Deterministic data from set-top boxes is changing how linear TV is bought and valued.
Like the Nielsen ratings panel, set-top box data connects to a physical address and household. But unlike Nielsen’s 40, 000 families – which provide a "truth set" for TV viewership – set-top boxes reach millions of households, allowing marketers to overlay purchase and CRM data to create targets.
Many multichannel video programming distributors (MVPDs) license set-top box data to comScore, Nielsen (which signed a deal with Dish in April) and ad tech companies like Simulmedia. These entities then aggregate and sell that data to TV networks and agencies.
“You will not find a TV network, a research company or a big piece of ad tech that is not trying to race forward to [incorporate new] data sets, ” said Andy Fisher, chief analytics officer at Merkle.
One way is by using set-top box data to supplement Nielsen panel data. Marketers can target beyond age and gender. “We are moving into a demos-plus world, ” said Mark Zagorski, Nielsen Marketing Cloud’s EVP.
Set-top box data ties to specific households, which means that marketers, through a data match, can understand the buying tendencies of those households. Then they can buy ads on the shows that the best prospects watch most.
Because they are still buying the entire show’s viewership, this is termed index-based buying. In contrast, with addressable TV, marketers only buy the audiences they want to reach.
“The main leap the industry is moving toward today is from demographic buying to index buying, ” said Samba TV CEO Ashwin Navin.
TV networks like Viacom, Turner and NBC Universal are building systems that allow marketers to do index-based buying. Viacom Vantage, for example, did 11 deals last year using “advanced currencies” – that is, deals that incorporate data from third parties like comScore or matched credit card data from American Express, instead of just Nielsen panel data. In this year's television upfront, that number is on track to triple.
These “advanced currencies, ” many of which incorporate set-top box data, change the value of TV inventory. A program with a smaller number of viewers but with an audience that’s more valuable to marketers will be in higher demand.
But while marketers are already using this data to plan and value media, set-top box data has limitations that the industry is either working around or working to solve.
What Set-Top Box Data Can (And Can’t) Do
Set-top box data is “extremely valuable, but imperfect, ” comScore Chief Research Officer Josh Chasin said.
Each data set has geographic and demographic biases. For example, because these are paid services, subscriber age and income level are higher than national averages. People who subscribe to satellite TV are often rural or suburban, because dishes historically worked better in those areas than in urban areas. And each cable company serves only a balkanized area of the US.
There are also technological limitations, as the boxes themselves “were never designed to be a measurement device, except for TiVo, ” noted Dave Morgan, CEO at Simulmedia, which licenses data from TiVo and other set-top box providers.
He estimates that only half to two-thirds of all boxes can measure exact viewing. Many boxes use old hardware that isn’t often updated. Some cable companies are further along than others in updating their boxes. Sources called out Dish, Charter, Comcast, Cablevision and TiVo as early leaders.
Because set-top boxes are always on, it’s not always clear when the viewer stops watching. Measurement companies must use algorithms to infer when the viewer tunes out, using proxies like a lack of channel- or volume-changing.
And while set-top box data tracks to the household level, Nielsen ratings panels track the viewing of individual household members.
For digital advertising natives, these gaps in set-top box data can be off-putting. “I have certain expectations about accuracy and one-to-one data, ” said Oleg Korenfeld, EVP of ad tech and platforms for Mediavest/Spark. “In TV, a lot of it is at the household level, or even the ZIP code and broader than that.”
Smart TV data could plug some of these holes. Smart TVs possess automated content recognition (ACR) tech that could ensure that programs and ads are being viewed without the hassle of the algorithms the set-top box companies must use. They are also internet-connected, enabling cross-device matching and easy extension of TV campaigns to the digital world. But right now, that data isn’t part of any larger data sets because the tech is still the “new kid on the block, ” Chasin said.
Because of its limitations, set-top box data works better when commingled. Often, data sharing is a “two-way street, ” noted Tara Maitra, SVP and general manager of content and research for TiVo: It will license data and receive data from third parties. For set-top box companies that want to sell addressable on their own inventory, licensing data could mean getting back stronger data sets in return.
New Data, New Currency?
While set-top box data is being used to build new currencies to measure TV, its current limitations keep it from being as valuable as a Nielsen ratings panel. Even as some advertisers and broadcasters want to get away from Nielsen, it’s still a fact that only Nielsen’s TV ratings passed the Media Rating Council (MRC) accreditation process. Rentrak (now comScore TV) didn’t pass its first audit in 2015.