Is C7 Worth It?

by , Dec 11, 2012, 8:39 AM
  • Comment (6)
  • Recommend (6)
Subscribe to TV Board

Tags

tv

Since 2007, the TV industry has been using the so-called C3 metric -- which measures the number of people who watch a show’s commercials either live or after three days of DVR playback -- to buy and sell primet-time advertising.   Now, with DVR playback constituting a much larger share of the TV audience, most of the big broadcast networks want to change the metric to C7, which would give them credit for commercials viewed a full week after the original airing.

You can’t blame the networks for trying to squeeze more revenue from their principal asset at a time of increased time-shifting and growing competition from both cable networks and the Internet.   But I wonder if the incremental gain will be worth the effort it might take to wrest that concession from advertisers.

There’s a reason that C3 was established in the first place, and it wasn’t just because it was a compromise between Live and 7-Day ratings.  A Nielsen analysis showed that nearly half of all time-shifted viewing of commercials occurred on the same day as the original airing (probably because viewers forgot they were actually time-shifting) and that a large majority of commercial viewing had already been seen by the end of Day 3.    In other words, there wasn’t all that much to be gained by moving the measurement out to seven days. 

CBS’s Les Moonves, one of the principal advocates for C7 ratings, correctly pointed out at a recent UBS conference that "the overnight [ratings] are less significant than they ever were.” The new CBS drama "Elementary,” for example, only gets about 60% of its viewing live, with the remaining 40% of its viewership coming from time-shifting.

But just because total viewing for “Elementary” increased 40% through DVR viewing doesn’t mean that commercial viewing increased 40% during the same period.  And besides, the question on the table isn’t how much commercial viewing gains from Live to Day 7, but how much it gains from Day 3 to Day 7. 

CBS has one of the best research departments in the business, so presumably they have calculated the total gain from C3 to C7, and presumably they have made the strategic decision that this is worth the fight.  Of course not all shows gain 40% of their audience from playback: sports, news and reality television gain much less from DVR viewing than popular sitcoms and dramas.  This means the networks have to be careful they don’t end up robbing Peter to pay Paul by unintentionally shifting revenue from the shows with little time-shifting to the ones with a lot.  Not every network can be above average in their time-shifting, so presumably there will be winners and losers.  (Unless you assume that the advertisers are going to allocate more budget to network TV to account for C7, which is a big assumption.)

So if the metric shifts to C7, will it make that much difference to the bottom line?  If a show gets a commercial rating that’s 5% higher than C-3, will that result in 5% more revenue?  Probably not.  Advertisers are likely to argue that commercial viewing is less valuable the more distant it appears from the original airing. That would be especially true for products such as movie openings and holiday sales (although pure brand advertising should still be almost as valuable a week later).

A stronger argument against C& is that incremental time-shifted commercial viewing is already taken into account by advertisers.  The industry’s approach to television viewed outside the home is instructive here.  For years the networks pushed Nielsen to measure viewing in the office, in hotels, in bars and in other homes -- and when Nielsen actually did develop an out-of-home measurement, most networks declined to buy it, noting that this viewing was already baked into existing rates.   Similarly, it’s hard to imagine that advertisers don’t know that programs with a lot of C3 viewing also get more C7 viewing and already price accordingly.

If the networks really want to de-emphasize overnight ratings, maybe they should stop sending out press releases touting their overnight wins.  Given the amount of effort that goes into bragging about overnight performance, a normal person might conclude that the networks think this is the most important metric. 

In the meantime, by all means try to get C7 established as the key metric. Just don’t expect it to be a financial panacea.

6 comments on "Is C7 Worth It?".

