Nielsen just reported that U.S. TV viewing has reached another all-time high and that some of the biggest gains came from time-shifted viewing, which grew almost 20 percent versus a year ago. (Click here to read story.)
Commenting on these trends, a colleague of mine said that the increase in time-shifting did not “bode well for traditional TV advertising.” While that’s a simple and popular conclusion, the facts tell a different story.
As Jim Cooper points out in this BrandWeek article, it has been ten years since the DVR was introduced at the 1999 Consumer Electronics Show. The advent of the technology was greeted with delight by those eager to bargain down the price of TV slots or to get marketers to switch funds to alternative media. Many believed that the DVR was the killer app that would cause the end of traditional TV advertising by giving consumers the ability not only to watch their favorite programs whenever they wanted, but also to skip ads. And Cooper’s commentary certainly suggests that he, along with others in $100K-plus households, is skipping every ad that comes along. But can we extrapolate from his behavior to the viewing audience at large? I do not think so.
Back in 2006 I wrote a Point of View titled, “Who’s Afraid of the Big Bad DVR?” One of the statements I made in that POV was this:
If we assume a DVR penetration of 40% by 2010, with 33% viewing pre-recorded content, and 80% of ad exposures being avoided, then only 10% of potential exposure will be lost to DVR usage.
I am delighted to confirm that three years later, this prediction still appears to hold true. This report from the Nielsen Wire states that “As of March 2009, 30.6 percent of households in Nielsen’s National People Meter Panel have a DVR, up significantly from just 12.3 percent in January 2007.”
That’s a pretty big increase, but it is still less than a third of U.S. households, and the proportion would probably not even be that high were it not for the fact that cable companies are now bundling in DVRs with subscriptions. Online surveys conducted by Nielsen in the last quarters of 2006, 2007, and 2008 suggest that DVR penetration is on track to hit 42 percent at the end of 2010. (Click here to read the article.)
According to The Nielsen Three Screen Report, during Q2 of 2009, time-shifted viewing averaged just over seven hours per month. Unfortunately, it is not clear if this figure is based on all TV viewers, or just DVR owners. If the base is all TV viewers, the number of hours must be over three times higher among the DVR population (since they account for less than one-third of TV-viewing households). So, if we scale that figure up to 23 hours for DVR owners, and assume that DVR owners are watching 141 hours per month in total (as cited in the report), then prerecorded content accounts for 16 percent of their total viewing. So even if they skip all of the ads in the pre-recorded content, the net impact on the viewing of all ads is far less than 10 percent.
Even those viewers in the $100K+ households (where DVR penetration, according to a report cited by Cooper, is 63 percent) are probably missing a minority of ad exposures through fast-forwarding. While my general prediction seems close to the mark, I did get one thing wrong. I suggested that the 10 percent of potential exposure was “lost” to DVR usage. As it turns out, that exposure is not lost in its entirety – provided the DVR user has previously seen a TV commercial under normal viewing conditions. See my post on this topic here.)
Research conducted by Erik Du Plessis suggests that people will recognize these ads even while fast-forwarding, and that even a fleeting glimpse will trigger the previously established associations. Add to that this comment by Sue Elms: “People typically only time-shift content they really want to watch, so the content should ensure an attentive audience, whether the ad is viewed at normal speed of fast-forwarded.”
So fast-forwarded or not, TV will likely remain an effective advertising medium for the foreseeable future. What do you think? Is the DVR threat over-stated? Do you recognize ads even when fast-forwarding through them? Please let us know.
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September 8th, 2009 at 1:21 am
Nigel,
You can add to this that when people time shift and ff ads they watch more tv, and more ads. Also that they are watching the show at a time that suits them - i.e. fewer deisruptions, and a ‘friendlier’ audience.
The DVR is probably more beneficial to advertising than not. Erik.
September 8th, 2009 at 3:38 am
The DVR threat is overstated through ignoring the passive nature of TV as a medium. The only caveat I would have had would be the behaviour of younger TV viewers specifically. Anecdotally, I own a DVR and rarely time shift but I did wonder if even at 34, I was too old to adjust to the pardigm of teenagers and 20 somethings who’ve grown up with on-demand media. However, the research that’s out there suggests that even the “youngsters” aren’t skipping more than the rest of us. This seems to be another case of technology advancing but human needs remaining the same.
