DVRs Increase Ratings and Change Advertising Models

These days it’s as common to watch shows at your own leisure as it is to watch them in real-time.

 

Thanks to digital video recorders (DVRs), television fans can catch their favorite shows at any time. This practice is changing the way that networks gauge viewer interest, and it’s poised to change the way that advertisers are billed for screen time.

 

Before the digital recorder age, it was relatively easy to tell how many people were watching a show. Nielsen ratings gave a snapshot of typical viewer response to a show and viewing figures could be analyzed the next day. However, because of DVRs, networks factor ratings a full week after the show’s initial airing.

 

This change is causing networks to keep shows around that would traditionally have been cancelled due to poor live viewing numbers. For example, Fox’s “Fringe” has only a 1.7 rating (2.24 million watchers) during the Friday broadcast, but those numbers jump to 2.5 and 3.3 million viewers when the seven-day ratings are taken into account.

 

This could prompt changes in the way that advertisers pay for space on network television shows. Currently, advertisers only pay for how many viewers watch shows within the first three days of airing (called “commercial plus 3”). The commercial plus 3 model was a compromise between networks and advertisers, and now there’s a growing movement to expect more from advertisers.

 

Now that the penetration growth for DVR usage has slowed down (up only 2% from last year), networks feel confident that the seven day viewing model is going to be stable and should be used for advertising going forward.

Paid Online Options Prove Lucrative for Sports Networks

Networks have struggled with embracing the fact that the Internet makes their shows available anywhere, anytime – which means they get fewer people sitting in front of the television to watch.

They may have found a model that works for them with paid viewing options for their sports offerings, especially as we enter into March Madness.

CBS offers March Madness on Demand, an online viewing service that is free for users but managed to bring in $32 million in ad revenue in 2009 and projects a 20% growth in that number for 2010. It’s not as good as the numbers for SuperBowl, which brought CBS $200 million in ad revenue, but it’s also not shabby when you consider the relatively slim number of people who prefer watching their sports online.

Other networks are going with a paid option for their viewers, often with a series of packages that let users choose which sports they want to watch. The NBA went from a single streaming option to a number of standalone packages, and Major League Baseball has been using MLB.tv as a pay model since it launched in 2003. Subscription revenues there bring in $88 million.

Networks are getting more creative with iPhone apps as well, but no matter how they choose to make profit from their online offerings, they seem to no longer be attempting to resist the drift online. Now they’re simply learning to monetize that drift – and it seems to be working well for them.

Where Are the Limits of Privacy in Ad Data?

Advertising data is a huge boon to advertisers, particularly those working online.

The more closely an advertiser can tailor their ad to a specific demographic, the more likely they are to make the sale or get the click. While it seems merely useful for advertisers – and in some cases, indispensible – many users are starting to become seriously uncomfortable with the idea that their movements, on and offline, are being observed and recorded.

A surprising amount of offline data is currently referenced to online activity, meaning that public records can be mixed up with a browsing history to create a spot-on diagnostic for the type of person who is currently using the computer.

Advertising research has compiled data that includes everything from birth and bridal registries to warranties to licenses – all with the aim of providing appropriate advertising to that person. However, when targeted advertising becomes almost eerily spot-on, consumers begin to wonder whether the advertisers’ interests are really so benign.

One of the primary focuses of the complaints about privacy is Acxiom, which cross-references a plethora of information to find the exact consumers their advertising interests are looking for. For example, an advertiser might ask them to find the names and addresses of single mothers above a certain income bracket, whose children would soon be going to high school and who did not currently own a car.

That’s very specific. But it’s not an uncommon level of specificity. So far, privacy online is not regulated, and advertising industries argue that no such regulation is necessary. Consumers are increasingly unsure – and unhappy.

How Cable Is Managing the Internet Problem

The Internet is a “threat’ to all media, it seems.

With 35% of cable subscribers who also watch video online thinking of cutting their cable subscription, the threat to major media companies like Time Warner, Viacom and NBC Universal has become very real.

The majority of profits for these companies currently come from cable programming. The concern is that cable programming online will completely erode the significant fees they garner from their subscribers – fees that are currently keeping major entertainment companies afloat.

On the other hand, as more network television shows up online, and the ever-present threat of regular consumers uploading copyrighted material on video-sharing services like YouTube, cable networks could get left in the dust if they don’t get online with all the other shows.

One idea that’s garnered some interest among the cable companies is going ahead with putting cable shows online – but in order to view them, consumers must first prove that they are a cable subscriber. This gives their customers the convenience of viewing their favorite programs anytime they want from their computers, while still ensuring that everyone who views the material has paid for the privilege.

Cable networks are trying to set up a standard cable-viewing policy across the board, worrying that if some shows are available for free (as many of Comedy Central’s shows currently are on Hulu) while others are restricted to cable subscribers only, they will not have managed the problem in the best way possible.

Are Online Ads Making Consumers Vulnerable to Malware?

Online ads are one of the few places where advertising spending has actually improved over the last year, but consumers may be liking them a lot less when they find out how dangerous clicking on those ads can be.

Consumers clicking on online ads in the UK and the US have been getting malware on their computers, and the pushback is not going to be pretty.

Since hackers look for places to put their malware that attract large numbers of people, internet ads are an obvious place for them to insert their viruses. Extremely popular ads, particularly ones that involve clicking on a link, are an excellent agent to distribute their malware to the general public.

