TV advertising ROI is declining quickly

I just finished reading an article that reported 27 percent of American households now have DVRs (according to Nielson, this has increased from just over 20 percent.) Scientific researchers further went on to study the impact of fast forwarding on advertiser recognition. No surprise, those who fast forward commercials, typically only see a second and a half of silent fast moving content. And this sharply reduces the viewers' recall of the commercials.

However, they also found that viewers were still able to recall commercials that contained many frames featuring the brand's name or logo, if the logo was in the center of the screen. Such commercials made viewers like the featured brands better, and increased their desire to buy the product advertised.

My bet is that these researchers are on acid. Because, this is a ludicrous study.

Let me explain. If we're at the point where advertisers need to defend TV commercials by asserting that some fast forwarded commercials are still effectively selling products if the brand logo is in the center of the frame, then this industry is really desperate beyond belief. I can’t believe the premise is actually true. And, it certainly won’t convince any corporate marketer that DVRs aren’t really as bad as they were led to believe.

Here are some facts:

-TV advertising costs a lot of money. The costs come from developing the commercials and more importantly buying the time. In some cases, TV advertising budgets are 10 to 20 times more expensive than direct marketing or public relations.

- Over 25 percent of households skip through commercials. That number will certainly grow every month and every year. I don't believe that DVR'd commercials provide any brand building value. Think about the cost highlighted above. Now, understand that one out of every four potential viewers will fast forward right by it.

- In this economy, marketers need to see that every dollar spent will produce efficient returns. That is the exact opposite of what TV commercials do.

- Today, the best marketing needs to focus on building trust, credibility and direct response with customers/prospects. Again, TV commercials provide none of these.

Lastly, even if a marketer does believe that TV commercials should be a key part of the marketing mix, he/she should maximize those bucks by pushing the media outlet/network to significantly enhance the buy for greater value, at no more cost. This could include additional Web advertisements on the broadcaster’s site, PR related promotions to create a larger call to action, direct response initiatives through online contests or a host of other marketing endeavors.

The Web is our future. TV will clearly still have a marketing role. Only, the cost to benefit received from this medium (alone) better change because many marketers are moving on.

Comments

[Steve Cody]

Actually, many marketers are incentivizing viewers to watch their online ads. I'm sure the same will hold true for TV. If I'm down and out and need every penny I can find, I'll accept an advertiser's money to watch their ads. It's a no-brainer. You just "watch" and see.

[Sam Ford]

Ed, I’d argue that the number of people who watch commercials hasn’t changed all that much. DVRs just give us a way to measure what it is that people have always done: not watched commercials. In previous times, they recorded with VCR and watched; or they talked during the commercials; or they fixed a snack or went to the bathroom; etc. It’s not as if the DVR created commercial avoidance. TV networks are trying to point that out, but they are walking a thin line, because admitting that reveals the lie they built their ROI on in the first place, that those eyeballs who are watching the program are actually engaged and paying attention to the commercials. See more here:

http://www.convergenceculture.org/weblog/2006/06/nielsen_commercial_ratings.php

[Steve Cody]

Yup, but new metrics are being built to avoid that perception. I've seen a lot of this being discussed with next gen TNS research models that will factor Tivo/DVR into their metrics.

[Sam Ford]

Absolutely, Steve. The DVR is forcing the television industry itself to come to grasps with what's always been true: people often don't watch commercials. Measurement companies are doing what measurement companies should do: using new technologies to give more precise data. The issue is you can track DVR fast-forwarding. You can't track people mentally tuning out, and the lie was pretending that people didn't do that at any point. In some ways, it's like claiming you can reach every reader of a newspaper's circulation if you get a mention in the publication. The idea that millions of Americans are influenced by your ad simply because it was placed on a popular show ignores the many ways people engage in commercial avoidance.

[Steve]

Have studies been done that attempt to quantify how much TV commercials actually affect consummer behavior--i.e. how much buying they actually cause? That seems to be more relevant than simply whether or not people see or remember a commercial.

I literally cannot remember the last time I bought something because it was advertised, and most of the brands of food, beverage, consumer products, etc. I purchase are among the least advertised ones. I buy the ones that I like and fit my budget, regardless of how heavily they are advertised.

At the same time, though, I actually *watch* probably more commercials than many other people--we don't use a DVR to skip through them, and many commercials *are* entertaining or memorable. I watch them, smile at them, but don't buy because of them.

My suspicion is that in terms of actually shaping behavior, TV ads are much less impactful than is commonly believed. Metrics that focus on how many commercials people watch or recall implicitly assume that paying attention to a commerical means it's working; but has that assumption been tested or borne out?

[x-ray fluorescence]

Hey,
DVRs just give us a way to measure what it is that people have always done: not watched commercials. In previous times, they recorded with VCR and watched