Comcast, Nielsen Unveil Plan to Get More Ad Money From Video On Demand

Placing current ads alongside older episodes could help Big TV recapture some of its eroding audience

More couch potatoes have turned to the TV-watching behavior known as “catch-up viewing.” Now, in an effort that could expand the ways advertisers pay for TV, Comcast wants to wring more cash from the process.

While using video-on-demand to try a show that has gotten buzz on Twitter or to check out a few recent missed episodes is growing in popularity, the added activity doesn’t result in much benefit for TV outlets. Advertisers haven’t seen value in supporting TV episodes beyond a few days after their initial air date.

Essentially, Comcast hopes to determine the viability of a new idea: What if advertisers could place the same commercials that accompany, say, this week’s airing of “NCIS” or “The Blacklist” alongside older episodes when they are streamed on-demand in a way that would please advertisers? It’s a maneuver that could help TV networks push back against ratings erosion caused by the DVR and assist cable companies in countering the availability of TV programming on video-streaming services like Hulu, Netflix and Amazon.

“This is directionally where we are heading,” said Matt Strauss, Comcast’s senior veep and general manager of video services, in an interview with Variety. Comcast expects more people to use on-demand viewing as a primary means of watching their favorite programs. That means a video distributor like Comcast must offer not only the last few weeks of a show through VOD, “but having every episode and continuing to make those episodes available faster on demand,” he said.

Comcast is partnering with Nielsen, and both are already working with NBCUniversal – the content conglomerate Comcast owns – and expect to work with others. CBS is among those on board, said David Poltrack, chief research officer of CBS Corp., in an interview.  Fox Networks Group, the 21st Century Fox unit that includes FX and Fox Broadcasting, declined to comment.  Rick Mandler, veep of new media sales for ABC, said the concept is still in “very early days”, and declined to comment further.

Still, the desired result is to offer a measurement – known as “ODCR” or “on demand commercial ratings” – of the broader audience making use of VOD in a way that is useful to the companies that sponsor TV programs. The idea, Poltrack said, is to get “what are the logistics to doing this on a regular basis? Can Nielsen measure it?” He added: “I would think by the end of the year or early in the first quarter, we’ll have the answers to those questions and then the next step is to get the business plan more in order.”

Poltrack believes other entities will follow Comcast in short order.  “I get the sense before we convene again for the next upfront,” he said, when the TV networks sell the bulk of their ad time for the next season, TV-network owners will seek to make the new on-demand idea part of their sales efforts.

If successful, the Comcast tests might help the TV networks regain some ground as their overall ratings continue to erode. As more viewers take up new habits spurred by technology that allows them to watch TV programs at times of their choosing, TV networks have had to contend with a loss of the traditional audience that might watch, for instance, “New Girl” on Fox every Tuesday at 9 p.m.

Since 2007, advertisers have paid only for viewers who watch the commercials that accompany their favorite program up to three days after the program first airs, a measure known in the industry as “C3.” But TV networks, seeing audiences watch shows several days beyond that window  thanks to DVRs, VOD, and online streaming, think they ought to be paid for more – as many as seven days (in recent weeks, some TV networks have begun releasing figures about audiences who watch episodes up to a month after their original airing).

The idea has met with resistance from several top media buyers, although both CBS and ABC have said in recent months that they have done deals with marketers that call for seven days’ worth of viewing, also known as “C7.” Several cable and broadcast networks have already begun to use VOD views as part of the ratings deals they make with advertisers.

The Comcast plan hopes to establish what the TV networks contend is already happening: Thanks to VOD and other technologies, more people than advertisers give them credit for are watching their programs.  According to Comcast, 43% of on-demand viewing of a current episode takes place within three days’ of the show’s original air date. Using ODCR and adding the exact same ad load that accompanied the current episode to prior episodes, Comcast estimates 60% of viewing would take place within that three-day window that is the industry standard.

Nielsen sees a VOD audience forming that advertisers would likely find desirable. “We think that particularly the younger demo and more upscale homes are really embracing VOD,” said Brian Fuhrer, senior veep of leadership at Nielsen. “As the content deals are being made between the networks and the cable companies and more content is becoming available, people really seem to be embracing this. We definitely see people are opting for VOD as opposed to the DVR. That’s the critical change we are seeing.”

The trials come as video-on-demand is growing in popularity among consumers. According to a recent Nielsen study, VOD is now available in 60% of U.S. TV households, up from just 37% five years ago. Comcast said 70% of its digital customers use video on demand. Of those, 50% use it for TV viewing. TV series – from broadcast, cable and premium networks – account for 50% of on-demand viewing, the company said.

VOD’s quiet appeal to the media companies? TV networks have managed to get cable distributors to block a viewer’s ability to fast forward past ads in exchange for VOD convenience – leaving media companies free to place fuller ad loads in VOD content than they have in other new venues like online streaming.

Comcast has ground to gain as well. In an era, when technology offers cable subscribers new ways to access video content, being able to show episodes of current-season TV series gives the video distributors a way to keep their customers from flirting with other services.

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