September 8th, 2009 at 3:53 am
What about those who rewind to watch more closely those you are interested in? I do this if I was only half watching but I am interested in the content, or even stop when fast forwarding to see something I am keen to see. Admitedly this only really works for high information ads (eg offers, latest releases etc) or ads I like and want to show to someone else, but it still increases their impact. Also what about repeated viewing especially among kids who seem to watch the same programme a number of times if mine are anything to go by. Has anyone done any research on the real time usage patterns rather than in an experimental environment?
September 8th, 2009 at 5:52 am
Great piece. It is worth adding that the facts from the UK show that this is a universal phenomenon – people love TV more when they get a digital recorder, they then watch a lot more TV (17%) and 85% of this is still to live broadcast TV (according to Sky’s Skyview panel). The end result is that once you get a digital recorder, you actually watch 2% more ads than before. Only 5.9% of total broadcast TV viewing is time-shifted in the UK (BARB).
Here at Thinkbox, we did a large research study examining attitudes to digital recorders. It’s here: http://www.thinkbox.tv/server/show/nav.853.
September 8th, 2009 at 9:28 am
Thanks for the comments everyone, much appreciated.
Helen, great point about the ability to rewind to watch an ad. In the past viewing was purely sequential with no time to reflect between ads. Now if an ad does catch your attention you can study it at leisure.
Thanks David, I did wonder if the increase in TV viewing was enough to offset the exposures lost to fast forwarding. An interesting addition.
September 8th, 2009 at 1:54 pm
Can’t say I am nearely as sanguine as you. I believe the DVR does not bode well for TV advertisers. Couple of comments:
Even if, as Eric points out, viewers still recall the ad as it speeds by at 100 mph, is a fleeting glance of the content and hopefully the brand ID, sufficient to justify the exorbitant sums paid for TV time? And what about ads that have never been seen elsewhere? I know in my instance there are ads on Mad Men that don’t occur elsewhere in my viewing. So I see them repeatedly, week after week, but have no idea what or who they are.
And one other issue: what about the many DVR viewers who start 22 minutes into the program? That enables them to view the entire hour totally uninterrupted. (22 minutes is the average non-programming time during prime in the US). The additional time freed up enables those people to view some other program — which probably accounts for why the average number of hours are increasing.
No, I don’t see DVRs as a good thing for advertisers. As to who is to blame — plenty to go around, but a topic for another day.
September 8th, 2009 at 2:45 pm
Hi Philip, thanks for the counterpoint but the overriding finding from most research is that people are not time-shifting much of their viewing. Until I see stats which tell me that time shifted and fast-forwarded viewing is a significant proportion of time spent in front of the TV I will remain an advocate for brands to use good, old fashioned TV commercials.
September 8th, 2009 at 3:09 pm
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September 11th, 2009 at 1:27 am
Many DVR doom-sayers (”TV advertising is dying”) assume that advertising skipping replaces advertising watching. But people never watched all the ads before!!! As a generalisation about one third of the time people watch the ad, another third they passively watch (i.e the do something else, talk, read), and about one third of the time they actively avoid it (e.g. leave the room, change channel). Using the DVR to skip through ads largely just replaces other, older, avoidance behaviour. So real ad viewing levels haven’t dropped.
Remember TV advertising worked in the past when not all the ads were seen. And it still works now.
Reference: Paech, S., E. Riebe, and B. Sharp (2003), “What Do People Do In Advertisement Breaks?,” in Aust & NZ Marketing Academy Conference.
September 11th, 2009 at 6:15 am
Thanks Byron, I have been looking for a good reference on this topic for a while. The real advantage of TV over many other media channels is that it even when they do watch the ad their attention level is not that high. As a result they watch ads for brands for which they perceive no current need but which they might buy at a later date (see the Cillit Bang post). This status mechanism is a great way to get into the consideration set and establish a differentiating idea which encourages people to pick your brand over the others.