When buying advertising for TV, cable, or radio, how do you know you’re getting the best rates? How do you know that your advertisement will reach your desired audience? Or arguably most important, did you get what you paid for?
Ratings from third-party services like Nielsen and ComScore estimate the viewership of different programs and time slots. They tell TV stations and marketing agencies how many households or targeted demographics view programs at a certain time. These ratings help agencies decide where to place ads for maximum impact and at a fair price.
But do rating system subscriptions matter? Why can’t you just ask the TV or radio station for the rating of certain time slots? Is the subscription necessary for a marketing agency to serve its clients well?
DW Creative is a Kansas City-based marketing agency that drives growth for clients by creating meaningful connections between their clients’ brands and the homeowners they serve.
By reading this article, you will learn about ratings, how agencies use them to optimize ad placement, and what questions to ask when shopping media buying partners.
What Are Ratings, and Why Are They Important?
Ratings estimate how many people are watching a program at a given time. The ratings cover specific geographic areas called Designated Marketing Areas (DMAs). They help determine a show’s popularity and key audience. Marketing agencies use this information to choose the best ad spots for their clients.
For example, a rating of 1% means that an estimated 1% of the households in a DMA tuned into that program. Shows with higher ratings typically reach larger audiences. Generally, higher-rated time slots also cost more.
How Third-Party Ratings Improve Media Buying
Nielsen and ComScore are two third-party rating providers approved by the Media Rating Council, an organization that audits and accredits media measurement products and data sources.
- Nielsen uses Metered data devices that collect real-time usage information on household viewers and radio listeners. Nielsen’s data is broken down by age, gender, and other demographic factors, allowing agencies to customize ad placements.
- ComScore combines data from multiple sources including connected TVs and consumer data from Experian. This builds a broader view of household viewing habits. ComScore even collects information on what viewers watch through smart TVs, creating a more complete picture of audience trends.
By understanding these details, agencies can place targeted ads more effectively.
Using Ratings to Negotiate Ad Costs and Placement
Marketing agencies using third-party ratings can negotiate pricing for ad placements.
Ratings provide transparency when agencies meet with stations. They show clear data about the value of each program.
If a station claims a time slot is popular, agencies can cross-check this with third-party data. If a station wants to charge a high rate for a show with a less desired rating, the agency can use the data to negotiate a price they feel is more appropriate.
Additionally, third-party data allows agencies to measure “cost per point.” This metric shows the cost of reaching each percentage point of the target audience. Stations often charge based on how many rating points an ad will earn, so understanding these metrics helps agencies set fair rates.
Agencies can also ensure stations deliver on what they promise—if a station guarantees a certain reach but falls short, the agency can request extra ad time at no additional cost.
For example, the industry standard is that your ad should reach at least 90% of the agreed-upon points. So, if you bought 100 points, your ad should reach at least 90 points. If your ad reaches less than 90 points, then the TV or radio station owes you points.
The chart below helps better illustrate how ratings affect pricing. In this chart, a company is looking to buy ad time during a weekday news program during 7:00-9:00 AM in the Las Vegas Market. The comparison metric is determined by the target demographic ratings for our hypothetical target audience of females ages 35-64.
It is critical at this stage that both buyer and seller are looking at the ratings period previously agreed upon.
Typically the cost per program correlates with higher ratings. This makes sense – higher ratings equate to more eyeballs, hence more “value.” The “Cost per Point” metric is determined based on the Station Rate divided by the Rating. So, according to the chart, our first program has a rating of 4.5 and a price of $450. If you divide 450 by 4.5, you get the price of $100 per point.
This second chart illustrates ratings and prices after negotiations.
It’s also important to note that the rating the station submits doesn’t mean that is the rating you will negotiate from. For example, KVVU is showing a 4.5 rating. However, the buyer has ratings software and can study trends. Using this tool, they noticed that in the last three rating periods, the ratings have gradually decreased from a 6, to a 5, to a 4.5. Hence, the buyer most likely will negotiate from a 4 rating, not the station’s 4.5
This “ratings negotiation” is a critical part of the process as it allows both sides to find a “common ground” to develop an agreeable price.
Different Media Buying Options
Businesses have two options when buying media ad time. They can purchase ad time during a specific program or a “rotator slot.”
