DVR Shakedown: Networks Declare War on Ratings
Moguls want a week (or a month?) to count, as overnights dwindle and ad buyers fear the next frontier.
This story first appeared in the Nov. 30 issue of The Hollywood Reporter magazine.
Forget live-plus-3 or live-plus-7 -- how about "live-plus-29"? As debate rages in the television business over time-shifted ratings, ABC quietly has asked Nielsen to look at how much TV viewing goes on in DVR homes up to 29 days after a show airs.
The move comes as the major networks prepare to lobby advertisers to expand the current system, in which national ad buyers pay for viewing up to three days post-air but not a week. "We've only been measuring what's been left on the table for the tail that goes to seven days, but what happens at 14 or 29 days?" asks Charles Kennedy, ABC senior vp research. "We will be getting that data back and in December will start to analyze that for specific shows."
Momentum is building for lengthening the viewership window to be a hot topic during the advertising upfront in May. CBS' Leslie Moonves, Disney's Bob Iger and NBCUniversal's Ted Harbert are among those who believe networks must cash in on the trend toward delayed viewing, now that 46 percent of U.S. TV homes have DVRs. Lionsgate CEO Jon Feltheimer echoed that sentiment in a Nov. 7 analyst call. "Obviously, that's what is relevant as you try to build a huge show," he said, referring to live-plus-7.
One network source says internal numbers suggest 30 percent of viewing in DVR homes now occurs between four and seven days out, adding, "We want to get paid for it." And Wall Street for the most part agrees. "It's ludicrous for advertisers to take the value of advertising shown four or five days after it airs and say it is worth zero," says Todd Juenger, an analyst at Sanford C. Bernstein.
But research shows DVR viewers watch far fewer ads than those who watch live, and the networks also have a selfish reason to push for more DVR respect. Viewership this season is down across the board, with ABC, CBS and Fox suffering traditional overnight ratings drops of more than 10 percent in the key 18-to-49 demo. DVR viewing has helped boost the lagging numbers.
Nielsen senior vp insights, analysis and policy Pat McDonough says the current method -- dubbed "C-3" -- captures 90 percent of viewers, leaving about 10 percent uncounted. And Kennedy adds that the live-plus-7 crowd potentially represents the most valuable audience segment. "They are more upscale, younger, more educated and more likely to be professionals," he says. "They are clearly a group advertisers would pay a premium to reach."
But ad buyers, which Kantar Media says are on track to spend more than $40 billion on network TV this year, remain resistant to the shift. "Advertisers need to understand why this is good for the buyer," says Bill Duggan, group executive vp at the Association of National Advertisers. "It's unclear."
Duggan sees the movement as a ploy by networks to raise ad rates. He hearkens back to five years ago, when advertisers agreed to adopt the C-3 standard. In return, networks agreed to start counting the average viewing of the commercials in each show, rather than the show itself. What advertisers want this time, says Duggan, is measurement of brand-specific ads -- yes, ratings for each spot. "Advertisers want the 'truth' about ratings for their specific commercial," he says. That would allow them to judge each ad's effectiveness and rate the "stickiness" of each network (to hold viewers when commercials air).
Ad buyers -- including Hollywood studios, among the most prolific TV advertisers -- also question the value of counting commercials for time-sensitive products like movies and retail. And if the changes to live-plus-7 happen soon, it might not take networks long to decide they want to be paid for even longer windows. "Will we hear an argument in a few years that it should be C-14 and then C-30?" asks Duggan.
ABC and Nielsen might soon be able to answer that question.