The upfronts may have wrapped last week, but the discussion they highlighted, on the demand for measuring and monetizing television content on air and online, looks like it will continue for the forseeable future. So, now that the dust is beginning to clear (a little) what can we make of what's transpired and what's ahead?
In short, a lot of options, a lot of speculation, and nothing really conclusive. I want to examine this issue in depth in a couple of posts here on the blog today.
I would argue that this uncertainty is reflected in the revenue from this year's upfront. After all the haggling over, claims of a small victory were made when it was revealed that the nets brought in 3% more ad revenue than they did at last year's up front, excluding syndication. Yet, inflation was also 3%, according to the U.S. Bureau of Labor Statistics.
This year, by almost every account, there was less flash. Programming and segmentation are clearly still key, but there seems to have been much more discussion of how to quantify television audiences and their interaction with programming and advertising. With long-held norms being called into question, no one seems sure what metrics are truly meaningful any more, hence the lack of consistency in deals this year, some of which were based on traditional program ratings, others on commercial ratings, many with Live+ metrics of some kind factored in.
Many of the issues (more choice and niche markets on cable, VCR/DVR) and the technology that drive them are far from new. What is changing, slowly, is the number of people choosing to consume media on demand, the participatory platform of the Internet and, perhaps most significantly, our ability to measure those behaviors.
For media outlets, following those eyeballs is a matter of life and death. Perhaps none of this would have been such a big issue if live audiences, the greatest asset of the networks, weren't declining at an annualized rate of 10%, which only goes down to 5% attrition from the big four when Live +7 ratings are added to include people who record and watch the programs within a week of their air date via DVR.
Even with the reassurance of a Live+ audience, there was some question if program ratings were really the really the right thing to be looking at, since commercials could be skipped, especially with a DVR. Even though DVR penetration is somewhere between 10-20% at the moment, U.S. networks, for the first time, made advertising deals based ratings for commercials. The favorite emerged as "C3", live plus 3-day commercial ratings.
Ah, but are people actually watching the commercials, even if they are on screen? And what about networks whose audiences tend to channel surf as soon as a commercial comes on? Some of these networks, like MTV, wanted to stay with the old program ratings. And then another concept arose: engagement.
I'll look at the engagement hypothesis in more detail in a post coming up tonight.