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C7 is About Making Things Right

By Mike McHugh May 28, 2014 | 11:03am

There has been a lot of buzz this upfront season about whether the TV advertising and ratings industry should switch from a C3 ratings measurement to C7. Some claim that millions of dollars are being left on the table. Others are arguing that C7 will include viewers that are viewing “stale” ads that are no longer relevant. There are merits to both arguments.

TiVo recently published research stating that millions of dollars are being left on the table because network are selling ad space based on C3 when the total viewership would jump much higher if C7 was used. In truth, a change from C3 to C7 sets up a mechanism where networks could be more accurately compensated. The operative word here is could.

In my view, C7 is a more accurate measurement of viewership. But the changes in the cost of advertising may not be as heavy as some people think. The cost to advertise on a program, whether being tracked with C3 or C7, will be (and always is) determined by the fair market value, and what the market will pay. The pricing does not only come from how many viewers a program has, but also by what ad buyers are willing to pay, plus a range of other factors (like the demographic, how many live viewers they think they’ll have, and many more).

Advertisers know that not all programs are created equal, and neither are their audiences. Whether C3 or C7 is used, advertisers are going to consider the demographic of the audience to measure if its a worthwhile place for them to advertise.

While I believe that C7 will give the industry a more accurate number on viewership, the pull that live TV programming has will, conversely, continue to be extremely important. Sporting and entertainment events, will be key for advertisers. That’s why CBS just paid $250 million for eight Thursday Night Football games.  

It’s tough to call when a transition to C7 will happen, but my prediction is that it will occur within the next three years, and here’s how: broadcasters will band together and simply state that they view C7 as the most accurate measurement. Instead of adopting C7 unilaterally, they will first offer it along C3 in their presentations. Eventually, C3 will be dropped altogether. 

But until that happens, the TV industry should start seriously considering C7. Everyone will gain from C7 as we’ll have more accuracy and transparency in our ratings systems. This is a good development, but ad execs should not assume that ad rates will skyrocket on Day 1. They should take some time to further develop their marketing campaigns. After all, this is what this debate is about. 

 

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