The great 'break ratings' conundrum

Seen these lines at gift shops? “Lovely to look at, nice to hold. But if you drop it, consider it sold.” With the arrival of Peoplemeter, it became possible, and then the norm, to publish television ratings on a very high level of granularity. From minutes, through half minutes, all the way down to single second intervals began to get reported.

And thus began a new debate between buyers and sellers of television. Should inventory be priced on the basis of what the show has rated? Or on the basis of what the commercial break rated? We all recognise it as the great “Break Ratings” conundrum.

 

Here is an imaginary example of a series of 30 second intervals of a television show just before and immediately following a two-minute commercial break.

Just before it goes into the commercial break, the show has delivered 5.3 TVR that drop immediately by a whole TVR and then level out and rise gently to 4.4 when the show resumes and starts clawing back the audience drop during the break.

A little math will reveal that the six, half-minute blocks covered by the show in the example above rate an average of 5.08 TVR, while the four half-minute blocks during the commercial break deliver an average of 4.4 TVR. In the two-minute commercial break, the show actually loses as much as 0.9 TVR.

Now, here’s the debate. The buyer would argue that what the broadcaster deserves to be paid for is the 4.4 TVR that prevailed during the break. The broadcaster would counter that his show actually rated 5.08 TVR and that is what he should be paid for. The argument never ends.

Here, though, is a somewhat different, though certainly not original, take on the situation.

Show or commercials are both forms of content. When presented with any content, viewers continually vote their preference with their staying or going. In the example above, it is clear that the advertising during the commercial break was a disincentive to stay and as much as a fifth of the audience that had been viewing the show walked during the break. Simply put, the show was better viewing than the commercials. The segment of the show that immediately followed the commercial break had to work hard to get the lost viewers back, but was unable to fully recoup the loss, managing to get back to 5.1 about a minute post-resumption, while it was at 5.2 leading into the break. In fact, the two-minute commercial break lost the show 0.8 TVR or 19 per cent of the audience it had built.

Anyone engaged with the buying or selling of television advertising inventory sees such situations all the time. It has to be said that there are noble exceptions to this rule when the ratings actually improve during the break. These are the commercials for which the broadcaster should actually be grateful, even as he has solid reason to be indignant about commercials that diminish them.

Given that fixed pricing is rapidly giving way to audience delivery based (CPRP/CPT in popular parlance) deals, it is time to bring in a penalty/bonus principle into pricing. Commercials that rate lower than the show just ahead of the break must pay a penalty for destroying the audience in direct proportion to the extent of the dent they cause. By the same token, commercials that rate higher than the show must be incentivised by a discount proportionate to the lift they deliver.

In our example above, the commercials in the break must pay a 19 per cent premium above the CPRP/CPT rate negotiated for the spots.

It is time to start pushing back, dear broadcasters. Hard, like we said before... If you drop it, consider it sold.

Paritosh Joshi is the CEO of STAR CJ Network and has been on the Board of the Indian Broadcasting Foundation for several years. Views expressed in this article are his own and do not reflect those of the STAR Group or the Indian Broadcasting Foundation.