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Next stop: on-demand ads

Nov 11, 2002  •  Post A Comment

Network executives have been sounding the alarm about the advent of the commercial-skipping personal video recorder, warning that mass acceptance of TiVo and Replay could mean the death of the 30-second spot, which in turn could mean the end of ad-supported television.
Executives have all but said it’s the patriotic duty of American viewers not to skip commercials, even if they can, so Hollywood can continue to afford to make their favorite programs.
But there may be other ways. Consider that once upon a time in TV land, commercials were live and sometimes ran for two minutes. They evolved into 60-second spots, which today have been supplanted by the 30-second spot and even the 15-second ones.
The next evolution, in a TiVo world, could be a return to long-form advertising, but this time on demand.
In a TiVo world, “ad-supported television is not going to go away,” said Tim Hanlon, VP and director, emerging contacts, Starcom MediaVest Group, but it’s “going to go through some fits and starts and changes.”
Executives who rail against the PVR don’t own one, said Mitch Oscar, senior VP and director, media futures, Universal McCann. “They don’t understand the functionality of one, and if they did, I think they’d learn to … [adopt the attitude of] let’s work it for our benefit.”
Both Mr. Oscar and Mr. Hanlon were participants in “Don’t Touch That Remote: Advertising Opportunities and Pitfalls in an On-Demand World,” a panel at the recent Kagan VOD Summit held in Manhattan.
Other panel participants brought examples of advertising-on-demand and visions of a world, still some years away, in which each TV viewer in effect will be his or her own TV station.
“It’s commercials for me, and it’s content for me,” said James Kelso, VP and GM, broadband systems, SeaChange International, of the TV world he sees coming. “We firmly believe in the evolution of personal television, and we see video-on-demand as essentially being a personal television station, so it’s all about me all day long.”
People who own a PVR may be evangelical about its use, and they may even treasure its commercial-skipping abilities, but as Mr. Kelso put it, “At some point, the subscriber says, `Get away from my wallet. You can’t have any more.”’
So even in the new world of personal television, “advertising is absolutely vital to the future of video-on-demand,” Mr. Kelso said. What pays for TV programming “is, always has been and always will be advertising.”
Panelist Seth Haberman, founder and president of Visible World, is ready to offer “customized television advertising” right now. “The concept behind it is very similar to the concept behind the evolution of a lot of addressable media, which is that the moment you can start to segregate your deliveries and visualize the audience, who gets what message, you start to think very quickly about how you customize the messages.”
Mr. Haberman said ads for video-on-demand could be customized so that, for example, a cable company trying to pitch its VOD can vary an ad’s opening shots to appeal to a single female who has had digital cable service for eight to 12 weeks, or to appeal to an individual neighborhood with high DBS penetration. In the VOD world, he said, commercials would no longer be “very static objects … very hard to change.”
Panelist Alison Green of Gist Communications, a company that offers interactive TV programming guides, demonstrated yet another iteration of VOD-related advertising-“instant targeting capability,” in which a viewer might call up an IPG screen showing the offerings available in one particular genre of available on-demand movies, say, romantic comedies or action pictures.
At the same time that the viewer is perusing the VOD menu for that genre, one corner of the screen carries a paid ad, announcing that a particular new film in the genre is now playing or coming soon to local movie theaters.
Eventually, VOD, PVRs and commercial skipping will take dollars out of the advertising marketplace, just as Hollywood’s executives have warned. “It may not be the majority of dollars,” Mr. Hanlon said, “but $10 billion, $20 billion [is] at risk potentially. … That’s at least enough to get people thinking, `Hmm, how else then might we use television beyond the impression-based 30-second ad?”’
Advertisers have to be aware that in an advertising-on-demand world, potentially “you have 31/2 minutes to play with and not 30 [seconds].”
Or perhaps even more. The bottom line is that no one knows yet. “How does a video-on-demand environment with advertising play out?” Mr. Hanlon asked. “I would argue that some of it may be CPM [based] down the road. I would also argue that a lot of it may be this set-top box data thing that has not really evolved yet but that anybody can see coming down the track.”