This story first appeared in the Feb. 8 issue of The Hollywood Reporter magazine.
Broadcast television moguls increasingly are pointing to what they believe should be the proper ratings currency used in the TV industry. Ads that are viewed within seven days (C7) rather than three days (C3) following initial broadcast should be the primary measurement of ratings, they say. The request isn't surprising: DVR usage has nearly doubled during the five years since Nielsen moved to C3 as the standard, and the trend toward viewers time-shifting their favorite shows seems irreversible. Perhaps not by coincidence, three of the four major broadcast networks are suffering declines in the range of 20 percent in live ratings this season.
But while stumping for C7 might get Wall Street excited, by focusing on a longer playback period to the exclusion of more important factors, the networks are perpetuating serious deficiencies in ratings measurement. They should be working with Nielsen to expand the platforms and devices measured, which will lead to a more accurate, fair and, yes, bigger assessment of viewership that someday might include all who are watching.
Recent studies reveal that 61 percent of TV viewers watch broadcast programs the day they air and another 21 percent catch up within three days of broadcast. That's the overwhelming bulk of commercial viewing. (Basic cable benefits from C3 but not nearly as much, in part because of more frequent repeats.) For advertisers such as movie distributors, retail stores and others whose messages are timely and price-sensitive, having to pay extra for commercials viewed from C4 to C7 would be a nonstarter. An ad placed Thursday night for a movie opening Friday is useful in encouraging attendance during the weekend, but it's highly unlikely to nudge people -- especially the core demo audience -- to see that movie the next Monday through Wednesday.
An analysis by BofA/Merrill Lynch, for instance, shows that for the CBS drama Elementary, C4-to-C7 viewing provides only 4 percent of the total audience. What's more significant is that cable VOD or streaming playback on CBS.com and other services accounts for 10 percent of total viewership for Elementary (C8+ fills in the remaining 4 percent). With more viewers watching more television on more devices and TV Everywhere usage growing, improved technology and measurement should be the themes of the industry.
So why go through the tortuous negotiation of C3 vs. C7 next upfront season over 4 percent, especially when a large segment of advertisers are not going to participate or will be looking for discounts? It would behoove the industry to focus on improved cross-platform and device measurement. Networks and ad buyers should work with Nielsen to add broadband measurement as a delivery mechanism, extending its reach to C3-compliant devices in the home such as tablets (iPad), digital media receivers (Apple TV), gaming consoles (Xbox), set-top boxes (Roku) and even smartphones (Samsung Galaxy) and taking other steps to change antiquated definitions of a "TV household." The good news is Nielsen soon will convene an industrywide committee to deal with these matters. We can only hope the members will be receptive to broadening the scope of measurement and devices.
It's arguable that identifying new platforms and devices also will help the industry fight off ad-free video viewing options such as Dish's Hopper and Aereo (whether or not these ultimately are found to be legal). But once Nielsen and the industry agree that ads exhibited outside linear television "count" for sampling and ratings purposes, it inevitably will lead to increased usage of dynamic advertising insertion, where the advertiser is empowered to substitute an ad that appeared during the initial exhibition with a more updated and relevant message.
Today, Nielsen counts ads for online only if the "load" is the same for linear and digital content. Once that changes, however, advertisers will be incentivized to create new (and more timely) commercials that could substitute for those shown during the initial network airing. The goal would be to target ads to the viewer, meaning those watching the same programs in the same (or different) households could eventually see different commercials targeted to their needs or their favorite products.
Cynics might argue that no one likes to see commercials, whether updated or relevant, but advertising is the economic foundation of the television industry, and we should do what we can -- legally, of course -- to enhance its growth.
Kenneth Ziffren is a partner at the Ziffren Brittenham law firm.