Much has been made in the past few years of the impending “death of broadcast television” as an advertising medium, particularly in the US. A quick glance at some of the statistics and new technology and it is not hard to see why this might be thought to be the case.
Helped by a bumper election harvest in 2004, ad revenues in the US have been growing strongly for the past couple of years. Full-year forecasts for 2005 by TNS Media Intelligence suggest that advertising spend in the US is likely to increase by 5.1 per cent, to $150.5bn (£80.5bn). This follows an estimated increase in total ad spending in 2004 of about 10.6 per cent. While TNS’s projections for younger media such as the internet and cable TV show strong growth in ad revenue this year (11.2 per cent and 9.3 per cent respectively), broadcast TV revenue is forecast to grow by a mere 2.9 per cent.
Where broadcast TV once had a strong claim to being the definitive mass-market medium in audio-visual advertising, the rapid proliferation of alternative outlets for advertisers has undoubtedly put this position under stress. Furthermore, as a communications platform, broadcast remains a “push” medium, giving the end-consumer little choice as to what they view. Given the flexibility of so many other media and the trend towards personalisation of content, many marketers now see TV as too rigid. Meanwhile, alternatives to broadcast continue to expand in range and breadth, applying even greater pressure. Video-game advertising is a case in point.
Advertising in video games is not in itself a new phenomenon – but market research company DFC Intelligence estimates that worldwide revenues from game advertising stand at about $200m (£107m) – marketers continue to find new ways to exploit it. Video-game advertising network Massive Inc. recently announced a deal with a number of major games publishers (including Eidos and Vivendi Universal), that allows marketers to place new ads in console and PC games via an online connection. From a media buying perspective, this kind of market was simply not available as an alternative to broadcast even a year ago.
The growing popularity of personal video recorders (PVRs, known as digital video recorders in the US), which enable users to skip ad breaks, has also contributed to a rising pessimism about the fate of the broadcast networks’ ad income. TiVo, the best-known brand and second-largest manufacturer of PVRs in the US, with about a third of the total market, has signed a deal with the nation’s largest cable supplier, Comcast, to produce a customised version of its system for Comcast subscribers. Research agency Magna Global USA recently projected that PVRs will be in 11.6 million US homes by the end of the year, equating to 11 per cent of households. That’s a lot of people with the power to skip ad breaks. The UK lags behind in this market, with just two per cent of households currently using the BSkyB proprietary system Sky Plus, but it is certainly gaining momentum.
And yet it is not all doom and gloom for US broadcasters. According to recent Nielsen Galaxy ratings, in the first 20 weeks of the current US TV season, about 500,000 more of the critical 12- to 24-year-old demographic were watching TV in the evenings compared to the previous year. Furthermore, a new study by the Kaiser Family Foundation into the typical daily habits of eight- to 18-year-olds in the US found that 81 per cent of the 2,000 sampled watched TV, versus 47 per cent who surfed the Net.
However, where ten years ago a TV could probably have commanded near-complete attention in the living room of a typical household, now the members of that household may be surfing the Web, texting friends and listening to an MP3 player at the same time. It is against this background, when a consumer can be hit by a dozen different brand messages at once, that marketers are having to fight to make their messages stand out.
But this challenge doesn’t apply to TV alone – marketing clutter is everywhere and broadcast is not the only medium that must fight to cut through. What’s more, broadcast is not standing still in the face of these challenges. Old and new responses are being revived and developed in an effort to appeal to more viewers, attract more ad dollars and evade the TiVo ad-skip button where possible.
Ensemble ads, sometimes called “sitcommercials”, are making a comeback and growing in popularity. These feature a larger cast than most ads and are generally longer-running than a standard campaign, mimicking the look and feel of sitcoms. Used by brands such as Ragu and Bell Atlantic back in the Eighties, they are designed to engage consumers on an emotional level in a way that ads featuring only one or two characters may not. A recent Verizon campaign ran 13 commercials, featuring three ensemble casts and a total of 18 actors. In February, BBDO New York introduced a campaign for PepsiCo brand Sierra Mist, featuring an ensemble cast of five comedians called the “Mist-Takes”, who featured in 12 ads. And the American Legacy Foundation’s recent anti-smoking sitcommercials ran in five-minute bursts, meaning they appeared more like programmes and were less likely to be screened out by TiVo users.
Sponsorship is also on the rise. While on its own this would be nothing new, an increasing number of one-off shows are abandoning ad breaks altogether in exchange for programme sponsorship deals. This month, the USA Network announced that it had signed Saab Cars USA as “presenting sponsor” for Ring of Fire: the Emile Griffith Story, the first programme the network will air uninterrupted.
According to Steven Elliot of the New York Times, “Madison Avenue and Hollywood have been working together in earnest since the Thirties.” From cans of Coca-Cola in the Tonight Show to Ford Mustangs on prime-time drama Alias, product placement on network TV in the US continues to thrive. And, with the burgeoning popularity of reality TV, the possibilities of product placement as an income stream have become even greater. Mark Burnett Productions (MBP), the company behind network shows Survivor and The Apprentice, is one of the main proponents of “product integration” – the name given to this growing market. MBP will charge upwards of $1.5m (£800,000) for sponsorship of a task in an episode of The Apprentice 3, netting about $15m (£8m) for the company over the course of the season. Product integration is certainly an income stream that is likely to prove highly significant for broadcasters and programme-makers in the coming years.
From an advertising perspective, we should certainly not dismiss the prospects of broadcast TV for the future. Many thought that the proliferation of the VCR was going to destroy the underlying economics of the US movie business – but Hollywood now makes over twice as much money from DVD/VHS sales and rentals as it does from ticket sales at cinemas. There’s no doubting that broadcast faces some tough challenges, particularly in the US, but in such a rapidly evolving market, every medium has to fight to get the attention of consumers who are under almost constant brand bombardment. The once-mighty TV is no exception.
Polly Devaney is a former Unilever executive now working as a freelance business editor