At their annual gathering on Wednesday, the Association of National Advertisers announced that TV advertising is nowhere near as effective as it was two years ago, and will probably take some hard hits in the next two years as the market corrects itself to the changing marketing climate.
In a study of 133 national advertisers it was found that 78% believe that TV advertising is not as effective as it used to be. Forrester VP Josh Bernoff says that the main reason that advertisers believe this is the advent of digital video recorders, which gives the opportunity to skip commercials.
The Big Four networks have presented research that says the impact of DVRs is minimal, but the advertisers simply don't believe their data.
According to the advertisers when the point comes when 30 million homes have DVRs, they will stop their current spending budgets and drop it by 25% when that time comes; 25% of them said this is their strategy, while 60% said they'll spend less on TV at that point.
It is predicted that next year there will be a decline of 5%-10% on TV spending, which doesn't bode well for the TV industry. While Bernoff says he doesn't believe that this is a terrible blow to television or the beginning of future declines because TV will adapt: I'm not so sure that it is a good as that.
If you take into account the only variable as DVRs, then maybe I could agree. But when you take into account the technology factor and the beginning of video-on-demand starting to take hold, along with mobile technology offerings and user-content aggregators, I'm not so sure that it is as good as they are trying to make it out to be.
One thing that many advertisers agree upon also is that the 30-second spot, is probably going to go the way of the dinosaur, as it is quickly losing its effect and viewability. An overwhelming 61% are developing more interest in the branding of entertainment within the shows themselves. Another segment of advertisers are looking at sponsoring TV programs, similar to the Mutual of Omaha's Wild Kingdom days.
Still others are looking at online video ads and product placement. Whatever the results end up being, I think that TV is in for a tremendous upheaval in its advertising model, as people choose among many options that take a multi-faceted strategy to reach these consumers on their numerous device choices they have already made.
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