TiVo: Adherence to C3 Is Sucking Millions Out of TV Ad Market

$87.8 million down the tubes—and that’s just the impact on the top 10 shows

In what may be the most cogent argument for the adoption of the C7 ratings currency, TiVo Research on Monday revealed that broadcasters beholden to the dated C3 metric are leaving hundreds of millions of dollars in ad sales revenue on the table.

According to TiVo’s analysis of its top 10 “Season Pass” broadcast series (a designation reserved for the shows that subscribers most commonly flag for automatic, full-season recording), there is an average lift of 8.2 percent in overall deliveries when four days of playback are added to the C3 data. As that increase is not compensated under the current metric, this translates to an overall loss of $87.8 million in ad sales for those 10 programs.

(As the data was generated in a second-by-second analysis of TiVo subscriber behaviors, the numbers were not broken down by the relevant demographics.)

Of the 10 series under the microscope, ABC’s Modern Family sees the greatest increase upon application of four to seven additional days of playback (10.9 percent). Based on the average unit cost per 30-second spot of $244,630, as furnished by SQAD NetCost, Modern Family season to date is missing out on an estimated $10.9 million in actionable revenue.

The SQAD data is in line with the average unit costs furnished by media buyers. In a survey of top agencies, Adweek last fall concluded that a 30-second spot in Modern Family sold for $257,435 during the 2013-14 upfront.

While a shift from C3 to C7 doesn’t proportionately move the ratings needle for Fox’s American Idol, which is largely watched in real time, the elevated cost of buying time in the show translates into the most amount of viewing that remains uncompensated. Per TiVo, when the 4.1 percent boost in deliveries is brought to bear on the average unit cost for the Wednesday and Thursday night Idol ($319,565 a pop), it all adds up to $14.4 million in wasted opportunities.

CBS has been the loudest, and most strident, voice calling for the implementation of the more inclusive metric, but it is unlikely that a sea change will be implemented in time to have a significant impact on this year’s upfront. That said, CBS (and to some extent, ABC) has done some early C7 deals with automakers.

Things should pick up on the cable side as well. “Don’t be shocked if you see cable playing a little bit more of a role in [the C7 sandbox] this year,” said Fox Cable Networks ad sales president Lou LaTorre, who added that the incremental addition of time-shifted deliveries led to a 6 percent to 8 percent increase in viewership of original cable series.

“There’s a notion among some in the industry that by simply gaming the blunt instrument of average commercial minute measurement the ratings currency provides, networks can gain back some of the advantage advertisers get from unmeasured viewership beyond the three-day window,” said TiVo chief research officer Jonathan Steuer. “The reality is that only an extended measurement approach that combines both precise measurement of media viewership and a comprehensive understanding of audience composition can enable networks and advertisers to evaluate what commercial ratings truly are over the course of a seven-day viewing period.”

Largely seen as a compromise from the moment it was adopted in 2007, C3 is a blend of the average rating of all commercial minutes in a program in live viewing plus three days of playback.

Six of TiVo’s top 10 Season Pass series air on CBS, while three are ABC properties. Fox elbowed its way onto the big board with Idol, but NBC was shut out. 


Single Season Revenue Increase for TiVo’s Top 10 Season Pass Programs   

Top Season Pass Series   Average Unit Cost Commerical Rating Increase (C4-C7) Units Per Episode Single-Season C4-C7 Increase
The Big Bang Theory $266,526  8.1%  17  $8,742,055
Modern Family $244,630   10.9%  17  $10,879,185
Grey's Anatomy $201,177  8.0%  29  $11,201,535
NCIS  $150,718  8.8% 29  $9,231,176
The Mentalist  $103,791  9.6%  29  $4,912,220
Castle  $121,059  10.0%  29 $8,425,706
Elementary  $153,428  8.8%  29  $8,614,062
American Idol $319,565  4.1%  61  $14,386,177
Person of Interest  $172,797  7.1%  29 $7,827,359
The Good Wife  $99,460  6.2%  29  $3,576,582
    8.2% (average)