Broadcast Networks Score Win in Battle for 7-Day Viewing Standard
UPDATED: Sources say media buying company GroupM, which spends $70 billion annually for clients including Paramount Pictures and Procter & Gamble, has agreed to negotiate upfront primetime deals on C7 instead of C3.
The broadcast networks have agreed to negotiate upfront primetime deals with GroupM on commercial viewing with seven days of delayed viewing – so-called C7 – instead of C3, the current industry standard. The news, confirmed by multiple industry sources, is a major step toward real monetization of time-shifted viewing, which has rapidly increased with the proliferation of VOD options.
Broadcast executives have been pushing for a shift from C3 for years. And some clients do have deals based on C7. But until now those deals have been small and relatively infrequent, with some media buyers asserting that ads lose value over time, especially spots for weekend sales and movie premieres. GroupM, which is made up of a consortium of agencies including MediaCom and Mindshare, spends more than $70 billion annually across marketing platforms on behalf of myriad clients including Procter & Gamble, Volkswagen, Paramount Pictures and AT&T.
And with shows like Fox's Sleepy Hollow and NBC's The Blacklist regularly adding several million viewers once seven days of delayed viewing are counted, last month's upfront presentations in New York all included some sort of pitch regarding compensation for those extra eyeballs.
The "business needs to evolve," Toby Byrne, president of ad sales at Fox Broadcasting, told media buyers at the network's May 19 upfront. "In order for us to continue to make massive investments into our quality entertainment programming, we need to recognize the evolution of the media landscape. For our business today and for tomorrow, we need to have a meaningful discussion about C7."
Spokespeople for Fox, CBS and The CW confirmed that the networks have come to an agreement with a major agency to negotiate on C7 rather than C3. ABC and NBC declined comment. GroupM also declined comment.
CBS Corp. president and CEO Leslie Moonves – long a forceful voice in the industry and perpetually bullish on broadcast – has been beating the C7 drum for a number of years. And CBS has done small deals on C7. But consumers' shift away from the DVR and toward VOD platforms is hastening the shift. That's because VOD platforms (where fast-forward is now nearly universally disabled) allow distributors to use dynamic ad insertion to swap in more timely commercials. Fox offers dynamic ad insertion in 75 percent of homes that have VOD; CBS rolled out dynamic ad insertion last March.
On a May 8 first-quarter earnings call with analysts, Moonves noted that if a buyer doesn't want to pay for delayed viewing after three days, the network can sell the extra four days of inventory to a different buyer.
"Advertisers adapted fairly quickly to the shift to C3," said Moonves. "What people don't understand is [advertisers] want large audiences. They want every viewer counted because it means their advertisements are being watched by more people. As the world expands, they are going to want those extra four days; and when that doesn't occur … we can sell it in different ways."