Ad spots in the DVR era

The networks are happy because recently completed upfront ad sales for the fall season reversed a downward trend that began two years ago. How did the
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The networks are happy because recently completed upfront ad sales for the fall season reversed a downward trend that began two years ago. How did the networks reverse this trend? They came up with tactics to help ensure they deliver the viewers promised to advertisers. That's fine for the networks, but what about the local broadcaster?

Today, broadcasters battle not only competing forms of media distribution for advertising dollars but also clever consumers who can apply inexpensive home technology for time shifting and time compression. At the extreme, savvy viewers with a DVR as inexpensive as $10 per month can reduce three hours of prime-time content into just two hours of viewing. All they need to do is fast-forward through the ads and promos.

Crunching the numbers

The ratings whizzes at Nielsen Media Research recently indicated that just over 17 percent of homes have DVR capability. DVRs are now so significant that Nielsen — which has provided TV audience measurement since 1950 — recently added a “live plus” stat to record viewers who don't watch programs when aired.

In a recent study, Forrester Research found that 92 percent of DVR users fast-forward through commercials while viewing DVR content. That means virtually all of the television households with a DVR are simply blowing right by an advertiser's message. Forrester went on to project that DVRs would penetrate 41 percent of households by 2009.

If anything, that projection could be on the low side. The Los Angeles and Dallas-Fort Worth markets are already in excess of 25 percent penetration.

In addition, cable providers have become adept at finding ways to balloon consumers' monthly bill. They have been increasingly successful with their “puppy dog” sales approach to DVR services: “Take this puppy dog home over the weekend, and if you decide you don't want him, just bring him back on Monday.”

In any event, there are rapidly growing numbers of eyeballs using the fast-forward button on the remote instead of viewing the brief message that a sponsor paid tens or even hundreds of thousands of dollars for.

Live, local programming

The DVR era has motivated commercial creativity by the networks. Product placement, long used as a revenue-generating vehicle in Hollywood filmmaking, is now being used more frequently within TV program content.

Commercial messaging is being woven into scripts. Live commercials are being aired. For example, during a recent broadcast of “The Tonight Show with Jay Leno,” a skit discussed mens' inability to ask for directions. The cure was a Garmin product, and the first commercial at the break was a Garmin ad.

But where does that leave the local station? How do local spots find a way to be viewed in the DVR era?

One answer, of course, is live, local programming. Content such as local news and sports share a unique common trait: the time value of the delivery of the content. No DVRs here.

News has long been a major ad revenue source for local stations. In recent years, the mainstay of free-to-air local sports has been slowly nibbled at by cable as more of a given team's schedule moves exclusively to cable airing.

It's up to you!

The continuing opportunity for local avails beyond live news and sports will increasingly be threatened. The broadcast networks and television syndicates live in a world where content is king, and at some level, it can assist the needs of one of their primary content distribution partners.

The most important factor in protecting the local avail revenue stream is the local broadcaster itself. Whether by increasing Web site tie-ins, creating unique real-time value program content or finding innovative ways to use excess DTV bandwidth, it is all in the hands of the local broadcaster to recognize the issue and strategically plan for it. Who's looking out for the local station? If you work for one, it had better be you.

Anthony R. Gargano is a consultant and former industry senior executive.

Send questions and comments to:anthony.gargano@penton.com