C3 Ratings Bring Good News, But Erosion Persists

Are DVR viewers becoming more tolerant of TV ads? It’s probably a little bit early to call it a trend, but a greater percentage of time shifters watched network TV commercials during the first week of the season, versus a year ago, according to network and agency analyses of Nielsen’s C3 ratings for premiere week.

Still, viewer erosion continues to be a big problem for TV, and the picture is clouded by the lack of a standard measure across all viewing sources, including broadcast, cable, online and mobile, media executives said. Media buyers noted that the uptick in viewers watching ads via DVR playback—about 2 percent—pales in comparison to the upwards of two-thirds of all DVR watchers who continue to skip the ads.

C3—shorthand for ratings that measure audiences to network ads including three days of DVR playback—was adopted as the industry yardstick for buying and selling ads two years ago. There is a three-week delay between the airing of network programs and Nielsen’s issuance of their C3 ratings. (Nielsen is Mediaweek’s parent.)

Both network and agency executives said the increase in viewers watching ads in playback mode was a welcome surprise. David Poltrack, CBS’ chief research officer, said the decline in ad skippers is one sign that the DVR isn’t the death knell for TV that many predicted. He added the device is a plus for networks in that it enables viewers to watch more TV on their own schedules. “The medium continues to deliver in a DVR environment in a way that is comparable to pre-DVR context,” he said.

Why? For one, over the past few seasons the networks have tested different commercial pod loads and positioning in their programs. But it also could boil down to the fact that more recent DVR converts simply aren’t as determined to avoid commercials as their early-adopter counterparts.

Buyers indicated they too were glad to see the number of ad skippers trending downward.
“That’s substantial,” said Lyle Schwartz, GroupM’s director of implementation research and marketplace analysis. “On a live plus same day [DVR watching] basis, the networks are down 5 to 6 percent [in viewing]. So picking up 2 percentage points is a big help.” Still, Schwartz added, erosion continues to plague network TV this year, particularly NBC, ABC and The CW, which are all sharply down in audience.

According to the premiere week C3 ratings, ABC’s delivery of the key adults 18-49 demo dropped 12 percent to a 3.1, versus the same period a year ago. Both NBC and The CW dropped 18 percent, to a 2.6 and 0.9 respectively. CBS and Fox fared better: Fox rose 13 percent in C3 to an average 3.0 in 18-49, while CBS was up 2 percent to a 2.9.

This season, with DVR usage on the rise—and penetration up to 33 percent, from 26 percent a year ago—all the nets posted bigger week one C3 audiences versus the audiences tuning in on a live basis. Almost three dozen programs received a double-digit percentage boost in their 18-49 C3 rating compared to live numbers (see chart for top five gainers).

While that’s all well and good, “we’re still seeing that large tune out,” said John Spiropoulos, senior vp, director of marketplace analytics, MediaVest USA, referring to the 60 percent of viewers watching shows in playback mode who skip through the ads. Spiropoulos is not counting on a lot of those viewers to change their ad-skipping behavior over the long term, despite efforts by the nets to tweak pod positions and efforts by creative agencies to make ads more palatable. “Fox tried limited commercial loads last year and couldn’t get the rates to justify expanding it,” he said.

The industry, Spiropoulos said, will get a clearer picture of viewing trends next year when Nielsen starts incorporating some online viewing data into the national TV sample. Lots of details still need to be worked out, however, including timing of the integration and exactly which online sources will be added. The plan is to incorporate online viewing feeds that contain all the commercials airing in the original network feed.

Whether Hulu and other major destinations for online video viewing participate remains to be seen. But Spiropoulos believes some online players may adopt a model in which they rebroadcast network feeds with the full complement of ads but also offer an alternative subscription model that’s ad free or close to it.

In the meantime, said Poltrack, as DVR penetration increases, C3 will offer advertisers greater bang for the buck. He pointed out that, essentially, advertisers are getting bonus value for any viewing that takes place after three days (since they don’t pay for it), as well as ads that viewers fast-forward through are seen but not heard.

Not all  buyers are buying into that spin. Schwartz countered that it’s hard to place any value on ads seen after three days, especially for time-sensitive retail buys. As to fast-forwarded spots, he replied, “there’s no sound, plenty of motion and sight is clearly diminished. How do you attain a value for that?”