Mediaweek (and other trade magazines) says the upfront advertising sales negotiations are stalled over the question of of whether advertisers should pay for viewers who watch network programs, but are watching recorded on a DVR. The networks, led by ABC, say you gotta pay for "Live plus 7 days" -- which includes recorded viewing within a week of airing. The agencies are adamant on the other side. Here's an excerpt:
Media agencies are also standing in lock step—on the opposite side of the issue—on the eve of the market’s movement. Cautioned one media agency executive, “Woe be the agency that breaks rank.” Heading into the Memorial Day weekend, Fox sales president Jon Nesvig said, “There’s been a lot of talk but no one can do anything until the ratings currency issue is resolved. Plus a certain amount of sparring has to go on before any deals can be done.”
Another network sales exec, who also declined to be identified, added, “Everybody’s talking, but nobody’s listening. Live plus 7 is the big hurdle.”
This issue really has some historical resonance for me. In 1999 I was the first to write about ad-skipping, which widely ridiculed since there were no TiVos yet sold. And one of the very first blog posts in this blog was on the same issue.
At the time I said this was a silly argument. I was wrong. While it's only about words, it's crucial what the precendent is -- do you pay for recorded viewing?
The networks have had two arguments about why DVRs don't matter.
- Networks say recording viewing is far less than we've been led to believe. Nielsen and Arbitron data appear to back this up, mostly because with DVRs only a single TV in most DVR homes, there's still plenty of live viewing on the other TVs. Now you can argue this -- once multiroom solutions like Scientific Atlanta's multiroom DVR (rolled out in a few markets at Time Warner Cable) and Digeo Moxi (running at Adelphia) catch on, we'll see more recorded viewing. But in the end, this argument doesn't apply to the upfronts, since the question is should they pay for recorded viewing, not how much recorded viewing.
- Networks also say that ads in recorded viewing are just as effective as live, and they have data to show this as well. But depending on whose figures you use, 70% of 90% of ads are skipped in recorded viewing on DVRs. And if advertisers say they don't want to pay for this, they have a right to do so.
I think the advertisers are going to win here. And here's why.
They can negotiate on price, devaluing programs based on their estimates of recorded viewing.
They can move advertising to other places.
They can advertise on cable.
Or if they have to have that big broadcast network buy, they can agree to pay for recorded viewing, as the networks insist, and then next year when it gets worse, they can change their stance.
When it comes to TV ads, it's a buyers' market right now. And we're sticking by our prediction that 2007 is the first year that DVRs make a measurable impact on TV ad sales.
And it won't be an increase.
Technorati tags: Bernoff, TechPotential, Forrester, DVRs, TiVo, ad-skipping, advertising, upfront
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