Proposed C7 Currency Switch Could Have Minor Impact

Thanks largely to NBC’s Ted Harbert, networks may push for a currency change bringing more rating points for them to sell in a DVR-expanding landscape. In media-buying argot, he wants to go from C3 as the principal negotiating metric to C7.

“Time to consider” the shift was Harbert’s call during NBC’s upfront presentation last month. The chairman of NBC Broadcasting's posturing was soon echoed by executives at other networks, while buyers surely chuckled.  

Yet, if the switch were to happen tomorrow, how much more money would NBC and its brethren collect? Maybe less than expected.

The gains in rating points – inventory as it were – resulting from a move to C7 would be relatively minimal for the Big Four networks. For prime time in the 2011-12 season through May, the networks on average would each have gained 3% in sellable viewership in the 18-to-49 demo.

Through one lens, that pales in comparison to the rating points the networks are gaining by using the C3 metric that came into play several years ago. Take the gap between LC (live commercial minutes average) and C3 (live commercial viewing plus three days of DVR time shifting). The Big Four are gaining on average between 17% (CBS) and 23% (Fox) in monetizable viewership.

Here’s the math: CBS is averaging 2.5 million adults 18 to 49 in live commercial viewing by one metric this season. Move to C3 and the average increases 17% to 3.0 million. Yet, add four more days to get to C7 and CBS gains an average of only 85,000 viewers – a 3% increase.

At Fox, the 3.3 million C3 average increases to 3.4 million in C7.  

ABC increases from 2.6 million (C3) to 2.7 million (C7).

NBC goes from 2.1 million to 2.2 million for its 3% gain.

It’s striking that each network’s increase from C3 to C7 on average is just 3%. Other data indicates the lower the network’s median age, the more ad-zapping occurs.

(The younger-skewing CW would seem to confirm that. The network’s C3 average is 25% higher than its live commercial viewing figure in the 18-to-49 demo. And, its C3 to C7 jump is slightly higher than the Big Four at 4%.)

So, should NBC’s Harbert give up the C7 fight? Buyers will push back, arguing commercials lose timeliness – particularly in categories such as movies and retail – during the four additional days covered in C7, so why should they pay?

(There was the prospect that a sort of quid-pro-quo could emerge, where buyers would agree to use a seven-day time period if networks would move to brand-specific ratings, which track individual spots rather than use an average. But, that was effectively wiped away when GroupM Chairman Irwin Gotlieb, perhaps the most powerful media buying executive, said Tuesday there is an “unacceptably high” risk in error with brand-specific ratings.) 

There are two rather intuitive reasons why Harbert and his fellow executives should engage in the perhaps Sisyphean push for C7. Just a 3% increase in sellable ratings can help pay for a lot of bonuses and desperately needed comedy development. And, of course, there's some future-proofing with the expectation that the C7 bump will be considerably higher as DVR-enabled viewing inevitably increases.

For now, though, some would argue Harbert’s conversation-starter – or non-starter as it were – may be much ado about little.

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1 comment about "Proposed C7 Currency Switch Could Have Minor Impact ".
  1. Darrin Stephens from McMann & Tate , June 13, 2012 at 3:22 p.m.
    Advertisers ate the CPM difference when we went to C3 ratings (C3 ratings were generally lower than live and CPMs rose by that difference in addition to market inflation)). Advertisers should gain the advantage should we go to C7.