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Monday, December, 10 2012

CBS sees VOD ads lifting C3 ratings by 3-5%

By: Stewart Schley Monday, December, 10 2012

What does the contribution of VOD ad insertion look like to a national television network? Like a very good friend, that's what.

So says CBS Chief Research Officer David Poltrack, who lifted the curtain a bit on how CBS views the emerging VOD advertising landscape at a time when traditional linear-TV viewing is down across key demographics.

Poltrack, speaking at last week’s UBS Media Conference in New York City, said video-on-demand telecasts of CBS’s prime time TV shows are producing significant audience exposure that should translate to higher ad revenue. The idea is that a viewer who watches CBS’s “The Big Bang Theory” through VOD – and 1.2 million did in the first three weeks of the 2012-13 season, according to Rentrak – should be monetized through advertising exposure just as viewers who watch the linear episodes are.

Poltrack likes what he sees in VOD, because it offers viewers a new way to watch CBS programming. He thinks VOD viewers are more valuable to advertisers than those who watch recorded episodes from DVRs, partly because of a nifty trick of VOD: Unlike commercials within DVR-recorded TV shows, advertisements within VOD can’t be avoided through fast-forwarding. It’s this disabling that makes VOD more valuable, in Poltrack’s view, than after-the-fact DVR viewing. Poltrack said VOD viewing of CBS's prime time programs is now adding 3-5% to the Nielsen C3 rating that tracks viewing to TV shows within a 3-day window of their network premiere. A common pattern: VOD viewing spikes usually occur the same night (Thursday, in the case of CBS's "Elementary," for instance) and the following night after a linear episode premier. Poltrack says that trend reflects the fact that viewers who discover the show on CBS are then turning to VOD to catch up with previous episodes.

A boost from VOD exposure would be welcome news for CBS, given the current languid state of network TV and an apparent decline in younger viewers (at least to linear broadcasts) this season. Poltrack thinks total network ad revenues will decline 2% next year, partly because of the absence of Olympics, but also because VOD, DVRs, Internet and mobile viewing are disrupting traditional viewing behaviors faster than TV ad sellers are monetizing them.

One interesting data point about VOD views: For CBS’s “Elementary,” nearly half of the 959,000 views came eight days or more after the show’s linear network premier.  That suggests there’s value to VOD national ad inventory even up to 28 days after a show’s debut.

Going forward, Poltrack thinks VOD telecasts – owing to the absence of fast-forward capability and the relative absence of channel-surfing during commercials – draw the highest rates of actual commercial exposure, surpassing linear debuts and on a par with online streaming (which also prevents ad-skipping). The lowest ad exposure rate on Poltrack’s radar is associated with DVR viewing. Here are the numbers showing how many ads actually get seen by viewing medium:

Live 10 minutes of ads = 20 ads x 0.95 Ad exposure = 19
DVR playback 10 minutes of ads = 20 ads x 0.44 Ad exposure = 8.8
Online streaming 10+ minutes of ads = 20 ads x 1+ Ad exposure = 20+
VOD 10 minutes of ads = 20 ads x 1 Ad exposure = 20

But VOD has some catching up to do. Again looking at “Elementary” over the first three weeks of the season, CBS calculates more than 4 million households watched DVR-recorded episodes of the show. That’s 4x the number that watched via VOD.

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