Summary
1) In the short term (1-3 years) this does not impact overall TV advertising spot pricing; however it will hasten the need for more accurate audience measurement. In addition, it is not 'another attempt to revive broadcast ad spend’.
2) Brands and companies still have a need to build awareness and provide ‘reasons-to-believe’ based on consumer-insight. And so, TV advertising will be essential. The challenge will be for the Creative and Media agencies to improve effectiveness.
3) In the UK – like the US – there is great affinity for DVR services. The data seems to reinforce the original article.
Analysis
To directly answer the questions posed and based on UK experience; in the short term (1-3 years) this does not impact overall TV advertising spot pricing; however it will hasten the need for more accurate audience measurement. I do not believe that this is ‘another attempt to revive broadcast ad spend’ – it is merely stating the facts of early adopters of DVRs. Separately, TV ad spend dwarfs online ad spend (indeed over 50% of online spend is due to search and of that c. 70% is due to Google).
Brands and companies still have a need to build awareness and provide ‘reasons-to-believe’ based on consumer-insight for consumers to use their products. The best way to achieve this in the short-to-medium term will continue to be traditional TV. The likes of Procter & Gamble, Mars, Microsoft, etc. will still rely on maximizing the effect of their national distribution in any country by using TV advertising to illustrate their brand/product benefits and then to help drive trial and eventual purchase.
The challenge to TV will be in aiming to gain the ‘immediacy of radio’ or the ‘impact’ of cinema or the ‘specificity’ of online. Clearly, this will fall onto the Creative Agencies to clearly address the appropriate consumer need and then for Media Agencies to obtain the best placement.
The initial statement of the article: “People with digital video recorders like TiVo never watch commercials, right?” focuses on two aspects - firstly, the viewer and secondly the technology of DVRs. Clearly, some TV viewers like to change channels during ad breaks or profess to not liking adverts or skip adverts on shows they have on their DVRs (or videos like in the past!). However, the popularity of short form entertainment and adverts illustrated by viewing statistics on YouTube seem to contradict this. Indeed, in the UK, if we look at cinemas – the data shows about 85% of the audience is seated in time for the adverts – even though the time of the movie is clearly stated, and so consumers can just turn up for the trailers or the movie (and so ’skip the ads’). And so, much hype – most of it unjustified - has been created around DVRs and their impact on ad breaks.
The implications are clearly for TV Creative Agencies to be as engaging as, for instance, cinema advertising executions are, and more importantly for accurate measurement systems. For instance, in the UK, we have BARB (Broadcasters’ Audience Research Board) which consists of a panel of a little over 5000 homes to measure the viewing attributes of a country of 25 million households. In addition, BARB relies on an outdated manual recording system where panel householders have to use a special remote control to signify who is in the room watching the TV at all times. All this leaves much room for error. Ironically, Brazil seems to have a vastly superior and all-encompassing measurement system – being more accurate in absolute terms.
In addition, TV media placement will become like print magazine placement where placement within a spot schedule is critical and the first and last ad slot will be more highly prized (as the inside front cover and back cover of a magazine).
In the UK – like the US – there is great affinity for DVR services. Indeed it is believed that BSkyB (of the News Corporation group) experiences underlying churn of less than 2% on customers with their Sky+ DVR box and service.
Again, in the UK, despite the success of BSkyB which has over 2m households with its Sky+ (DVR satellite service) – there has been no evidence of customers ‘fast-forwarding through adverts. Indeed, the BSkyB, DVR is changing the TV viewing habits – with, time-shifting accounts for an average of 12.2% of total viewing (across all channels). In addition, time-shifting accounts for 22% of all viewing of programmes originally scheduled between 9pm and 10pm and 17% of all viewing of programmes scheduled between 10pm and 11pm. This seems to reinforce the statement in the original article: “People are buying DVRs not because they want to time-shift all of their viewing and skip all commercials, but because they want to time-shift some of their viewing.”
