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At the Upfronts the Economy and DVRs Move to the Forefront
Three out of the four large TV networks are releasing their fall schedules this week during the so called upfronts. A new study, however, shows the economy and increased DVR usage has made many advertisers skeptical to TV advertising.
LOS ANGELES, CA, May 21, 2009 /Television PR News/ -- Research Institute - When Malcolm Gladwell, author of The Tipping Point, Blink , and his latest, Outliers, presented at the Nielsen Consumer360 this month, he said that the recession offers a chance to rethink assumptions and bad habits accumulated over many years. To him, successful people are aware of their limitations and work harder to overcome them.
With upfronts in full swing, and the networks announcing their fall schedules, this is particularly true for advertisers and their agencies as they consider the strategies they'll need to use to address the growth of DVRs and related increases in time-shifting and fast-forwarding by TV viewers.
As a recently released study by the DVR Research Institute suggests - in line with Gladwell's thinking - the rise of DVRs does not suggest the demise of TV advertising. Quite the contrary. Instead - despite sometimes significant misconceptions among advertisers and agencies - some are developing creative approaches to maximize their use of TV advertising which continues to be one of the most impactful and cost effective buys around.
"Given the economy, advertising executives are under a lot of pressure to demonstrate value in every dollar they are spending," says Tom Schultz, Managing Director at the DVR Research Institute. "With 30 percent of TV households owning a DVR and fast-forwarding through commercials, ad executives are starting to get very nervous about advertising on TV, especially since those who can afford a DVR in this economy are the ones who are most likely to afford products advertised on TV in the first place."
Schultz bases his argument on study by the DVR Research Institute that was released this May and that builds on a survey of nearly 200 top U.S. advertising executives. The study, called Advertising in the DVR Age, shows that 90 percent of advertisers are considering DVRs when making decision on advertising (media, program selection, creative strategy etc.).
Says Schultz, "There were two big surprises in the response to our survey: the deep impact on all aspects of the TV advertising strategy that advertisers ascribe to DVRs and the large number of misconceptions and misunderstandings on DVRs. The widespread misunderstandings are maybe not so surprising if close to 80 percent of the respondents acknowledge that they do not have the information they need on DVRs".
As DVRs are becoming main stream, their impact on TV advertising increases . The response to the question: "To what extent will DVRs impact your advertising strategy over the coming three years?" is therefore - not surprisingly - very different from the answer to the question: "To what extent have DVRs impacted your advertising strategy over the past three years?" Nearly 40 percent of the respondents believe DVRs have had no impact over the past three years but less than 10 percent believe DVRs will have no impact on advertising in the near future. In fact, nearly 90 percent of the advertising executives think DVRs will change their advertising strategies. Going forward, a sizeable group (60% of the respondents) thinks that DVRs will even have a substantial impact on advertising strategy.
Most of the executives who intend to make changes to their advertising strategies have gone beyond contemplation. Nearly 70 percent of the respondents say that they have already developed action plans.
Advertising executives indicate that changes are being investigated in all aspects of advertising strategy: media mix, price/compensation basis, pod placement, creative aspects, airing frequency, etc. By far the most frequently cited change in advertising strategy indicates an intent to re-balance the media mix. Half of these responses suggest that, over the next three years, advertisers will explore the use of alternate media vehicles because of the expected increase in DVR use. Internet is the most frequently cited alternative.
Many respondents also mention a shift of TV advertising dollars away from programs that tend to be watched in time-shifted mode where ads are more likely to be fast-forwarded. About 70 percent of the respondents say that, over the next three years, they will advertise more during programs that are primarily watched live (news, live sports, etc.) and less during programs that tend to be recorded (e.g., primetime broadcast programs).
The open-ended response to the survey by the DVR Research Institute generally confirms the move to C-3 as the currency for the compensation of commercial time. Some responses point at the shortcomings of the C-3 ratings (average commercial rating during a program). A large number of responses however also indicate widespread misunderstanding of what advertisers pay for under C-3. Many advertisers did not seem to realize that fast-forwarded commercials are not counted towards the C-3 rating.
Decisions about the appropriate strategies to use are critical, of course. Costs are significant and misallocating spends can result in wasted money and lost opportunities. Devising the "right" combination of placement and creative strategy holds a significant upside for advertisers. Advertising in the DVR Age offers clarification on misconceptions and suggests opportunities for innovation in strategy that advertising executives need to know to thrive in an environment where consumers increasingly control the media.
CONTACT:
Linda Pophal, Strategic Communications, LLC, 715-723-2395, linda@stratcommunications.com
About Tom Schultz
tom.schultz@DVRresearch.com
Tom Schultz, managing director of the DVR Research Institute, has extensive experience in the field of marketing. He has previously worked at the Boston Consulting Group, Nike, Procter & Gamble and Netflix. Mr. Schultz was awarded an MBA from Kellogg School of Management. He is a recipient of the Richard M. Clewett Scholarship awarded for academic excellence in the field of marketing. While at Kellogg, he was also awarded the American Marketing Association George Hay Brown Scholarship.
About Adam Zarrin
adam.zarrin@DVRresearch.com
Adam Zarrin has extensive experience in market research and survey based tools. As a management consultant, Mr. Zarrin consulted for numerous Fortune 100 companies on their marketing strategy. He has previously held positions at amongst others the Boston Consulting Group and T-Mobile. Mr. Zarrin holds an M.Sc. in Business and Economics from the Stockholm School of Economics (SSE) and has also studied at Harvard University and WHU - Otto Beisheim School of Management (Germany).
About the DVR Research Institute
(www.DVRresearch.com)
The DVR Research Institute is the leading provider of market research and consulting services specific to the impact of Digital Video Recorders (DVRs) on advertising strategies. Advertising in the DVR Age is available on the DVR Research Institute's web site.
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