TV ratings have withstood the test of time as a prime metric for measuring TV viewership, but in this age of refined metrics, some are questioning their utility. The New York Times reported that as of last year, Nielsen, the company known for producing such TV ratings, was still basing them on 20-page paper-based written diaries that consumers fill out at their leisure. While competition from Rentrak and comScore is forcing Nielsen to catch up, it’s worth taking a deeper look at what remains the industry standard for TV measurement—particularly the difference between ratings and share.
What Are They Measuring?
Arthur Nielsen, a former engineer, introduced a TV ratings system in 1950, reported the The New York Times. The ratings were based on a silver box that Nielsen’s company sent to a sampling of homes with TVs across the U.S. The company then added viewing diaries in 1953. These two sources of data are matched into a central database, which is used to project overall ratings and a demographic breakdown of the viewing audience.
Nielsen’s ratings are based on the overall number of U.S. households, a figure that is itself based on U.S. Census figures and that Nielsen updates every August. The company currently estimates there are 118.4 million U.S. homes. Since ratings are based on a percentage of overall households, and the latter has hovered around 100 million in recent years, a rating is close to the actual percentage but isn’t exactly the same. Some 47.5 million households tuned into Election Day news coverage this year, for instance, which works out to a 40.0 share.
Share, meanwhile, is the percentage of viewers who are watching a given show at a given time on a given TV set. If a show received a 7.5/12, that means that 7.5 percent of TV-equipped households were tuned into that program, but out of TV-equipped households with a TV in use at that time, 12 percent were tuned in. According to the Pew Research Center, the Television Advertising Bureau defines share as the “percent of households or persons using television who are tuned to a specific program, network or station at a specific time.”
Why Do They Matter?
Generally speaking, marketers are interested in ratings when they’re trying to reach a segment of the population over a long period of time; marketers with a limited time window tend to be more interested in share. For instance, if Walmart was pushing a Black Friday sale over the next week, the company would want to maximize its share to encourage the most viewers to visit its stores rather than a competitor’s. If Ford was launching a new car, however, it would be more interested in advertising against robust ratings than a large share, though the latter would be welcome too.
For buyers and sellers, the difference between the two is crucial. A retailer running a sale might want to aim for the highest share possible by purchasing time from not only one station, but from that station’s competitors as well. Marketers more interested in ratings might be persuaded to execute one buy across one station over a longer period of time, perhaps for a discounted rate. As of now, these metrics continue to form the basis for such buys, though it’s hard to say how much longer that will be the case. As programmatic TV increases its market share, future buyers may be more interested in reaching the right audience than the largest one possible.