May 23, 2006 4:00 AM PDT

TV advertising's DVR challenge

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"What's driving this (demand for better metrics) is the accountability available online. We are being held more accountable by our own managers, CEOs who are recognizing trends mostly from the online space. Online metrics are a lot more sophisticated. (The CEOs) are asking: How come I can't get that from television?" said Barbara Bacci Mirque, executive vice president at the ANA.

Nielsen, the TV ratings company, acknowledges that it does not yet include enough DVR-equipped households to mimic the national landscape. According to Laura James, a spokeswoman for the company, 5.7 percent of Nielsen homes have DVRs. By the end of the year, the company hopes to raise that figure to 12 percent, the percentage that Nielsen feels reflects the number of DVRs in U.S. households.

The DVR mainline
Another potential source of DVR-viewing statistics is the DVR service TiVo, which can access second-by-second raw data on its subscribers' viewing habits. The company, however, has not yet begun releasing all that data to the public, said Davina Kent, vice president of national advertising sales at TiVo.

Its "Total TiVo Rating" is calculated by averaging the total number of viewers per second for a given program. The percentage is taken from a random sampling of 20,000 TiVo households. For example, TiVo released ratings to CNET News.com showing that 14.3 percent of all prime-time television from the week of April 17 through April 23 was watched as "playback viewing," not live.

"Advertisers love sight, sound and motion. (But) as DVR penetration and new media is getting into more households, we have to ask: Where does TV fit into the media?"
--Barbara Bacci Mirque, executive VP, Association of National Advertisers

TiVo can also use its second-by-second data to determine viewership of commercials among TiVo subscribers. These are the type of metrics, Mirque believes, advertisers are looking for.

"We need more transparency in the numbers. Right now, Nielsen does the research, they give that data to the networks. The numbers are based on program ratings. That is a proxy. I don't think it's relevant anymore. In this age of technology, advertisers are asking: Can we get better data? Can we get minute-by-minute? There should be better metrics," said Mirque.

While advertisers may want better metrics for measuring viewers, consumers are looking for better content.

"Our learnings show that if content is entertaining, relevant, and the information has a special offer, users will want that content. What they will shy away from is a typical 30-second spot," TiVo's Kent said.

TiVo is using this discovery to proactively deal with commercial skipping. In early May, it launched TiVo Product Watch, a feature that allows subscribers to create searches that will place commercial content in their DVR inbox. Instead of the typical 30-second spot, the content consists of infomercial-like programs ranging in duration from 1 to 60 minutes. Many are in the form of how-to segments that feature product placements.

Interactive ads
There is also a tag feature that TiVo has implemented to take interested viewers to more, advertiser-related content, while their programming remains on pause. Recently, TiVo expanded this feature to make the tag content interactive. The first brand to launch with this feature is Lexus. Its tagged ad brings TiVo viewers who click on the tag icon during the commercial to a build-a-car feature.

While this solution is great for advertisers and TiVo, it does nothing to help the networks, who are desperate to keep their advertising revenue. Networks can, however, learn from TiVo's research.

Another report, from JupiterResearch, which gets its data from market research company Ipsos, recently confirmed that the majority of DVR owners do use the device to skip commercials.

According to the report, $74 billion will be spent on television advertising in 2006 in an effort to reach 112 million households in the U.S. Of these households, 23 million, or 20 percent, will use DVRs to watch TV in 2006. If all of these DVR households were to practice commercial skipping every single time they watched television, it would represent $15 billion in wasted advertising dollars.

While some market observers might dispute that figure, it does convincingly point to trouble for networks, which stand to lose millions if they do not come up with a solution soon.

"Advertisers love sight, sound and motion," said Mirque, "(But) as DVR penetration and new media is getting into more households, we have to ask: Where does TV fit into the media?"

But JupiterResearch's Chanko sees options, saying that DVR ownership does not necessarily portend the complete breakdown of the ad model.

"It's just not true," said Chanko. "People used to get up and go to the bathroom, get a snack during commercials. Now, though they may be watched in fast-forward, people are actually watching frames of commercial content. Networks and advertisers should start taking advantage of the fact that while material is fast-forwarded, consumers can perceive individual frames."

Chanko suggests that advertisers use the displayed key-frames creatively to convey their brand logo, or release coupons that may get viewers to stay tuned.

When there were only three networks and practically everyone was watching "I Love Lucy," said Mirque, the old joke was that water pressure in America dropped drastically during the commercial breaks. The DVR is not really anything new to advertising, she said, alluding to those breaks. The technology has just made commercial skipping easier.

