LOS ANGELES (Reuters) – U.S. television broadcast networks are taking the first steps to persuade advertisers to pay for commercial viewership that occurs up to seven days after a program airs, a shift that would provide a new revenue stream to help combat ratings erosion.
The networks argue that the rising popularity of digital video recorders is pushing a sizeable number of viewers to delay watching their favorite programs beyond the first three days, the time period most often used for calculating ad payments.
Some advertisers are ready to make the move to a seven-day metric. One of the big four networks, Walt Disney Co’s ABC, earlier this year reached deals with some sponsors that bring in payments for eyeballs counted between days four and seven.
The other broadcasters have begun talks with advertisers and hope to convince them to switch to the longer window in time for the “upfront” selling season that starts early next year, when billions of dollars in ad commitments will be made, according to people familiar with the discussions.
Since 2007, most TV ad time has been bought and sold based on “C3,” a ratings measurement based of the average number of commercial minutes watched during a program either live or within three days of its airing.
TV networks want advertisers to shift to “C7,” which captures commercials watched within seven days.
Advertisers hesitate to pay for the added days, particularly for time-sensitive ads pitching a department store’s one-day sale or the opening of a summer movie blockbuster. Media buyers are pushing for precise measurements of each commercial viewed, rather than an average for an entire program, as well as a tabulation of how many people are watching on mobile devices.
The debate intensified after Nielsen data showed a sharp decline in three-day viewing at the start of the fall TV season compared with last year.
The drop is partly due to “the greater penetration of DVRs and the greater usage of DVRs, which clearly have shifted the rating in the direction of C3, and ultimately, hopefully, C7,” Disney CEO Bob Iger told analysts on a November 8 conference call.
Most viewing of network prime time shows still takes place within three days. But the post-three day viewers are growing and can be significant. Ratings for ABC comedy hit “Modern Family” increased by 5 percent, to 6.5 million viewers age 18 to 49 viewers, when counted by the C7 measurement instead of C3.
The later viewers also are among the most-coveted by advertisers, according to ABC research, which showed people who watched a show after three days were more highly educated and had higher incomes. For days four through seven, “the people who are doing the viewing are some of the most desirable available from an advertiser’s perspective,” said Charles Kennedy, senior vice president of research for ABC and the ABC Family cable network.
Earlier this year, ABC made deals with some sponsors to pay for ad time based on C7 numbers, ABC spokesman Kevin Brockman said. “We expect to do more of them if they make sense for us and our clients,” Brockman said.
At CBS, the flagship network of CBS Corp, CEO Leslie Moonves has been outspoken in pressing for a C7 metric and said it “represents a significant opportunity for us that is still in the very early stages.”
“As we move forward, we will make it a priority to get paid for all of the viewing that is going on across our shows, including DVR viewing beyond C3,” Moonves told analysts on a November 7 conference call.
Advertisers are not ready to commit to the switch and will be looking for something in return if they agree to a longer window. Timing is a big concern for many brands that want to get a message out to large numbers of consumers during a specific time period. Some commercials lose their value for sponsors over a few days.
“In moving to C7, you’ve got to be careful because you are taking away some of the advantage of why clients buy television,” said Sam Armando, director of strategic intelligence for SMGx, a division of media buying agency Starcom MediaVest Group.
Advertisers believe simply adding more days to the current metric fails to adequately capture viewership. Brands are lobbying for a more precise measurement that tracks viewership of each commercial, rather than an average for a program over a time period, they say. They also want information on how many people see their ads on programs watched on computers or Internet-connected mobile devices like phones and tablets.
“If the industry is going to make a move, we need to consider it all before we just make a little baby step to C7,” Armando said.
(Reporting By Lisa Richwine; Edited by Ronald Grover and Andrew Hay)
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