Anyone with a DVR knows the joy of skipping through the commercials when you watch TV shows you've recorded. But it's a real challenge to marketers who want to use TV to get their message out quickly to the masses, and that challenge is getting even tougher. Dish TV just announced that they have a new DVR that can totally eliminate ads from subscribers' TV viewing.
Unlike regular DVRs, the new Hopper, as it's called, will totally eliminate ads when you play a show back. Most DVRs now let you fast-forward through ads, but you still see the images on the screen and ad impressions still do register, even if not fully. But the Hopper actually skips ads altogether, unless you opt top see them.
The Dish TV announcement comes at a bad time for the networks, as they are about to unveil their Fall schedules to advertisers during the annual Upfront ritual. That's the dance between the nets and advertisers, where the networks try to shake down advertisers and their agencies for ever-increasing ad rates, even in the face of declining audiences. And at the risk of missing out on the next big hit, the advertisers usually give in and pay the higher ad rates.
The household penetration of DVRs is significant and will continue to grow, which means it will get harder for the nets to deliver the eyeballs their advertisers are paying for. The Hopper adds another challenging wrinkle.
The networks are responding by offering ad packages that include product placement, enabling subtle and not-so-subtle ad messages to be embedded in the program content. Shows like "30 Rock" openly poke fun at the product placement concept, but they've cleverly made it into an added revenue stream for the network. And it may seem to fit into some of the reality shows like "The Biggest Loser" or "The Apprentice," although people aren't stupid (well... maybe they are) enough to totally accept placement endorsements as genuine. But product placement simply can't fit everywhere, and it often has limitations on how deeply it can go into hardcore product sell. And there's got to be a limit as to how much product placement viewers will tolerate.
So what's an advertiser to do? Maybe create ads that are more fun or compelling to watch so we don't zap them or get up to hit the bathroom or refrigerator. It can be done -- look at the hoopla surrounding the ads themselves at SuperBowl. Ads that tell a story or get viewers involved have also worked, like the BMW ads that were mini-stories by hot directors, which debuted online some in 2001. Or the ads for Folgers (or was it Maxwell House?) that showed a budding relationship or flirtation between two neighbors.
If something about TV commercials doesn't change, they will continue to be skipped, zapped and ignored in growing numbers. And the more than $16 billion in ad revenues that the four major networks alone get each year may start to dwindle, especially as content providers for digital media like our iPads and smartphones are just itching to get a bigger piece of the ad pie.
Or perhaps nothing will change. Didn't we have similar discussions way back when that ancient piece of technology -- the VCR -- took hold and viewers suddenly had the power to control what and when we watched TV?
Stay tuned ...
Update May 14, 2012:
Was it Newton or Einstein who said: For every action, there's an opposite and equal reaction? This from today's Adweek...
"Comcast is seeking a patent for new technology that will force subscribers who fast-forward through DVR-recorded shows to view advertising anyway, according to FierceCable, an online publication for cable network execs.
The cable operator is doing the exact opposite of what Dish announced last week. Dish's new Ad Hop technology allows viewers to totally skip ads during DVR playback of prime-time broadcast programming—an idea that, for obvious reasons, is unlikely to please advertisers.
Comcast subscribers who hit fast-forward on their remotes would receive an alternate ad displayed in the center of their TV screens, which could be partially transparent, FierceCable reported, citing a U.S. patent application for the technology. The patent application also reportedly details a strategy for targeting alternative ads to skip-happy subscribers based on demographics and viewing habits.
Some have pointed out that Dish's Ad Hop feature is limited in that it only allows viewers to skip ads during prime-time programming from four large networks—ABC, NBC, CBS and Fox.
However, with the average cost for a 30-second spot climbing again—now at $111,500, according to TVB—the ad industry still will have to figure out how to count Dish's 14 million subscribers during CPM negotiations during the upfront.
MSNBC noted that DVR company TiVo tried something similar to Ad Hop in 1999, letting viewers skip ads, but pulled the plug on the plan after networks expressed outrage."