  1. Doug Garnett from Atomic Direct
    commented on: December 11, 2012 at 11:43 a.m.
    Who knows whether C7 viewing is accounted for by advertisers... In many ways, it has to be viewed as $x for $y MARKET impact - not just viewings. But you are far too snarky about viewing commercials on DVR. The studies show that ad impact has increased with the advent of the DVR. That's seems to be primarily because DVRs give interested consumers the opportunity to rewind and really watch an ad - or show it to someone else. (This has always been an advantage for print.) Is there a significant impact from ads 7 days later? I'm sure there is and we should know about it. Will that change the economic equation to increase ad rates?...I doubt it.
  2. Paula Lynn from Who Else Unlimited
    commented on: December 11, 2012 at 2:16 p.m.
    There must be an algorithm for that. Overnight with one value, C3 and overnight another and C7 and C3 another. Still calculatorable.
  3. Douglas Ferguson from College of Charleston
    commented on: December 11, 2012 at 3:29 p.m.
    Never in my life have I rewound a commercial, except to make fun of it. Which studies are showing this, pray tell?
  4. Tim Orr from Barnett Orr Marketing Group, Inc.
    commented on: December 11, 2012 at 6:07 p.m.
    When your sample size is one, we call that "me-search," not research. As Doug Garnett points out, research shows DVRs have increased commercial effectiveness. My own "me-search" indicates I frequently forget I'm watching a recording and fail to skip the spots (I also find myself trying to fast-forward through "live" spots at other times!). The notion that "everyone" is skipping spots is simply not supported by the data. And in another piece of "me-search," I have indeed rewinded a spot to view it again.
  5. Doug Garnett from Atomic Direct
    commented on: December 12, 2012 at 5:05 p.m.
    Douglas - There is a very large range of studies showing this. Journal of Advertising research conducted a thorough review of all media types a year or two ago - very thorough and quite clear. Included excellent analysis of the DVR reality. DVR providers also provide the data - because they can look at rewind habits and viewing habits. Key to the JAR research: about a third of people always skipped ads in the past by leaving the room to go to the bathroom, going to the kitchen, arguing with the kids, etc. That has been built into TV pricing for decades. All the DVR does is allow that group to automate their behavior - except now they have to watch the DVR while they're fast forwarding so they get MORE ad impact than they used to. It is a real problem in advertising that someone decides something then everybody else thinks its cools and agrees... Then when reality comes around - they prefer to remain in the echo chamber. Your response to the DVR is exactly what the agency echo chambers are shouting...they just aren't accurate.
  6. Michael Natale from MCM Media Sales
    commented on: December 17, 2012 at 2 p.m.
    For Tim Orr and Doug Garnett: A Bob Garfield excerpt..... "What has kept the nets afloat, paradoxically enough, is the very fragmentation that is decimating them. As the mass audience has gradually but enormously eroded, the value of any mass audience has increased all out of proportion to actual reach. It’s like the last gas station before Death Valley: $10 a gallon. The Big 4 have kept revenues flowing by doing nothing more visionary than gouging at the pump. But the traffic on the desert highway is now so light, even the gougers won’t long be able to keep their pumps running. That’s the simple economics of the situation. Even if the Big 4 had the wherewithal to produce the likes of Homeland, Breaking Bad, Mad Men, Girls, and Game of Thrones -- and for reasons of budget and FCC nannying they emphatically do not -- they would suffer an end-stage condition. But they can’t even program themselves into survivability, because the one aspect of their business model that stubbornly pertains is the sanctity of the lowest common denominator. The question, therefore, should not be how the Big 4 can cure what ails them. They cannot cure what ails them. The only relevant set of questions concerns what will succeed the Big 4. Is there a place for an all-live network? Is there a place for two? If CBS is a cable channel, what will it present? Cable channels are -- in varying degrees -- vertical. Comedy Central and Discovery have organizing principles, and therefore constituencies. CBS, NBC, ABC and Fox have no organizing principles. They have decades of brand equity, but literally zero brand meaning. They are, in short, irrelevant. They exist to sustain the affiliates, who in turn exist to sustain the nets in a sad symbiosis of mutual obsolescence. Advertisers aren’t served. Audiences aren’t served." Nuff said

Leave a Comment

Sign in to leave a comment. Don't have an account? Join Now

Recent TV Board Articles

» TV Board Archives