• by Jon Mandel , May 31, 2011

Madison Avenue's upfront television buying season is often compared to the financial marketplace, because of the way buyers and sellers behave. There are media buyers who fuel their decisions on emotion, others who put in the time and effort to study the factors driving the market. Some of the latter end up worse off than the lackadaisical investor when all their deep thinking misreads the marketplace.

Perhaps the misread or flaw is in the actual programming purchased, or maybe it is due to a lack of attention in the use of the actual commercial placement. Either way, the potential overpayment for the goods or underdelivery of the goods can amount to millions upon millions of dollars.

It has often been said in boardrooms that fiduciary responsibility begins with using the proper information and data so that companies can make proper decisions and properly care for the stockholders interest.

And as in so many other areas of a corporation, the biggest overpayments on media come from those don't use or misuse the information available to them when they are making their investment decisions.

Part of the problem the television industry has is that the data it is traded on is widely acknowledged to be non-reflective of the viewing to television that it purports to measure. But while the industry is stuck using the Nielsen ratings for another season, or probably two, for measuring advertising buys, there are still some advertisers and agencies that are currently avoiding overpayment and gaining huge financial advantage -- at the expense of those who are flying blind by only looking at the readily available Nielsen ratings.

One of the easiest areas for advertisers to make a gain is in the area of commercial ratings.

Network television is bought and sold on what are known as C3 ratings, which are the average audience ratings for the commercials running in a telecast, including any delayed viewing that occurs within three days.

Unfortunately, C3 ratings had to be created, as Nielsen does not have the capability to actually measure commercial audience, nor does it have the capability to deliver the data for a multitude of different client date ranges in delayed viewing.

One cannot blame Nielsen for this. Most companies would be loath to totally discard an infrastructure and methodology they built in the Eisenhower era if they could milk it for a few more years before investing huge sums of money in a totally new system in order to survive.

But like any industry shift, the savviest players are taking advantage of the impending changes to benefit ahead of their competitors.

The sharp investors have recognized that all research is just that. It is all estimates of actual audience behavior. And when using any research, it is accurate within itself when comparing individual data sets measured the same way.

There are two ways to benefit from buying on the basis of C3 ratings. First, a single commercial is obviously likely viewed by more or less of the audience than the average of all of the commercials. Second, an advertiser can save money or make his or her money work harder by properly investing money through measuring audience delivery on the specific commercial and length of campaign.

The ramifications can be enormous.

For instance, using TiVo's second-by-second commercial ratings, it becomes obvious that an AT&T Wireless commercial delivered 48% more audience than the average commercial in one episode of "Glee," while a Mars Kit Kat commercial in the same episode delivered 19% less than the average.

Likewise, a Buick Regal spot in "Modern Family" outperformed the average of all commercials by 20%, while a Ford Edge ad underperformed by 16%.

Percentages like these are pretty common. And when applied to the millions of dollars spent by a single advertiser on television media, the swings in investment performance can be staggering.

One could argue that in the scenarios where C3 ratings over-deliver, they have created a situation where the advertisers saved money by spending less on other programming or squeezed every last nickel out of their investment by properly managing the placement of their inventory. In the situations where C3 ratings under-delivered, they could be construed as poor use of funds.

Advertisers that are outperforming the broadcast network marketplace know that these same gains can be made in the cable network marketplace. Cable is often bought on a package of spots that rotate across programming over several cable company's networks. And the differences in investment performance can be taken advantage of for the benefit of the advertiser.

Again, using second-by-second data from TiVo, Pepsi commercials in VH-1's "Behind the Music" only deliver 36% of the viewership of the program, but the same spots in MTV2's "Fantasy Factory" deliver 83% of the program viewers.

Since the network is paid on the average C3 rating, those spots that ran in "Fantasy Factory" were a bargain, and those that ran in "Behind the Music" cost more than twice what they should have given their delivery.

After spending 32 years as an agency media person railing about the gross inadequacies of the legacy ratings system, and a couple of years working inside Nielsen trying to fix it, I am glad that the industry finally has several researchers providing data on a more relevant and granular basis. TiVo, Rentrak, and others finally allow sharp advertisers a way to get what they need: smarter financial planning.