
With upfront ad negotiations fast approaching for the 2015-16 broadcast television season, GroupM chief investment officer Rino Scanzoni is projecting another large chunk of media agency ad buys will be done using C7 ratings as the metric.
Scanzoni led the way in last year's upfront when he did C7 deals with the five major English-language broadcast networks for every client represented by the Group M agencies, which include Mindshare, MediaCom, MEC and Maxus.
GroupM shops were not the only agencies that made C7 deals, but they were the only agencies that did them for all clients. Every client under the GroupM umbrella agreed to let us buy their broadcast TV inventory using C7 as the metric, Scanzoni says. The networks wanted to do it, and we were able to get favorable pricing, so it made sense for us and for our clients.
Scanzoni estimates 40% to 45% of the broadcast networks' primetime ad deals for the current season are based on C7 rather than the C3 metric, which had been the primary negotiating currency since 2007. He projects that the percentage of C7 deals will rise to about 70% during this year's upfront and that by the upfront for the 2016-17 season, 100% of broadcast network primetime program ratings guarantees will be based on C7.
Scanzoni is not as optimistic about the cable networks' transition to C7, because right now there is not much difference in the ratings for most networks between C3 and C7. The average cable network only gets about 1% in additional audience between C3 and C7, he says. So it doesn't really benefit agencies to do C7 deals with such insignificant ratings boost. We will be looking to do C7 deals with cable networks in this upfront, but there needs to be enough upside for our clients, Scanzoni says.
GroupM surprised the marketplace in the last upfront with the extent of its C7 deals. But Scanzoni says, We wanted to be the leader in the C7 arena, and by going first and going all-out, we felt we could not only help set the standards but also get some favorable pricing.
While the networks might want to take a harder line on the discounts they may have offered in the last upfront, it's going to be hard for them to take a real hard line since every GroupM client would be negatively impacted by a major jump in rates.
Scanzoni believes he caught his agency competitors a bit off-guard with the extent of the move to C7 by all of his agencies. I don't think the rest of the industry was thinking about it as much as we were, he says. Prior to the upfront last year, we spent a lot of time putting together analytics to help us negotiate our C7 deals. It wasn't easy.
Scanzoni believes that the C7 deals that were negotiated are playing out the way we thought they would in terms of ratings. And he says the industry must move to C7 from C3 because of audience fragmentation and the way viewers are watching TV in delayed modes. We have to be able to aggregate audiences properly, he says. We just can't use live metrics anymore. And for most broadcast programming, there is a significant jump in viewing from live-plus-three-day to live-plus-seven-day viewing.
Media agency Carat also did some C7 broadcast primetime buys in last year's upfront. Billie Gold, VP, director of TV programming research at the agency, recently compiled some Nielsen data that shows the bump in ratings going from live-plus-same-day viewing to C3 viewing to C7 viewing.
Fourth-quarter data showed that adults 18-49 ratings for the five broadcast networks in primetime grew about 4.6% from live-plus-same-day viewing to C3, and another 3.4% from C3 to C7.
The data showed that Fox gains the most viewers in delayed viewing modes. The network's 18-49 ratings grow 9.9% from live-plus-same-day to C3 and another 5.8% from C3 to C7. NBC is at the low end. Its live-plus-same-day to C3 18-49 ratings grow just 2.2% and its C3 to C7 ratings grow another 1.8%.
Gold says while 50% of commercials are fast-forwarded in delayed viewing or DVR mode, most original broadcast network shows are still making notable gains, and the networks overall are on the plus side going from live-plus-same-day to C3 to C7.
Gold adds 96% of live viewers watch commercials. But that is topped by video-on-demand viewing, which has a current commercial retention rate of 98%. Part of that is because most cable operators, in agreements with the broadcasters to carry their programming in VOD mode, have agreed to prevent the fast-forwarding of commercials.
Scanzoni says in 2007 when the agencies and broadcast networks first moved to the C3 metric, the skip rate for commercials was about 60% compared to 50% today, and he believes that percentage will continue to go down.
Scanzoni also believes that VOD, where cable operators have been working with the broadcast networks to allow dynamic insertion of advertising, is going to be a growing benefit to C7 advertisers because of the ability to refresh ads after the C3, or three-day viewing period, is over.
Fox has been working with Nielsen to change its policy and allow a reorganizing of VOD ad loads. The measurement service recently said it will permit broadcasters to remove ads from their VOD programming after three days but keep ads using the C7 metric.
So beginning this week, Fox began the policy of leaving ads bought with C7 audience guarantees in for seven days in VOD. Nielsen will now measure these ads within the C7 metric. Nielsen will also allow C7 advertisers in those VOD shows to replace a commercial after three days, as long as it is for the same brand.
Fox's move is exciting to Scanzoni since all of his clients are C7 advertisers. Not only will they be able to refresh their commercials, but there will also be less clutter because all the C3 commercials are going to be removed but the C7 ads can remain. Previously
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