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Buyer: NBC’s Leno Strategy Reflects Broadcast Erosion

Dec 9, 2008  •  Post A Comment

A leading ad buyer says NBC’s decision to put Jay Leno into the 10 p.m. time slot is a sign of the times, reflecting the erosion of broadcast audiences, the effects of the digital video recorder and NBC’s strategy of managing for margins, rather than for ratings.
The broadcast networks have long garnered premium prices for commercials because they were the only way to reach a mass audience of viewers. But Laura Caraccioli-Davis, executive VP at media buyer Starcom, says the days of being able to reach 20 million viewers with a 10 p.m. drama are pretty much over.
And even if the networks can get that many people to watch, digital video recorders have made advertising on those shows a less effective proposition.
“If they’re not watching our commercials, it doesn’t have very much value to us,” she said.
On top of that, marketers are looking to aim their ads at more specific viewers more likely to buy their products.
“It’s a mass of niches, not just mass,” Ms. Caraccioli-Davis said.
While it might not have as big an audience as a scripted show, whose biggest fans tend to record programs and fast-forward through the commercials, the new Leno show is more likely to be watched live.
On top of that Mr. Leno and NBC Entertainment Chairman Ben Silverman both have a history of making shows advertiser friendly. Marketers will be interested in having Mr. Leno read commercials live or otherwise integrating products into his show as a way to avoid having sponsor messages get zapped by DVRs.
“I could see that being a big component to that,” Ms. Caraccioli-Davis said.
Don Seaman, VP of communications analysis at media agency MPG, agreed. “One clear benefit of this move from an advertiser’s perspective is that it allows a timelier prime-time platform for live spots and product integration, with the added benefit of higher HUT [households using television] levels,” he said.
But in a report issued Tuesday, he added that the move “also signals NBC’s potential lack of confidence in its program development.” Mr. Seaman questions whether Mr. Leno’s comedy will be a big draw at 10 p.m. and notes that a big chunk—30%—of the “Tonight” show’s audience is 65 years old and up.
“Historically, the A65+ audience is fiercely loyal, so trying to lure them away from their dramas on the other networks may be a gamble with very high odds,” Mr. Seaman said.
He adds that with the exception of recent “Saturday Night Live” specials driven by the fascination with the recent election, late-night show specials in prime time rarely deliver big audiences.
“So how the audience perceives Jay’s program—is it a prime-time show or is it just making me sleepy earlier?—might have an impact upon long-term viewer,” he said.
Ms. Caraccioli-Davis added that NBC might have the right idea, but the wrong execution. Programming more provocative than Mr. Leno might be better at attracting an audience not using DVRs, she said.
With NBC airing fewer hours of scripted programming, studios might be more likely to take their best shows to other networks, where a program would have a better shot at being nurtured, Ms. Caraccioli-Davis said.
“This hurts the Hollywood community because five scripted hours are going out of the market,” she said.

26 Comments

  1. I think reality series may be on their way out in the next three to five years. What gave them their birth in primetime was the writers’ strike a decade ago. Networks discovered it was cheaper to run reality with mostly unknown talent or amateurs who could be paid at a low scale. However, I think its become a glut and is further draining away audiences from the traditional broadcast networks. As it stands, it looks like GE may be planning to shop NBC, since it may no longer meet GE’s profit philosphy of ‘either it makes money, or it goes. Other than Leno or Conan, NBC isn’t pulling in the audiences it once did. Also as mentioned, viewers have more choices, narrowcasting is slowly eating away traditional conduits of entertainment media – but that’s not a new discovery.
    – Andrew, MALL727.net –

  2. I DVR all of my favorite shows. What brought me to this option were all the ads for liquor (got damn tired of Capt. Morgan and Budweiser [sure miss those frogs and the clysdales]), erectile disfunction and medication/drugs.
    When I watch my programs, I’ll stop and view the commercials with children and puppies – they are generally fun to watch. I’ll also view the new model year commercials for automobiles/trucks – I love the Dodge Ram commercials with their trucks going thru what appears to be an obstacle course of swinging squashed vehicles.
    Perhaps the ad agencies may want to rethink their ads and make them entertaining so we’ll watch them.

  3. I DVR all of my favorite shows. What brought me to this option were all the ads for liquor (got damn tired of Capt. Morgan and Budweiser [sure miss those frogs and the clysdales]), erectile disfunction and medication/drugs.
    When I watch my programs, I’ll stop and view the commercials with children and puppies – they are generally fun to watch. I’ll also view the new model year commercials for automobiles/trucks – I love the Dodge Ram commercials with their trucks going thru what appears to be an obstacle course of swinging squashed vehicles – and the Apple/PC commercials – those two guys are so droll (the bake sale ad was very funny).
    Of course, I generally watch sports live. Commercials give me a chance to check on other sports that are on at the same time or I go to the bathroom. Please see my prior rant on commercials.
    Perhaps the ad agencies may want to rethink their ads and make them entertaining so we’ll watch them.

  4. What we are witnessing is the unmitigated death of television as we know it and it is a sad and financial questionable decision by a broadcast network. Since Networks are allowed to own their own programming, a hit sitcom or a hit drama can end up a billion dollar asset when you don’t include the derivative revenue when content is finally monetized online. In order to come up with these billion dollar assets, you have to keep taking shots. None are really ramping up sitcoms. The financial windfall from the old Cosbys, Seinfelds, Raymonds, Cheers, etc.(and still paying!) were worth the 12 others that they swung and missed on. In those days, production companies owned the underlying rights and profited but not anymore. First the networks peeled off hours for Newsmagazines, then it was game shows which morphed into reality, and now they are ceding 5 hours in which they will no longer be swinging for the fences. Creating a phenomenon is increasingly difficult but with all the ancillary markets and the appetite for US programming abroad, the benefits of success are even greater. What a sorry decision.
    It has always been so simple….why don’t they simply cut the commercial load? They can charge more for the scarcity it causes but at least for advertisers, their spots have a fighting shot of being effective. There isn’t an advertiser out there who won’t pay extra for “effective” and a less cluttered environment will accomplish that. But first they would have to decontaminate the screen of the bugs and banners and runners and robots and promos and actually make the viewing experience enjoyable again.

  5. Remember when we were sold on how “wonderful” it was going to be having “500 or more channels” of programming to choose from 24/7? Remember when we were told how the vacuum from all of these new channels would be filled with tons and tons of “quality” programming that would “find its way” to air?
    Yeah…right. Now we see how the “corporatization” of TV has all be destroyed yet another industry. Over-leveraged, bottom-line absentee corporate ownership as resulted in nothing but reduced localization, falling viewership, and dumbing down of the newsproduct to the point of irrelevancy.
    Hopefully broadcasting will have to go back to its roots in putting its local audience and communities first and not the invisible stockholders complaining about not making their 30% profit margin.

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