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23 comments

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We already get bombarded...
Did it not occur to them that the general public gets bombarded with advertising and we are getting tired of it? Why do you think satellite radio is so popular? Or advertising filtering software, popup blockers, and registration bypass sites?

I personally get tired of seeing the same commercial 5 times during one show, seeing commercials for feminine hygeine products, toys, products that don't work, and those "work at home" commercials. I have had enough. Now they are going to start using contests to get people to watch?

If you want people to watch the ads, make sure they fit the target audience for the current show, and that they don't get overburdened. One of the shows I do watch is in a one hour time slot, but last friday, there were 22 minutes of commercials. So there was only 38 minutes of show, minus the 3 minutes for the opening and closing credits, that was only 35 minutes of actual programming.

Maybe the advertisers need to talk to the general public first. Find out how many people are just annoyed to no end. Maybe survey people to find out what really works now, rather than concoct ways to force us to watch them.
Posted by FusedAndCondazed (26 comments )
Reply Link Flag
You're Kidding Right?
Who cares what we want.
The only reason why we get tv shows is because of the commercials. That's why HBO, Cinemax, and the likes cost extra. Anything else is supported or paid for by the commercials. As long as the commercials are not offensive, advertisers don't care if you're happy or not with the amount during the shows. The networks buy the shows, the advertisers pay the networks, viewers pay the cable/satellite providers, and you get the shows.

As a matter of fact, 30mns shows are no more than 21mns. The rest is commercials. So, consider yourself lucky if you get anything over 45mns of a one hour show.

I agree with you that there are a lot of commercials on tv. But, when you consider that shows like "Lost" and whatever else is popular out there, is given away, or is available for free. Then someone/somehow has to get paid for it.

And Satellite Radio is not the answer. The commercials are coming. You'll be paying for the abilitity to find all your favorite satellite radio stations anywhere in the country rather than commercial-free radio. XM and Sirius are losing millions, and the only way for them to be profitable is to start putting in more commercials.
Posted by Dead Soulman (245 comments )
Link Flag
annoying is irrelevant
<i>Did it not occur to them that the general public gets bombarded with advertising and we are getting tired of it?</i>


Uhm, what reason do you have to think they care? Marketing people get paid to get in your face. If they don't get in your face, they don't get paid. Where do you think their motivation is, to try not to annoy you, or to get paid? I think they will continue trying to make up new ways to force us to watch stuff (did you hear about the recent patent that could forbid you from changing channels if a commercial is on??) so that they will continue getting paid. No, I don't think they will find a different line of work that is less annoying to we the general public either.
Posted by amigabill (93 comments )
Link Flag
blargin!!
all to true ...i pay 200$ a month for all you can eat with 1 mg a sec internet . i never watch comercials cuz all my crap is recorded or on demand . screw your crappy contest's ...@ holes!!
Posted by jwmc1971 (18 comments )
Link Flag
DVR's and ADs
I pay for the DVR so i don't have to watch all the stupid commercials on TV. I know the midless masses mind think they have a shot at winning some money, but I think after a 10 hour work day I am still gonna skip the commercials. All the mouth breathers out there who think they "might" win, yea they will watch some of your ads targeted at the uneducated and easily influencable people with that extra disposable income to buy your beer, computer, etc... I know ads pay for TV but so do I, and as cable gets more and more expensive and ads start taking more time out of the shows I actually want to watch I am gonna skip them without a second thought. Mark Burnett does all the stupid MTV Real World shows. What a broad demographic that must have.
Posted by thedaddyfatsax (1 comment )
Reply Link Flag
It doesn't matter
TV advertising doesn't matter for 2 reasons:
1. People have been skipping commercials forever - long before the DVR, the VCR or even the remote. And there is no way to force people to watch commercials even if the content must be displayed by the TV. The article noted this, haven't advertisers pondered this? Forcing the display of commercials with technology (such as Philips diabling chip) is just going to **** off consumers.
2. Targeted personal advertising via the RFID chips that will be embedded in everything we buy/wear/own is coming. It's coming sooner than you think, and it will antiquate mass blanketing of generic commercial content. Minority Report style advertising is the wave of the future.
Posted by skeptik (590 comments )
Reply Link Flag
oversaturated reality
I went without tv for five months and when it came time to get cable setup again the first thought through my mind wasn't an excited "golly, I gotta get me that brand of hand soap. It's amazing!" it was a pessimistic "boy howdy am I glad I updated my advertising subscription."

The viewers pay to watch advertising. The advertisers pay to get ads shown. The content providers get paid from both ends.

I was away from tv long enough for all the commercials I used to see to become outdated. The drop in displayed intelligence between commercials at re-subscription time and five months previous was incredible. TV and radio don't rot your brain, marketing agencies do.

