Broadband Benefits From TV Ad Dollars

It’s only a mere $9 billion. Based on various news reports, that’s the roughly what advertisers will spend on broadcast TV in the upcoming season beginning this fall, with no increase over the current season.

For years—about a half-century at least—they’ve been spending that money knowing only how many and what type of viewers are watching the shows around their commercials. The premise that they are paying for this precise number of eyeballs has grown increasingly tenuous with the evolution of technologies of avoidance, from VCRs and remote controls to DVRs and Web-based viewing, allowing viewers to skip commercials.

That’s now changing, radically, with significant implications for broadband video distribution.


For the first time as of May 31, TV and ad executives knew how many viewers were watching commercials. Nielsen Media Research, which holds the monopoly on ratings data, expanded its reporting to note average commercial-minute, rather than program-minute, ratings.

Nielsen took a peek at this before in trials beginning in 2005, finding that primetime network shows lose around 10 percent of viewers during commercial breaks, cable shows about 6 percent, and some younger-skewing networks, like MTV, losing up to 20 percent.

Many executives are saying the new ratings data, combined with the continued migration of viewing to online and time-shifted platforms, heralds their industry’s most significant sea change of the past 50 years.

This shift comes at a critical time for advertisers and networks. Each year in May at the annual upfront ritual, TV networks line up to entice ad buyers with previews of new shows, and arm themselves with Nielsen ratings data they slice any which way to demonstrate the appeal of their programming. Up until last year, they had even been able to persuade ad executives to pay more per viewer, on the premise that broadcast TV is the last mass medium.

No longer.

Not only have network TV ratings and ad sales been flat, but advertisers are showing an increasing inclination to follow eyeballs to other venues, especially the Web, prompting a flurry of strategies and counter-strategies.

DVRs, a primary means for cable and satellite operators to grow revenues, have been marketed heavily, and are having the most significant impact on TV’s shaky business model.

Almost one in five U.S. households had DVRs at the end of last year, a figure expected to rise to 30 percent by the end of 2007 and as high as 50 percent by 2010, according to Forrester Research.


Nielsen will be adding audience measurement categories, including one that will tally viewers who watch a program up to a week later. Not that that’s any good for an advertiser with a time-sensitive message.

Research by the Syndicated Network Television Association shows that only 62 percent of 18- to 49-year-olds who watch DVR-recorded programs do so on the same day those air. How many of those watch the commercials will now be revealed—and with DVR ad-skipping, that’s bound to be low.

Broadband-only shows, meanwhile, have been getting boosts from TV competitors.

Time Warner’s AOL, for example, in April unleashed its own upfront programming schedule—a slate of five new shows, from “iLand,” allowing contestants to live on and someday own a tropical island, to a second season of its popular “Gold Rush” game show, deliberately targeting TV ad dollars.

AOL executives are emphasizing that they can deliver an audience reach that’s the equivalent of broadcast, but with the kind of interactivity and tailored targeting unmatched by regular TV.

Forrester researchers estimate that broadcasters are already charging a premium of 20 percent more for ads airing on Web-based shows as opposed to those only on broadcast, a trend that should accelerate.

Networks, of course, are doing their damnedest to take the “regular” out of TV, trying a number of creative approaches to integrate advertising in a less obtrusive way, and these go far beyond simple product placement.

First, every major broadcast show now has a significant online component—or several. In addition, many ads are now coming in shorter and shorter segments to allow for content “wraps,” in which ads air interspersed with programming. Finally, branded content platforms, in which a particular brand provides a framework for a show or segment, have become commonplace. (You can see a half dozen of these on ESPN, for example.)

Plus the networks have aggressively organized their online offerings to integrate ad sales more effectively with traditional on-air spots.


CBS, for example, has lumped its online extensions into a new Interactive Audience Network. Fox is touting its MySpace platform for ad integration (which I’m certain would thrill MySpace users). NBC has even talked about launching a real Bonfire magazine based on the fictional one that’s the focus of its on-air drama, “Lipstick Jungle,” to which it has dedicated space on and iVillage.

The fledgling CW Network, meanwhile, has taken the most radical step, airing a full 30-minute “CW Now” entertainment “news” show sans ads, instead wrapping all kinds of commercials in content clothing.

How will viewers react to the ad-saturation of programs they watch? How adept will they become at stripping ads from their viewing? How much will advertisers reject traditional media platforms and move to more unconventional approaches?

We’re about to see.