While a slate of lackluster new series and a more-ravenous-than-usual cohort of cable competition has enfeebled broadcast’s live-plus-same-day ratings, a full week’s course of time-shifted deliveries demonstrably puts the numbers in a sunnier light. For example, in the final week of October, ABC’s already powerful Modern Family saw its 18-49 deliveries jump 49 percent upon application of the live-plus-7 data, improving from a 4.9 in the demo to a 7.3.
But here’s the thing: Those extra eyeballs are all but meaningless to advertisers, as they pay only for C3 deliveries. And when the ratings are filtered through the currency, Modern Family, like so many other shows, is flat. In other words, all the extra viewership that is facilitated by the DVR does not result in a concomitant gain in people who’ve actually had the patience to sit through the commercial load.
As anyone in the 52.7 million households with a DVR knows, the fast-forward button is the device’s killer app. The networks could add 14 days of playback to the mix, and it still seems unlikely that it would move the needle on actionable commercial ratings.
Or, as BTIG Research analyst Rich Greenfield wrote today in a note to investors, “Watching live television is no longer top of mind and watching commercials is laughed at. Consumers have essentially been trained to avoid TV commercials.”
Greenfield went on to tear a hole in broadcasters’ efforts to effect a shift to a C7 currency, saying that the data stream is fundamentally irrelevant to advertisers. “You can try boosting viewership via C7 or even C14, but the ads are simply not being watched,” Greenfield said. “Trying to charge advertisers for ratings points that are not generating ad views is a nonstarter.”
Because viewers understand that they now live in an on-demand universe, Greenfield said that the only solution is for programmers to find a way to couple “a dramatically larger percentage” of VOD content with “targeted advertising and a lower ad load.” He added that consumers are unlikely to use the relatively clumsy DVR if they can access what they want when they want it, “especially if the ad load is lighter and the ads relevant.”
The same morning, RBC Capital Markets analyst David Bank indicated that he was a lot more optimistic about the implementation of C7. “It’s less of a pipe dream than one might think,” Bank said, adding that the extra four days of deliveries were likely to improve on the standard C3 results by as much as 5 percent.
While Bank said that lobbying efforts to update the currency probably won’t pick up sufficient momentum to have any material impact on the 2013-14 upfront, a switch “could happen sooner than later.”
Essentially, the broadcasters are gambling that the gains that come with the extra four days of playback will more than offset the resulting power shift in favor of the media buyers. “Buyers want a modest discount in pricing that probably sets dollar volumes back in year one, with the expectation that the additional four days of viewing will grow more quickly than the declines in C3 over the next few years, bringing long-term volume growth to the sellers in exchange for the near-term pain,” Bank said.
Also look for a two-tier system to crop up, wherein inventory for time-sensitive clients (movie studios, retailers) would be roped off from the long-tail categories like CPG and financial services.