I was interested to read Nick Higham’s prescient article “A converged world could spell the end for TV ads” (MW February 3). It is increasingly clear that this view of the world, and the implications for the traditional marketing business model, is going mainstream.
However, I think that the article underplayed the effects.
New figures from BSkyB show that 642,000 households have Sky Plus and our research suggests that this means well over one per cent of television impacts are lost; this ad avoidance is now costing UK brands more than &£40m a year. And it’s only going to get worse.
And the convergence Higham describes is already here; software such as BitTorrent, Myth TV and Videora are already being used by more than 20 million people in the US and Europe to create their own video-on-demand service and “share” TV programming across the Web.
The implications for advertisers are sobering – and research in the US suggests people are happy to pay $1 for a VOD programme without ads, but only 50 cents for programming with ads. That’s a cost-per-thousand of $500 – enough to make any broadcaster think about changing their business model.
Does this sound like panicmongering? Ask around your office to see who has a MP3 player and who has downloaded music for free. Only a couple of years ago this was geek behaviour – now it’s mainstream.
The iPoding of TV programmes isn’t far away. It’s time for marketers to start rethinking their business model.