Nielsen/Business NotesSeeking More Pay for Delayed Play
By Bill Carter, The New York Times
- Nov. 4, 2013
In 2007, faced with the growing popularity of digital video recorders, advertisers agreed to pay television networks for commercials viewed within three days of a show’s first broadcast.
But with the pace of delayed viewing increasing ever more rapidly, a chorus of network executives is pushing for a new change — payment for seven days of commercial viewing on everything from computer screens and tablets to TV sets.
David F. Poltrack, who has headed CBS’s research for more than 30 years, said it would be hard to understate the influence of the digital video recorder on the economic model of commercial television. “The difference between this season and two seasons ago is more dramatic than the difference between two seasons ago and 20 seasons ago,” he said.
The single biggest factor in that upheaval: delayed — and sometimes never counted — viewing of television shows. Under the agreement negotiated five years ago, known in the industry as C3, networks do not get paid for any viewing that takes place starting on the fourth day after a show’s first run, even though more and more viewing is falling into that category.
Viewing in the period four to seven days after the first run is up about 17 percent this season, Mr. Poltrack said. That can mean millions of viewers. The new Fox and NBC hits “Sleepy Hollow” and “The Blacklist” have both been adding more than a million viewers in those extra days, and about half a rating point in the category many advertisers pay a premium for — viewers between the ages of 18 and 49.
“These are our viewers,” said Kevin Reilly, chairman of entertainment for the Fox Broadcasting Company. “It’s not as though they are lesser viewers or negligible viewers.”
Indeed, they are valuable viewers. Brad Adgate, the senior vice president for research at Horizon Media, said the 18-49 rating for programs in playback mode is better than first-run numbers for almost every network program this season. The median age for viewers watching recorded shows is 45.1 — younger than any of the four big networks (CBS, 58.3; ABC, 54.2; Fox, 51.1; NBC, 50.7).
Leslie Moonves, the CBS president, noted that viewers who play back shows demonstrated “a definite desire to watch those shows,” which goes to the increasingly important advertising area called engagement.
The counterargument, of course, to the building desire to receive seven days’ pay from ad buyers is that delayed viewers are often commercial-skippers. But Nielsen has steadily shown — in the face of consistent skepticism from those who skip ads — that about half the commercials are viewed days later.
Pat McDonough, the senior vice president for analysis at Nielsen, said, “You just watch them; you forget you’re watching a commercial.” She said that no matter what the program or time frame, “it never gets below 40 percent” viewing for commercials.
Mr. Moonves, who in his long tenure at CBS has been aggressive in pursuing value for every aspect of network television, said confidently that by next May, when networks make ad deals for the next season, “The new currency will be live plus seven days” — or C7.
Linda Yaccarino, the top sales executive for NBC Universal, said she had already seen more flexibility among advertisers. “It’s top of mind in meetings with customers,” she said.
Paul Lee, ABC’s top entertainment executive, said, “We’ve done some C7 deals already.” He said ABC might be in a special position because of all the serialized shows it broadcasts. “We’re getting more value for shows like ‘Scandal,’ ” he said.
Still, the collective view of the ad community remains: we’ll see.
“Clients are already getting this audience,” said Rino Scanzoni, the chief investment officer for the media buying giant GroupM, who was at the center of the creation of C3 in 2007. “It’s very difficult for an agency to go to a client and say: why don’t you just be benevolent and pay for it?”
Even with added viewing, going past three days will remain an issue for advertisers who need timely exposure, Mr. Scanzoni said, especially movie companies that need to open a film on a specific date. But he said the issue would come down to a negotiation, with advertisers expecting networks to concede something — perhaps a lower initial rate. “There has to be some incentive,” he said.
Whatever happens to the C3 system, the television business is rethinking across the board to cope with the changes wrought by delayed viewing. Mr. Adgate suggested that some advertisers might decide to start ad promotions earlier to capture the millions waiting longer to see shows.
Mr. Poltrack of CBS noted that playback was heavy on weekends, which is fine for CBS shows that play on Thursdays because that falls inside the C3 window; Monday shows are hurt, however, because CBS gets no money if they are played back the following Saturday. “It’s becoming a marketing challenge,” he said.
Robert Greenblatt, the chairman of NBC Entertainment, said, “It seems overly self-serving to say to viewers: watch it within three days. The better message is: watch it soon.”
That has already led to a push to develop shows with excitement and urgency, he said. But urgency is what programmers also say they must now avoid in judging shows, because the viewership numbers that arrive in three or seven days (or 30 — networks are also putting out month-after ratings) may revive shows that struggle in early ratings.
Mr. Moonves pointed to how patient CBS was being with the new drama “Hostages,” which has attracted weak audiences for its first broadcasts. The aggregated numbers are somewhat more promising, so CBS has so far stuck with the show.
Fox has done the same with its comedy “Brooklyn Nine-Nine,” going so far as to slot a special episode after the Super Bowl. Mr. Reilly noted that “comedy is a slow-growth business” that demands special patience to see if an audience finds it over time.
As they do all this recalculating, the networks are keeping eyes trained on two other developments. One is the rapid growth of video-on-demand, which the networks embrace. The VOD system does not allow fast-forwarding, so commercials cannot be skipped.
The future gold mine in VOD, as the networks see it, is in the added business that can be done after initial three-day commercial exposure ends. At the moment, the networks simply remove the ads. But they expect to be able to switch to new commercials after three days, which would mean separate sales to new advertisers.
And there is one more looming avenue of revenue, based on the addition by Nielsen — next fall by most estimates — of a system that will measure streaming shows on tablets and computers. At the moment, that viewing is going completely unmeasured — and unpaid for.http://www.nytimes.com/2013/11/04/business/media/networks-want-advertisers-to-pay-for-delayed-viewing.html?hp&_r=0