$137.8B U.S. ad spend for top 200 advertisers
Other media agencies aren't likely to follow in GroupM's footsteps by striking broad agreements to use C7 in upfront deals this year, according to people familiar with the upfront market.
GroupM has entered into agreements with broadcasters including CBS, Fox and NBC to pay for ad time based on commercial ratings across seven days, a measure called C7 in the industry. The current standard, C3, only considers commercials seen within a three-day window.
While most agencies did C7 deals for select clients during last year's upfront, GroupM's agreements will apply to a breadth of clients across its portfolio of agencies, according to people familiar with the pacts, making it the biggest move yet into paying for seven-day viewing.
GroupM, WPP's powerful media-agency group, controls about 30% of the total dollars spent on network TV, with clients like Procter & Gamble, AT&T and Paramount Pictures. And RBC Capital Markets analyst David Bank said in a note that most other agencies will "likely have to move in lock-step at some point soon."
But its move isn't likely to generate a domino effect, at least not this year, some media buyers and others insist. Other agencies are still hesitant to strike broad-based agreements for C7 that would apply to a majority of their clients.
One insider at a major agency group said its agencies will not be making similar C7 agreements.
A buyer at an agency elsewhere said the agency cut some C7 deals as part of the upfront last year and will continue to evaluate all options for its clients, including C7. "There is not a one-size-fits-all solution in this marketplace," the buyer added.
For advertisers with a time-specific message, such as retailers promoting weekend sales or movie studios trying to pump up a new release's crucial opening weekend, ads seen after three days may be useless.
And some see C7 as the wrong emphasis. "C7 falls short of what the industry can do," said Sam Armando, senior VP, director of strategic intelligence at SMGx. Moving to C7 from C3 isn't a step forward in the same way that moving to commercial ratings from program ratings several years ago was, he said.
Instead of focusing on C7, the discussion needs to be around finding more precise ways to measure commercial and cross-platform viewership, Mr. Armando said.
And for cable networks, C7 provides a smaller boost than for broadcast and is not expected to be a meaningful part of upfront negotiations, industry executives said.
The upfront marketplace has been slow to move so far this summer, with little inventory actually being sold thus far. One industry executive said the C7 news could be partially to blame for the hold-up.
TV networks have been pushing to get paid for viewing that extends beyond the three-day window as viewers increasingly watch programming on a delayed basis through DVRs and on-demand. Networks, of course, want to count those eyeballs and argue that advertisers are essentially getting a free bump after day three.
But a pricing discount, which GroupM is believed to have received as part of its C7 agreements, could help win over more advertisers at some point.
Slightly lower ad rates keeps TV advertising "that much more cost competitive relative to alternatives" like web video, argued Todd Juenger, senior analyst at Bernstein Research, in a research note. "Over time, especially as VOD and other advertising-supported on-demand viewing is also credited in the currency rating, the lower cost may prove to be the most important impact of more inclusive ratings definitions."
Speaking at a conference on Tuesday, CBS' chief operating officer Joseph Ianniello said C7 "is now going to become the standard."
"There is significant viewership outside of the first three days and we think it's fair that we get paid for that," Mr. Ianniello said at the Bank of America Merrill Lynch Global Telecom & Media Conference. "So, I think, again you're going to see more and more of those types of deals."
"We are in the very, very, very early innings of that cycle," he added."