• by David Goetzl , June 1, 2007

If buyers agree to follow GroupM's lead and negotiate based on commercial ratings for "live plus three day" viewing, then broadcast network upfront advertising deals could begin much sooner than expected. That's because the Big 4 networks would seem more than eager to use that currency.

Why? Nielsen data shows commercial ratings for "live plus three" essentially give broadcasters the same amount of rating points to sell compared to "live" program ratings - the traditional negotiating currency. In short, networks' supply would hardly be affected, so why wouldn't they say, 'Let's go...'"

The data shows ABC, CBS and NBC would lose only about 2% of rating points when comparing the "average commercial ratings/live plus three" numbers with the long-used "live" program ratings. And Fox would even gain rating points to sell.

For example, the prime-time 18-to-49 program rating average for ABC is 3.11, which drops to a 3.05 in commercial ratings for "live plus three day" - down just 2%. Then take Fox with its 4.55 "live" program average, and 4.68 for commercial ratings/"live plus three day" - that's an increase of 3%.

CBS goes from a 3.04 down to a 2.98, a 2% drop. And NBC falls from a 2.43 to a 2.38, also down just 2%.

A show like "The Office, which is watched heavily with DVRs, mirrors Fox as it shows commercial ratings/"live plus three" ratings are higher than its "live" program ratings - 3.22 vs. 3.06.

Supply is one thing. Demand, of course, is another matter and that's where networks could lose or gain revenues based on pricing and dollars available, and a slew of other factors. One is the issue of whether networks can charge more for commercial rating points than for program ratings under the concept that they provide a better gauge of whether an ad is actually watched.

The data covers prime-time performance from Jan. 29 through May 13. Nielsen yesterday released what it termed the first "standardized" commercial ratings, but networks and agencies have been able to determine them for some time.

The January-May data appears to show that even if DVR skipping is significant, by the time commercial ratings are tabulated over a three-day period, they offer up a figure close to the "live" program ratings.

Does this mean that over time commercial ratings won't affect the market? Probably not. For one, currently only 17% of homes in the Nielsen sample have DVRs -- and an increase in both that figure and general ad-skipping behavior in years to come could lower the commercial ratings, which could lower network supply.

For this year, though, no matter how commercial ratings are used for broadcast negotiations, they would appear not to have much affect on the supply or what's available to be bought and sold. For example, even if "live" commercial ratings are used - arguably what buyers would be most willing to use - networks might not be hurt as much as some would think, since they retain a high number of viewers during the ad breaks.

ABC, CBS and NBC all hold about 94% of their audience during commercials in real time, while Fox retains about 98.5%. As a result, rating points to sell would be lower, though not as if people were hitting the remote control en masse.