• by Ed DeNicola , Op-Ed Contributor, February 5, 2010

The national television industry has every reason to congratulate itself for successfully adapting its ad currency to accommodate for a disruptive technology known as the digital video recorder (DVR). The acceptance and implementation of C3 ratings happened very quickly considering the enormity of the change.

I remember the first time I ever heard of a DVR. I was working for a large research firm (circa 1999) when a former cable-network client contacted me about a new company that was employing him. It was called TiVo. He explained how the company had a device that enabled viewers to watch TV programs whenever they chose without tapes or the use of a VCR.

I had no idea at the time the tremendous impact that this new company would have on the television industry, both from a cultural as well as a business perspective. Culturally, the DVR is causing dramatic changes to the way people use television, letting them watch favorite programs at unscheduled times and skip advertisements, to name a few. From a business perspective, DVRs are turning ad-supported television business models on their heads. The research company I was working for partnered with TiVo and produced the first DVR tuning data. The tag line for this service was very aptly coined: "shift happens".

It seems like a long time since C3 first became available -- but actually, it was only toward the middle of 2007, two-and-a-half years ago. Back then, buyers and sellers of national advertising time were at loggerheads over which numbers to use for ad sales purposes: live or playback? If the decision was playback, which stream: same day, live plus 3 days or live plus 7 days?

The confusion caused the 2006 ad sales upfront marketplace to be dismal for many sellers, who ended up having to settle on using live numbers that didn't give them credit for any time-shifted viewing. C3 was a good compromise, as the sellers of ad time would receive credit for any time-shifted viewing done up to three days after the program aired. Buyers were happy because they would only be paying for viewers of commercials rather than for viewers of programs.

One of the brilliant aspects of the decision to use the C3 metric was that from an implementation perspective, little had to change. The national media business infrastructure all operates off the same data format. It is commonly called the MIT (Media Information Tape) format. The MIT format has been used for at least two decades. The MIT data is not even provided on a tape anymore; however, the name was never changed. Most companies receive MIT data processed for them via software solutions providers like Donovan and MSA that import the data using a computer-to-computer system provided by The Nielsen Company. It was brilliant due to the fact that Nielsen could implement C3 simply by producing another MIT data stream that included the weighted average number of impressions for the commercials in the program plus three days of viewing, instead of an average of all the minutes in the program plus three days of viewing.

C3 was another program-based number. The data format and delivery mechanism was one that the industry was already set up to use. If the decision had been to go with actual commercial-based or brand-based metrics, it would have been a more complicated change that could not have been deployed as quickly or seamlessly. This is important because it will impact the next media frontier: moving to set-top-box (STB) estimates as a currency for ad sales transactions.

Part of the beauty of STB data is that the precision of the data makes second-by-second reporting granularity possible. The current C3 metric is a minute-based number, yet most commercials that air today are shorter than 60 seconds. As a consequence, C3 ratings had to be weighted based on the number of commercial seconds in each minute. C3 ratings are also an average of all the commercials in the program. As a result, all the brands airing in the program are being posted based on the average rating for all the commercials that aired in the show. These numbers do not necessarily reflect the actual number of impressions that a particular commercial or brand achieve, because the use of weighted minute ratings are not the most precise solution.

Using STB data, average second ratings can be produced for all the commercials and brands based on the precise commercial second tuning, rather than based on tuning for minute surrogates. This STB method enables researchers to begin to see that not all brands attain the average number of impressions as reported by the currency. Some have higher deliveries and others lower. It then becomes obvious that some advertisers in a program are receiving more impressions than what was posted, while others receive fewer.

As the industry begins to consider the use of STB data as a new currency for television advertising, the opportunity arises to move from an average of all commercials in a program to a more precise average for individual commercials or brands. Granted, the data format and software infrastructure used today will need to be revised -- a more significant change than the previous move from program-based average minute numbers to program-based C3. However, considering the increase in accuracy, it will be worth the effort.

 

Correction: The next-to-last paragraph of Tuesday's TV Board, "Hung Up On The Cross" by Mitch Oscar, gave the number of panelists on TiVo's StopWatch and PowerWatch panels as 100,000 and 30,000 respectively. The correct numbers are actually 350,000 and 35,000.