[Josh] Will DVRs (like TiVo) hurt TV ads? Intuitively the answer has to be yes. But TV networks (NBC most recently) have published research that says, no, DVRs aren't a problem.
That was how the stage was set for my short speech and panel at the Association of National Advertisers TV Forum yesterday. On with me was CBS' David Poltrack, probably the top TV research guy in the country, and the leader of the group of network TV research heads that made its pronouncements last November that everything is fine with TV ads (see previous post).
But with the help of the ANA, we had the real answer to the question. Together, we surveyed 133 national advertisers who represented almost $20 billion in advertising dollars last year. Ad Age covered it -- it's also been covered broadly in many other media outlets. Some key points:
- 78% of advertisers feel that traditional television advertising has become less effective in the past two years.
- Almost 70% of advertisers think that DVRs and video-on-demand will reduce or destroy the effectiveness of traditional 30-second commercials.
- When DVRs spread to 30 million homes, close to 60% of advertisers say that they will spend less on conventional TV advertising; of those, 24% will cut their TV budgets by at least 25%.
- Eighty percent of advertisers will spend more of their advertising budget on Web advertising and 68% of advertisers will look to search engine marketing.
- Advertisers are also looking at alternatives to traditional TV advertising and will spend more of their advertising budgets on: branded entertainment within TV programs (61%); TV program sponsorships (55%); interactive advertising during TV programs (48%); online video ads (45%); and product placement (44%).
- Ninety-seven percent of advertisers agree that the TV industry will need new audience metrics — other than reach and frequency — to report commercial ratings, not just program ratings to effectively measure TV advertising.
Two other things happened at the conference that were pretty interesting. First, after David Poltrack spoke, we polled the audience (they had a response device) on whether DVRs were still a threat. (I said "I think this is a good time to use the audience response device." Poltrack said "I don't agree.") 63% said DVRs are a threat -- 24% said they weren't. So clearly they're not buying the networks' claim that there's nothing to worry about.
Second, when we asked the audience "what's the biggest threat to TV advertising?" only 17% said it was DVR ad-skipping. 48% said it was too much ad clutter. TV has created a cluttered environment full of identically-sized 30-second spots. Consumers resent it and try to avoid the ads. And advertisers wonder if it's worth it. It's time for change.
The message here is very clear. The bloom is off the rose for commercials. Advertisers aren't dumping TV -- but they're re-evaluating their headlong commitment to it.
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