratings have included only viewers who watch live TV, ignoring the 17 percent of homes that use DVRs. But this week, Nielsen released new ratings that include DVR watchers, and for the first time measure audiences for commercials.

The U.K. and other European countries have been gauging those audiences for 25 years, so Nielsen is hardly breaking new ground. What it is doing, says Marisa Guthrie from Broadcasting and Cable Magazine, is responding to the demands of their client networks and advertisers, who need to find agreement on whether to count the growing mass of time shifters as viewers.
MARISA GUTHRIE:
Advertisers and the networks demanded from Nielsen some sort of standard measurement to show if people are watching advertisements during DVR playback, and if they are, how many of them are. And are they watching them just in live plus one or are they watching them in live plus three and live plus seven?
BOB GARFIELD:
You're talking about plus seven days out from the original broadcast.
MARISA GUTHRIE:
Exactly.
BOB GARFIELD:
Which theoretically wouldn't much hurt the advertiser of, say, paper towels, but if you're Hollywood and trying to promote this weekend's blockbuster new film release, seven days out probably would be not very useful at all.
MARISA GUTHRIE:
No. And the movie studios will never pay for seven days [LAUGHS] out. They don't want to pay for three days out. But for many advertisers, live plus three days out of viewing is fine.
BOB GARFIELD:
But they're not getting any value at all if the ads are being fast-forwarded through. Some studies show that seven out of ten DVR users just skip past the ads altogether. Others have suggested that the number is closer to four out of ten. Is there any consensus on this percentage yet?
MARISA GUTHRIE:
If there is, Nielsen is not revealing what it is. [LAUGHS] Their clients are reluctant to release that information wide. However, the new Nielsen data shows that some people, in fact, do let the DVR playback run through the commercial. Whether they're in the room when the commercial is on, no one knows.
BOB GARFIELD:
For more than two years we've been talking on this program about what happens when old media structures can no longer operate profitably and advertisers flee in droves. Do you have any reason to think that this will be the up-front market in which advertisers finally say, no more – we will no longer pay you more for less?
MARISA GUTHRIE:
Well, I think even before Nielsen released data in this new standardized form, which they did this week, there had been some movement toward a consensus of the advertisers would pay for live plus three day viewing.

When we reach a point where DVR penetration is upwards of 50 percent, there will have to be some radical shift. How that ultimately affects the creative process is still open to interpretation. But it will be much harder to mount these big, expensive tent-pole shows, like Gray's Anatomy. That's an ad-supported show.
BOB GARFIELD:
Apart from trying to negotiate with advertisers for what kind of shelf life their ads have on a DVR, are networks doing anything else to try to keep people watching the ads instead of fast-forwarding through them?
MARISA GUTHRIE:
There are many attempts. I mean, they are integrating stories throughout ad pods that start in the program and extend into the ad. They are having an advertisement start on the TV screen within the television program itself and then extend into the advertising pod. And certainly on broadband channels, everything is integrated, and actually there is no skipping on streaming video.
BOB GARFIELD:
You made reference to integrating advertising messages into the programs themselves. It's come to be called "branded entertainment." Is it being accepted by the public? I mean, there's a lot of really heavy-handed stuff out there.
MARISA GUTHRIE:
Viewers are increasingly accustomed to this. And don't forget, Bob, I mean, that model is going back to, you know, Milton Berle and the Texaco Men. And research shows that younger viewers are even more accepting of that sort of branded integration.

The one thing to note is that branded integration is much easier with unscripted television. American Idol is sponsored by Coca-Cola. Extreme Makeover: Home Edition, the sponsor is Sears. It's a little trickier to do it in a scripted series, but it's being done.
BOB GARFIELD:
And, in fact, NBC already announced that in the first hour of prime time, between eight and nine Eastern Time, there will be no more [LAUGHING] new dramas and sitcoms, only reality programming, which is, you know, dimes on the dollar to produce relative to scripted dramas and sitcoms.
MARISA GUTHRIE:
Yes. I mean, NBC certainly is not the leader there in fourth place, but you could be seeing a sad glimpse of the future.
BOB GARFIELD:
Marisa, thank you so much for joining us.
MARISA GUTHRIE:
Thank you. Nice to be here, Bob.
BOB GARFIELD:
Marisa Guthrie is a reporter at Broadcasting and Cable.
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