Rotator slots are random ad time available after all other slots are purchased. They are generally less expensive than purchasing a specific time slot.
However, rotator slots do not guarantee an ad will air during a specific show or time. There’s a chance that the ad will fall during the desired program or audience, but there’s also a high chance it could fall in the wrong audience or a very small audience. The ad may not reach maximum impact because it’s not being seen by the right people or by many people.
On the other hand, you could buy ads for specific programs. This is usually done after a marketing agency has reviewed your desired audience and rating trends for different programs. They can help you pinpoint which program would help you reach the widest desired audience.
Buying ad time during a specific program may be more expensive (the more popular the program, the higher the price), but this strategy ensures the ad reaches the intended audience.
For instance, if a business wants to reach sports fans, the agency can review ratings data and select time slots during popular sports programs. If a business purchases a rotator slot, they do not know when their advertisement will run, and they miss out on sports fan viewership.
By making data-informed decisions, agencies with third-party ratings can offer better placements, ensuring that their clients’ messages reach the right viewers.
Tracking Trends and Analyzing Audience Patterns
Another benefit of third-party rating services is the ability to track past and current trends. Interpreting trends can be crucial for effective media buying. Ratings reveal patterns in viewership. This helps agencies anticipate spikes or dips in audience size.
For example, suppose a time slot usually has average ratings during most of the year but sees a spike during certain months. This may be due to a holiday or seasonal special that plays during that time slot rather than the popularity of a show. A Thursday 7:00 PM time slot in November may rank highly due to holiday programming, but it may have a low rating during the rest of the year. This makes that buy less advantageous than it first appears.
Agencies that lack third-party ratings might miss these trends and end up placing ads during low-viewership times.
With third-party ratings, agencies can see how a program performed last month and look back over multiple seasons. This perspective helps them understand which programs will likely deliver consistent results.
Questions to Ask a Marketing Agency About Ratings
It’s essential to confirm that their marketing agency uses a third-party rating service when buying media. To learn whether or not a marketing agency uses a third-party rating service, ask the following questions:
- Do you subscribe to a third-party rating service like Nielsen or ComScore?
Agencies with this access can provide a level of detail that improves ad placement, giving clients a clearer view of who’s watching their ads.
- What media-buying software do you use?
Advanced software allows agencies to track rating trends, view program lineups, and compare ad costs, ensuring they make informed buys.
Be wary if an agency says they only use Microsoft Excel. While Excel is a great resource for organizing data, it is limited by the data and formulas you supply. If you do not have the correct data and formulas, your information will have holes.
Media-buying software supplies all of the necessary formulas and considerations to help craft effective buys.
- How do you monitor ad placements?
Agencies often use media monitors, which track when and where an ad plays, and whether it ran close to a competitor’s ad. This helps maintain strategic ad timing, maximizing the ad’s impact.
- What is your relationship like with traditional media stations?
Quality marketing agencies will have spent time developing trust with media stations. These relationships help negotiations.
Why Using a Media Buyer with Third-Party Ratings Matters
Marketing agencies that don’t subscribe to third-party ratings cannot offer the same level of transparency or precision as those that do. Without third-party data, agencies must rely on information provided directly by TV stations, which may not be as comprehensive or unbiased. This can lead to misinformed ad placements that waste the client’s budget.
Subscribing to a third-party rating service isn’t just about knowing who’s watching—it’s about protecting a client’s ad investment.
Third-party data also saves time, giving agencies instant access to the latest audience insights.
Some agencies may cut corners by avoiding these costs. However, quality agencies invest in these tools to offer clients the best media investments.
Next Steps for Using Ratings for Buying Media
Navigating traditional media advertising can feel challenging, but working with a marketing agency that subscribes to a third-party media rating service provides you with a major advantage. These agencies give you accurate, up-to-date ratings to help you make informed decisions. They can also help your ads reach the right audience at the best rates.
When looking to make a media buy, ask agencies about their media ratings subscriptions. Confirm they use data-driven tools and methods to negotiate ad rates and placements. By choosing a well-equipped agency, you’ll gain a team ready to optimize every dollar you invest.
If you’re looking for help creating marketing videos, schedule a fit call with our team to see how DW Creative can help.
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