Broadcasters would have you think that advertising is in place to support the tv shows when the sad truth is the opposite; shows support the advertising. The real content is the ad, the show it's wrapped isn't anything more than flashy packaging.

I've seen absolute crap targeting the undereducated masses stay on the air for seasons while good writing about a rich and intelligent story line gets tossed off the air after five episodes.

I wake up to the radio's stream of ads. I get ready for work and check the weather while going out the door and yet more ads. I check my email online and I get browser ads, two pop-ups and 70% spam in my inbox. Fine, radio has always been supported by ads, the weather is on tv and ads are just apart of internet life now.

It doesn't stop there though. Now I'm out of the house. public transit and caps are plastered with ads inside and out (even the hubcaps). I'll walk to work instead and for the most part it's quiet sidewalks and park paths until the downtown core when I'm assaulted by two billboards on every building and a whole square full of shinny new giant video screens playing nothing but ads.

Not an hour into my day and I've already found six new products I won't buy because of advertising. I finally get to work and start my day when my cell phone rings with either a telemarketer or txt spam.

Advertising companies are barely above lawyers in the list of businesses most likely to attract soul sucking leeches.

The more good tv shows that get sold on dvd, the less I'll be needing my advertising subscription.
Posted by jabbotts (492 comments )
Reply Link Flag
I've converted all my friends to DVR, it's the only way to watch
TV. There are just way too many ads to watch TV without it. Add to it, that people spend at least $50 a month on cable and then they expect you to watch the ads.
Posted by bobby_brady (765 comments )
Reply Link Flag
Too much thinking about TV - try OFF
If we want to prove that ads are useless, painful, not well received, etc. just turn off the TV, including DVRs. Like many people, I have my favorite shows too, but if I never watched another episode I would live just as long and be just as happy. Don't be a Lemming, turn it OFF.

<a class="jive-link-external" href="http://en.wikipedia.org/wiki/Lemming" target="_newWindow">http://en.wikipedia.org/wiki/Lemming</a>
Posted by Im-Not-TED (21 comments )
Reply Link Flag
The way it goes.
If the products doesn't sell, the commerical doesn't get made,
the company either goes out of the biz or shrinks, then the ads
disappear.

If the ratings disappear from the sch. broadcast, and a Nielsen
box doesn't notch it up, the show then disappears.

So the networks have products buy time during the show to
keep it floating. But what if nobody is either watching the show
nor watching the commericals and buying the product?

I DVR, and I haven't seen a commerical in about 15 years, since I
started using a VCR with a remote. I don't give a damn about
their products, and I don't care about the business end of TV.
I'm not supposed to. Channels I watch, like Boomerang, or MTV
Hits, they don't have commericals at all.

Tech has changed the way Joe Blow is watching TV. He doesn't
want commericals anymore. Companies need to realize that
after generations of bombarding us with ads, we're immune to
their disease. We buy what we want, after either seeing it on the
Net or walking into a store and just seeing the product. We buy
TV on DVD or download it. They can't understand we exist.

Congress and the FCC told them to offer ala carte TV for the
cable and sat companies. It might be the way to go. Pay for a
handful of channels you want, commerical free. Maybe max out
around $50 a month in $5 channels, and be happy. Frankly, I
don't need 400+ channels like I have now. I seem to just watch
lots of sorry movies on HBO, Sho, and Max.
Posted by fakespam (239 comments )
Reply Link Flag
IT'S ONLY T.V. PEOPLE
Why not try turning off the tube, and getting your fat ***** off the couch, America? There is only one time of the day that I watch t.v. and that is when I am in the morning running on the treadmill or sweating my ass off on the elliptical.
Posted by talus7 (15 comments )
Reply Link Flag
Thats right! Lets move out from behind the TV!!
Excellent first step talus7! Now all you need to do is replace your car with a bike and you can rid yourself of TV altogether, loose weight, and fight global climate change.
Posted by Fancypantscz (1 comment )
Link Flag
Simple Answer
The simple solution would be to make the ads less intrusive and less irritating. The sooner the ad industry stops thinking in terms of the "16-24 demographic" and thinks in terms of "intelligent" and "stupid" the sooner we will stop skipping ads.

boggart blog
<a class="jive-link-external" href="http://greenteeth.blog.co.uk/main" target="_newWindow">http://greenteeth.blog.co.uk/main</a>
Posted by boggart (4 comments )
Reply Link Flag
But Tivo doesn't have 30 second skip, Media Center does though
Tivo caved into big media's pressure not to provide official 30 second skip. Media Center has that beautiful feature. There is nothing better than knowing how much time is saved by blowing through the commercials.
Posted by bobby_brady (765 comments )
Reply Link Flag
Tivo does have skip
I don't know or care if it's "official" or not, it's there. I'm too forgetful to use it very often, I just got the thing and am even still confused about some of the commercials about "tonight's" news stories or other shows coming next or in the next few days that I've already seen, until I realize I'm watching something from a while ago.

