Bill Niemeyer, Senior Analyst
November 11, 2011
MediaPost reported this week that AMC has started adding online viewing to TV ratings to create a single currency for advertisers. AMC joins Time Warner's Turner Broadcasting to become the only two TV network groups to offer Nielsen's Extended Screen measurement service. The service combines online viewing with TV ratings to produce a single C3 rating, which measures viewing of ads in both live and time-shifted viewing up to three days after broadcast. It is the metric by which most national TV advertising is determined. If ads are fast-forwarded, they don't count.
This combined metric is both good and bad news for online/OTT advertising and content availability. The good news is that networks now have an easy path to monetize TV shows online provided they are C3-compliant by showing exactly the same "commercial load" that is shown on TV (yes, that means the good-old familiar 16 minutes or so of ads and promos per hour). If networks can easily get the same revenue per viewing as on TV, it should motivate them to put more full episodes online. And, as Nielsen has said it is working to add iPad and smartphone viewing to Extended Screen, it is likely that connected-device OTT viewing might also be on the road map for the C3.
So now for the bad news: the requirement that online programming carry the same commercial load as the TV episode.
First, this reduces online and other digital platform viewing to a "lowest common denominator" auxiliary of linear television. Simply being combined into C3 ratings does not allow the unique advantages of digital platforms - superior capacities for targeting, measurement, interactivity, and engagement - to help deliver greater revenue per viewing than linear TV.
It's understandable why networks may choose to combine online into TV C3 ratings as a bridge strategy for online revenue creation. It's especially understandable for cable networks like AMC that may not have the resources to leverage online ads effectively at current viewing levels. Online, the October 16 premiere of the second season of "Walking Dead" only added 1.7% to the C3 18-49 rating (the most commonly used group in primetime ad calculations).
The danger in this bridge strategy is that it may delay networks pursuing innovation in online and OTT video advertising in pursuit of making those platforms better monetization vehicles than TV. But advertising innovation can be developed in parallel with online C3 ratings. Turner's TNT.com full episodes of "The Closer" illustrate how this can happen. Within the three-day window, TNT.com viewers now see the full TV commercial load. Beyond three days, TNT removes the TV load and replaces it with a smaller number of different ads. Right now it's a collection of linear 30- and 15-second TV commercials, but this post three-day viewing can be the "room to learn" for the nascent art of digital platform video advertising. If this older content can demonstrate that techniques like engagement advertising and targeting can create higher revenues per viewing than C3-compliant ad loads, it won't be hard to make the argument that online shouldn't be combined with (and constrained by) TV-style ratings.
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