Jon M. Huntsman School of Business

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Thursday, July 14, 2011

Don't throw TV advertising off the train quite yet

Eric Schulz
It’s fashionable to embrace the notion that traditional television advertising is dead. It’s sort of like the 50-year-old who ditches his wife to go after that hot, sexy Victoria Secret model in silky undergarments. We read that using TV as an advertising channel has become obsolete, which sends us headfirst into a middle-age crisis - so we rush to make ourselves “young, hip, and cool” by tossing aside everything we have learned and used effectively for the past 30 years to embrace digital and social media as the cure-all to reinvent our career relevance. 
This so-called crisis has been caused by two emerging trends - the growth of DVR’s and the increasing number of hours spent online. The rationale goes, “Well, if they are skipping commercials, no sense advertising on TV1. So let’s move all our money online, get a Facebook page, and start tweeting!” While digital and social media is a tool that has to be integrated into all marketing plans, television, to borrow a line from Monty Python is “not dead yet”. Let’s look at the realities in TV viewership in 2011.

DVR’s
The growth trajectory in DVR ownership suggests that penetration among television owners in the US should cross 50 percent in 2011-2012 2, making it theoretically possible for half of all households to avoid television commercials altogether. Most marketers believe that it’s useless to advertise on television any longer, as “everyone is skipping commercials” (so they believe, because they themselves are doing it). But, according to a just-released study by Deliotte LLP, while DVRs provide the technological capacity to skip ads, the majority of DVR owners are still watching live broadcast television as their first choice, and only turn to recorded programs when they don’t find anything ‘live” that they like.

Viewing behaviors of DVR owners.



Source: Deloitte LLP UK, July 10, 2011. Sample: 958 DVR owners

In 2011 and beyond, many surveys of consumer behavior are likely to indicate rampant advertising skipping 2. Measured data, rather than self-reported data, paint a different picture. Measured research shows that only15-25 percent of programming is fast-forwarded through, but even that is not necessarily a squandered resource. Even ads viewed at 12x speed are still retained by viewers, and by including more distinctive imagery advertisers can further enhance the impact of fast-forwarded ads 3.

In an industry adept at creating compelling television programming and among a viewership that consumes an average 20 hours per week (and over 35 hours in some markets), pre-recording everything is almost impossible. Secondly, skipping through every advertisement, including the end “bumper”, requires a precision that most of us lack. The television advertising model is not broken, at least not by the DVR. To the contrary, there is evidence that the growing household penetration of high-definition televisions is actually INCREASING time spent watching television! The majority of homes, roughly two-thirds, now own a high definition television. Not coincidentally, Nielsen reports that overall TV viewing increased 22 minutes per month, per person over last year!

The increase in online consumption is also somewhat of a misnomer. In the last quarter of 2009, simultaneous use of the Internet while watching TV reached three and a half hours a month, up 35 percent from the previous year 5. Nearly 60 percent of TV viewers now use the Internet once a month while also watching TV. The Internet isn’t replacing TV viewing – it’s happening simultaneous to it!

In summary, TV advertising still works. Eyeballs are still there. Don’t ditch TV as an effective way to reach consumers, even though it’s not as sexy and trendy as jumping on the social media bandwagon.

Eric D. Schulz

Eric D Schulz is a senior lecturer and co-director of strategic marketing and brand management at the Jon M Huntsman School of Business at Utah State University.  He is a brand marketing expert and the author of The Marketing Game, How The World’s Best Companies Play to Win, a book that has sold more than 250,000 copies worldwide.  Follow him on FACEBOOK at The Brand Cop and on Twitter @thebrandcop.

Citations

1 One survey of marketers found that 75 percent would cut their television ad budget as a result of ad-skipping technology. Forrester report from February, 2002 cited in: The TiVo Effect: Advertisers See Less TV Ad Spending, ClickZ, 25 November 2002:http://www.clickz.com/clickz/news/1704616/the-tivo-effect-advertisers-see-less-tv-ad-spending

2 At the end of Q2 2010, 40 percent of all US households had a DVR, a rise of 14 percent on the previous quarter. Source: Bigger TVs, DVR and Wi-Fi among Hot U.S. Home Technology Trends, Nielsen, 30 September 2010:http://blog.nielsen.com/nielsenwire/consumer/report-bigger-tvs-dvr-and-wi-fi-among-hot-u-s-home-technology-trends/

4 Why DVR Viewers Recall Some TV Spots, Wall Street Journal, 26 February 2008:http://online.wsj.com/public/article/SB120398730105292237.html?mod=blog; Also see: DVR Fast-Forwarding May Not be Fatal to TV Ads, PRNewswire, 3 November 2008:http://www.prnewswire.com/news-releases/dvr-fast-forwarding-may-not-be-fatal-to-tv-ads-65213522.html

5 Americans Using TV and Internet Together 35% More Than A Year Ago, Nielsen Wire, March 22,2010: http://blog.nielsen.com/nielsenwire/online_mobile/three-screen-report-q409/

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