DVR technology and shifts in television advertising strategies

Tivo & DVR Effects

Cartel: "A formal or informal arrangement of companies that attempt to eliminate competition between themselves by agreeing to common prices, quality standards, advertising and the like. (Alexander, Owers, Carveth, Hollifield, & Greco, 2004, p. 284)

Cost per point (CPP): Cost per point is a method of evaluating media efficiency and represents a ratio based on how much it costs to buy one rating point, or one percent of the population in an area being evaluated. The common formula is: CPP equals the cost of advertising schedule purchased divided by Gross Rating Points (GRPs). (Alexander, Owers, Carveth, Hollifield, & Greco, 2004, p. 286)

Gross rating point (GRP): "A gross rating point is a unit of measurement of advertising audience size equal to one percent of the total potential audience universe. GRP measures the exposure of one or more TV programs or commercials without regard to multiple exposure of the same advertising to individuals. A GRP is the product of media reach times exposure frequency.

Holding company: Organizational entities that form umbrella structures linking independent advertising agencies. (Alexander, Owers, Carveth, Hollifield, & Greco, 2004, p. 287)

Speculative presentations: "Presentations prepared by advertising agencies in order to attract new business clients. (Alexander, Owers, Carveth, Hollifield, & Greco, 2004, p. 292)

Syndicated research services: "Companies that collect information on media audiences and product usage that is sold to advertisers, advertising agencies, and the media." (Alexander, Owers, Carveth, Hollifield, & Greco, 2004, p. 292)

DVR EFFECTS

DVR makes our jobs more difficult.

Who really wants to watch commercials if you don't have to anyway?

I can't believe I just said that."

Lisa Snedeker

Forever Changed

DVRs pause programs without viewers missing anything. Some DVRs require monthly fees to record shows; however, subscriptions usually provide cost savings, which may prove significant as an individual does not have to purchase a hard drive. (Mccombs, 2006, p. 125) With the debut of DVRs, albeit, a number of factors have affected the Neilson ratings; advertisement and networks; fostering changes.

Among the numerous affects from the utilization of DVR, one major concern stands out; advertisement serves as a primary focus for this paper. Due to pressure evolving from digital video recorders, advertisers and ad agencies began to search for something to replace the 30-second commercial. Currently, these marketers are "utilizing placement with a vengeance, especially in game, reality, and lifestyle programs." (Fischer, 2003) During the course of this paper, advertisements, along with the effects of DVRs are explored. The 2007 fall season reportedly constitutes the first season for digital video recorders to be "mainstream: and the ratings that really count will include not just live viewing, when the show actually airs, but delayed viewing on DVR devices like TiVo up to seven days after that original airing." (Snedeker, 2007) the overall sense of responses from readers as to how they perceived DVR would affect their work, as media planners and buyers, was that DVR ratings would forever change broadcast television and how shows, networks and TV seasons are evaluated. Other than on this point, readers agreed on little. (Snedeker, 2007)

Because advertising plays a vital role in supporting the U.S. media, advertising revenues basically cover all broadcast media. Advertisement pays 70% to 80% of newspaper expenses, as well as, a high percentage for magazines. The revenue stream for scuscriptions pays only a minimal amount of the actual production and distribution costs. (Alexander, Owers, Carveth, Hollifield, & Greco, 2004, p. 250)

Advertising in one form or another is centuries old.

Advertising expenditures for 2002 are estimated at 466.1 billion U.S. dollars (U.S.D.; Coen, 2002). The U.S. portion of that figure is just more than one half at 239.2 billion U.S.D. These 2001 figures are slightly lower than 2000 due to the sharp declines of 2001 caused by the severe economic drop worldwide. The drop in U.S. advertising in 2001 was the first time ad dollars had declined since World War II. The year 2002 is estimated to have a 2.4% growth in the United States and a 2% growth overall in world markets

There are two basic audiences for advertising. The first is the consumer audience that is exposed to the advertising through many types of media vehicles. The second are the manufacturing and service organizations who use advertising to make contact with the audience of present and potential consumers of their goods and services. (Alexander, Owers, Carveth, Hollifield, & Greco, 2004, p. 249)

Pondering Prospects

Bad news for television news in the Washington area: The final test of the new method used to measure local audiences showed fewer households watched in June. One exception: The ratings for the region's long-suffering CBS affiliate, WUSA-TV (Channel 9) increased under the new system during two key time periods. Nielsen Media Research Inc., the company that measures TV ratings, officially switched to its new "local people meters" system in the Washington area Thursday. The meters are electronic devices that sit atop TV sets in Nielsen-selected households. They replace the written diaries and older meters that Nielsen families used to record their viewing habits for decades. ("New TV Meters Report," 2005, p. C06)

The campaign by the Consumer Electronics Association, (CEA) Computer and Communications Industry Association, Public Knowledge and Media Access Project, a nonprofit telecommunications law firm, says that consumers should be allowed to enjoy music and video whenever and however they want, and that such freedom should be "protected and nurtured." ("Digital Freedom Campaign Begins;," 2006, p. C09)

Controversial Conclusions think I will be buying a lot more sports! Planners are going to have to adjust CPPs and TRP levels to account for the dramatic drop in live ratings (I think the plus three part is crap, once it's on DVR very few people are going to watch the commercials, and the stations haven't really convinced me otherwise.) and agencies are going to have figure out and then re-educate clients on what to expect and what constitutes an effective buy. I believe the DVR to be the greatest invention since the VCR for watching TV and the worst, perhaps industry-killing innovation for the advertising industry. The DVR, even more than the internet, is going to be what forces advertising to change, evolve and adapt to a completely new landscape. We completely underestimated TiVo."

"DVRs will bring the ratings down. Once a show is recorded, the viewer isn't in any hurry to watch it. Between LPMs, DVRs, the increase in cable ratings, the political season, and the Olympics, 2008 is going to be a tough year for spot buying."

"It will certainly extend the period after a show airs before ratings actually matter." ("New TV Meters Report," 2005, p. C06)