Risks include consumers becoming angry at the companies who put up these ads, even if the companies themselves have nothing to do with the malware and do not have a hacker among their own employees.

This means that companies who want to spend their advertising dollars online would be well advised to invest a portion of those funds in serious security systems to protect their customers – and their own ROI.

Media Marketers Target Ad Skippers

Search engine Ask.com has created an ad campaign where advertisers that “crawl” across the bottom of the computer screen during certain cable shows.

The search company will continue running traditional commercials, but it also hopes to get more attention with questions posed to viewers related to whatever programming they happen to be watching. Viewers can answer by going to the company’s search site.

The TV industry is brainstorming ideas to deal with the growing number of viewers using fast forward DVRs to skip over the ads sponsoring their favorite programs.

The truth is that some people want to have their cake and eat it too when it comes to free content and ad-free content. Commercials are not always considered all that entertaining or exciting. TV executives estimate that 60 percent of DVR owners use them to fast-forward past ads, which is the equivalent of wiping out an important part of the TV industry’s economy.

Digital Media Holds Steady Despite Recession

Digital media is still thriving in 2009 in spite of the economic gloom and doom.

Industry bellwether eMarketer predicted that web spending on digital products will increase up to nine percent to $25.7 billion during 2009. (That said, this estimate is actually down from an August 2007 prediction of 15 percent growth.)

Digital media’s winning formula
Despite the situation, many media companies remain calm. They continue to build on their strengths and focus on what works.

“The truth is now that we are a $20 billion business, it’s large enough to cut back,” said Peter Nayler, senior vice president of digital media sales at NBC Universal. “Our strengths continue to be our strengths. These strengths are tractability and efficiency. Also, users are spending more time with digital media.”

The bottom line is that brands are less likely to walk away from marketing and advertising in response to a recession, as they may have done in 2001. Some, in fact, will wind up spending even more money. While media buyers should not expect spending windfalls in 2009 like those of past years, this is sure to a year in which making smarter purchasing choices and focusing on ROI will really count.

Online News Sites Reveal a Boost in Advertising

The Internet has definitely made it easier for advertisers to reach a mass audience.

An advertiser’s dream. If you were creating an advertising campaign for a new product or service and wanted to reach the most prospects, this could be accomplished by advertising online more quickly than any other media outlet.

Online up, newspapers down. Online news sources are the newest medium used to reach the most American consumers. A recent Harris poll revealed that an estimated 80 percent of Americans read the news online. Those who regularly read online news reportedly do so seven times a week for an average 30 minutes daily.

One reason for the shift to online news is the drastic reduction in daily newspaper subscriptions. The Harris poll also showed that 47 percent of Americans who read news online have decreased the time spent reading newspapers.

More accurate, better updated. Many consumers believe they can receive more accurate, up-to-the-minute news online. This is another reason behind decreasing newspaper subscriptions — online news websites attract a wide audience.

What is everyone doing online? 

  • Baby Boomers spend the majority of their time online checking e-mail and reading online news.
  • Generation X consumers are also drawn to online news, regardless of the fact that they did not grow up using computers. The Internet is an integral part of this group’s daily life.
  • Generation Y is the most technically savvy of the three groups. They have literally grown up working, learning, playing and exploring on computers.

Infomercials: An Effective Advertising Strategy

Infomercials are becoming one of the fastest growing direct response marketing techniques for many mainstream businesses of all sizes.

Those popular 30-minute infomercials are a big reason for this growth. If you took time to surf through the various TV channels, you would be amazed at how many different 30-second TV advertisements (also known as a “short form”) and typical 30-minute infomercials (“long form”) are currently on the air marketing their products.

On all the time…These infomercials are on TV at any given time of the day, constantly giving out their 800 numbers or website address for ordering purposes. Because so many companies are using infomercials as their number-one television marketing tool, viewers are seeing more high quality ads coming from mainstream companies like Ditech.com, Vonage and Geico. This prevalence is making any distinction between DRTV infomercials and “regular” (in the consumer’s mind) commercials virtually non-existent to many viewers.

It’s a fact. The fact that advertisers of these infomercials are pulling in countless leads simply by using DRTV as the platform for their product or service is no coincidence. The fact of the matter is that this format and means of advertising works.

Banner Ads vs. Pay Per Click (Part 2 of 2)

Often referred to as cost per click advertising, PPC advertising is used to boost a website’s ranking status among search engine results.

Advertisers pay a predetermined price every time someone clicks on a keyword located somewhere on the Internet. When the user clicks the highlighted keyword, he or she is directed to the advertiser’s website. Additionally, the advertiser is charged for the click.

PPC advertising is beneficial to advertisers seeking a way to increase traffic to their website almost instantly. One of the challenges PPC users face, however, is how quickly the campaign cost can increase as the websites popularity grows.

Therefore, the PPC campaign should be monitored closely to prevent a budget blowout. [Natural or organic rankings, often achieved by good SEO (search engine optimization) and keyword use is the second means for gaining good search engine rankings.]

PPC and banner advertising both present separate yet relative marketing strategies. The strategy that will work best for any given company depends mainly upon the goals and needs of the organization.

Either way, an experienced online media buyer can assist with the purchase of an ad campaign, and go a long way in maximizing the company’s ROI.