But I didn't get it to skip commercials, I got it because I've been working 12 hour days for the past few weeks and haven't been home for the few shows I like these days. I had no idea what Hanso or whatever it's called had anythign to do with the show without that news story telling me so, as I haven't seen the show very often this season and didn't see it at all last season, so I'm totally clueless at this point.
Posted by amigabill (93 comments )
Link Flag
$20 a month and TIVO wussied out to Advertising
It's totally ridiculous... Pay Comcast... Pay Tivo... and they both remove the 30 second skip button. Yes, I know it's secretly there, but that's not the point, it's the fact that they had to hide it at all. Talk about bending over for Hollywood.

I mean... who's paying for the TIVO SERVICE? Is it the Ad executes? NO? Oh, that right it's their customers. There loyal TIVO customers, that they are constantly screwing over with stupid crap like, downloadable AD's that eat-up hard drive. space.
Posted by c.Lake (42 comments )
Link Flag
Copy the Japanese
Instead of worry about people avoiding the commercials, let's study WHY people avoid the commercials. Being an American drama viewer, I really dislike the CMs because they're generally boring... Most of them are portraits of dumb men, people working at department stores, testimonials, an so forth. Simply put, they're just a bunch of ordinary people in these CMs. People don't want to watch ordinary people.

In Japan, they have a really great system. Most of the CMs feature Japanese idols - both males and females. The great thing about the geinokai (Japanese entertainment industry) there is that even the biggest of idols and other artists don't get paid that much (the talent agency/artist system is much different than that in the US.) As a result, using them in CMs are quite inexpensive (and the idols can do LOTS and LOTS of CMs.)

Another thing Japan does right is that their CMs are only 15 seconds long. A 15-second Japanese ad does a lot more than most 30-second ads in the US: they're enjoyable to watch, they go right to the point, and they feature famous celebrities that keeps the viewer locked in for the 15-seconds. The more time you allow, the less the focus.

In all, there's just as huge of an attraction to the CMs as the shows themselves. As a matter of fact, Japanese CMs are quite collectible. You can download any CM via P2P or direct downloads. At times, the CMs are downloadable in packages of 100 or more CMs. A fan of Ueto Aya or Itoh Misaki, for example, would collect every single CM they appeared in. They'll watch these CMs dozens of times. And at times, they'll buy whatever products and services these idols endorse...

...which comes down to the most important thing about CMs: the Japanese spend a LOT of money on goods and services - much more than in the US. The Japanese are very persuasive when it comes to marketing. They appear to have a very short attention span, so their tastes can basically change on the fly. So the CMs have a lot of power and influence in Japan's economy.

So rather than putting on these stupid contests and such, just make the commercials more enjoyable to watch. Like the Japanese geinokai, there needs to be more convergance between Hollywood and the commercial industry.
Posted by groink_hi (380 comments )
Reply Link Flag
Great post, thanks
Your comments were relavent, informative, factual, and provides an alternative to the method of providing commercials. Great post.
Posted by Seaspray0 (9714 comments )
Link Flag
Who cares?
Current television programming is so useless that I don't even care. I haven't found much worth my time for years. I average at most two hours of television a week. The networks could run 20 minutes of commercials in a half hour show for all I care.
Posted by herkamur (115 comments )
Reply Link Flag
Ads
Maybe they should just focus on making the ads interesting enough to watch.
Posted by skobryan (4 comments )
Reply Link Flag
Give up Network Programming and commercials
and head over to HBO, ShowTime and Cinemax for their original commercial free programming like Deadwood, Carnival, Weeds, Big Love and much more. Or try IFC and Sundance for some great independant story - even if it's crap, it's still commercial free. I for one like to pay the extra money so I get my full hour or half hour of original programming that is far more original, compelling, dramatic and better acted then anything network television has to offer me - save for one or two guilty pleasures like LOST I can fast forward my Tivo through. I swear the older I get the more I think network television is crap and the movie industry isn't far behind. Who's bright idea was it to remake Possiedon? If you give up network television for some of these original programs for a while you'll find that you'll never want to go back. I just wish the Sci-Fi and Comedy Central channels were commercial free - I'd pay extra for that.
Posted by mbcfdude (4 comments )
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Posted by Deals231 (4 comments )
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