PANELISTS SAY PVRs AREN'T LIKELY TO HURT BROADCASTING
W. HOLLYWOOD -- Countering frequent hand-wringing by broadcast executives over potential negative impact of personal video recorder (PVR) technology, panelists said at conference here Tues. that Digital Age was opportunity. Speaking at Advertising in the Digital Age Carmel Group conference, Marty Yudkovitz, pres. of NBC Digital Media, said: “No matter what new technology develops, there is always an opportunity to benefit. It’s our job to find what those opportunities are. For the last half century, we've had the same business model because television can aggregate audiences and as a result is the most successful brand- building medium in history. But it’s gone 59 years without adding any extra value to advertisers. In addition to brand awareness, digital will allow broadcasters to add a feedback loop to advertisers in a meaningful way through interactivity. The value is not only good for the consumer but it provides advertisers information about which ads targeted to what audience segment at what time and in what geographical region works best.”
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Historically, new technologies have only improved overall business for TV because although audience levels have gone down, broadcaster’s price per thousand has gone up, Yudkovitz said: “In other words, as cable fragmented the viewing audience, broadcast networks became even more valuable to advertisers because of their ability to deliver an unduplicated audience. If we accept the estimate that by 2008, TiVo-like devices will be in 25% of U.S. homes and you figure those consumers use the ad skip features 60% of the time, that’s a 15% reduction, which matches the 15% reduction caused by cable over the last decade which has actually financially benefited broadcasters. But what I see is lower and slower penetration of PVRs.”
Issue isn’t whether model will change, but how to facilitate evolution, speakers said. BrandX Management CEO Steve Mendelson said: “Advertising has been the underpinning of TV since the medium began. And both industries are undergoing changes, so the question is, how do you bridge the divide between what advertisers need and how content delivery models are changing? The answer is, over time both sides must work more and more together to get the marketing message out. VoD [video-on-demand] will force networks to be better brand builders.”
Part of problem, panel agreed, is that advertisers don’t know what they are looking for. Mendelson said: “But the merger of advertising and programming, or branded programming, seems inevitable. You will need to integrate and embed the marketing message into the programming and I'm not talking about mere product placement.” TiVo Exec. Producer James Monroe said agencies must be willing to part from 30-sec. model: “Most people if asked would say they don’t like advertising. But people do watch ads,” which is why many commercial catch-phrases become adopted into pop culture lingo. Monroe said consumers hated intrusion: “The key is finding a new way to advertise that isn’t intrusive, to give consumers something entertaining.”
True value of advertising in Digital Age will be availability of consumer information. Mick Rinehart, Decisionmark vp-product development, said: “As the transition to digital happens, you can give content providers information about who is watching what, it is fertile ground for advertisers.”
Keynoter Christopher Gebhardt of Ogilvy & Mather was decidedly upbeat: “The future of advertising is happening much faster than anyone in the industry expected or than the agencies are adapting to. In the next 18 to 20 months, the business model will start undergoing great changes. What we want is a scalable open system of customized messages over all systems. As communications changes, traditional advertising must integrate interactivity techniques in order to do that.”
Gebhardt said key components of bringing TV advertising into Digital Age were establishing “a clear value proposition that defines digital and its role, fostering deeper relationships between the advertising and ITV communities, exploring co-creation models and integrating brands into content creation, especially in ITV, establishing a baseline matrix and creating an articulated standard.”