How great does it feel when you are watching your favorite show and you can fast-forward through the commercials? If youh ave a TiVo or a DVR then you know exactly what I’m talking about. For the average TV watcher, the ability to tap a button and skip four and a half minutes of advertising is just about the greatest invention since the remote control. But, it’s not so great for advertisers, who have to watch helplessly as the efficiency of their advertising dollar decreases with each new DVR installed. The fact of the matter that DVRs such as TiVo or those that come with your digital cable or dish service are becoming more and more popular. Let’s look at some figures:
- According to an October 27, 2007 report by Nielson, DVR penetration has grown to 20.5% of households.
- A report released this month from ABI research says, “Almost four out of five TiVo customers and over 82 percent of service provider DVR customers said they skip all or most commercials.”
So if we put those two numbers together we get around 16% of households reporting that they skip “all or most” commercials. So the question now becomes, if advertisers are reaching 16% fewer consumers, are they paying 16% less for their ads? The answer: probably not. I bring this up because I think DVR proliferation is likely to continue in the years to come. When Nielson first began tracking DVR usage in January 2006, they reported DVR penetration at 8% of households. So it’s taken only about 20 months for DVR penetration to more than double. At this rate we could be looking at over one third of all households having DVRs by the end of 2009. This is fantastic news if you make DVRs, but disquieting news if you are continuing to pay the same amount (or even more) for your ad time.
Advertisers need to quickly realize that the “golden age” of TV advertising is coming to an end. I am not saying that TV isn’t still the dominant advertising format, but I think we are seeing evolutions in technology that are indicators of a coming shift. DVR proliferation will continue and that means fewer and fewer consumers will be seeing your really expensive spot during the first break of “Grey’s Anatomy.” In addition, the internet is becoming an increasingly popular source for entertainment, with nearly 60% of all internet users saying they watch online video, and new formats such as the webisode just now beginning to get off the ground.
I think it’s fair to say that we are headed for a world where the TV and the computer are no longer two separate devices, merely two functions of a single machine. With computer monitors looking more like televisions, and the interface of your Comcast digital cable looking more like an operating system, we are already moving towards that reality. Think about it, you can already get your TV, cable internet, and phone piped in over one wire…is my vision really that much of a stretch? If an advertiser hopes to remain ahead of the game, it is not enough for that advertiser to simply acknowledge the coming changes. Smart advertisers will begin to act on these changes, leaving those who refuse to utilize these new tools in the dust. Online video, social media, viral games, destination websites, even virtual worlds all present marketers and advertisers with ways to not only advertise to consumers, but to engage them. Advertisers need to move away from a theory of interruption and embrace a theory of facilitation in order to remain successful. Luckily for advertisers, the tools are already here and new ones are evolving all the time.
What remains clear is that companies and brands cannot afford to sit idle while the ROI of their TV ad dollars dwindles. An unwillingness to leave their comfort zone is not an acceptable reason for your marketing agency to refuse to add social media elements to your integrated marketing efforts. Once again, I am not claiming that these new online marketing services are replacing more traditional marketing formats, but they are absolutely a necessary element to an overall marketing strategy for any company that wants to engage their customers directly. Moving outside the box is the best way to see the world for what it is, and to those skeptics that are afraid to take a risk I say: you can’t surf on the back of a wave.